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David Mercer/APPatrick Lamanske of Champaign, Ill., works with Amanda Ziemnisky, right, of the Champaign Urbana Public Health District office in Champaign to try to sign his wife, Ping Lamanske, left, up for health care coverage through the Affordable Care Act.By Caroline Humer
NEW YORK — For Americans who are able to check out new insurance plans launched under President Barack Obama’s health care reform, the price differences from state to state may be surprising.
Residents of Minnesota, a Democratic-led state, are likely to pay the lowest monthly premiums in the country. Just two states away, some residents of Republican-dominated Wyoming might be surprised to find they will pay among the highest.
But the ideological debate between Obamacare’s supporters and opponents seems to have had little relevance when it comes to the affordability of care, the main goal of the Democratic president’s signature program, health economists and actuaries say.
Instead, they point to regional differences in medical costs, the relative health and age of local populations and competition among insurers as having greater influence over the monthly premiums. Those differences lead to a wide variance in prices between states, and even within states.
Of the 24 states that fall below a national average of $328 in monthly premiums, laid out in a U.S. Department of Health and Human Services analysis last month, at least half are dominated by Republican state governments.
The affordability of the plans will likely determine whether enough uninsured Americans, particularly young and healthy ones, sign up to make the program successful.
The new insurance plans became available for enrollment nationwide on Oct. 1. But technical problems with the federal government’s health care.gov website serving 36 states have blocked millions of people from accessing the information.
In Wyoming, the cheapest mid-tier plan, or “silver” plan, costs $307 for a 27-year old in Laramie County, one of the state’s only two counties considered “urban” and where the state capital Cheyenne is located. It has 60,000 residents with an average age of 37 years old. Venture outside those two counties and prices rise by $25. Change to the one other insurer offering a plan, and prices climb $100.
In Minnesota, a 27-year old in Minneapolis could pay $126 for a silver plan. Its population is 393,000, and the median age is 34. Go out to Traverse County, with the oldest population in the state, and that starting price rises to $153. In Minnesota, residents can choose from four insurers.
“It seems that basically the eligible populations in those areas, and the relative negotiating power of providers and insurance plans seem to really be the driver” of prices, said Matthew Buettgens, a mathematician at the Urban Institute, a social and economic research, “not necessarily politics.”
Maryland, a staunchly Democratic state with an active insurance department, emphasized its ability to reduce premium rates by about 30 percent overall on the new products. But the average price on its mid-tier “silver” insurance plan is $299, only $6 less than in Republican-led Texas, whose leaders have been at the forefront of an effort to kill the health care law, culminating in a federal government shutdown.
Even within a state, there are variations. In Georgia, a 100-mile difference can mean hundreds of dollars in the monthly cost. Monthly premiums in rural regions cost much more than in more populated areas.
According to the data on the federal health care.gov website, the cheapest “silver” plans in the state are in the counties surrounding Atlanta — about $185 a month — where five insurers sell plans. The most expensive are in Georgia’s southwest corner, where only Anthem Blue Cross Blue Shield, a unit of WellPoint (WLP), sells Obamacare plans at a minimum of $200 a month higher for a comparable plan.
Florida and Texas Rates
To be sure, politics historically has played a role in how states regulate insurance. Many of the Republican “red” states have had a laissez-faire attitude towards regulation compared with activist Democratic, or “blue,” states.
And to a lesser degree, that regulation did affect Obamacare prices. Many Republican states have deferred to the federal government to run their exchanges, while Democratic states that support Obamacare have taken an active role in running their own exchanges.
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Leaders in Texas and Florida also blamed Obamacare for skyrocketing health insurance costs, arguing that the new plans will take a toll on individuals and businesses.
In Florida, the Republican-led legislature and governor suspended the state insurance department’s rate review authority for 2014 and 2015, saying they didn’t want the state to participate in the overhaul.
But even without official authority, Florida still conducted “informational” reviews of rates for 2014 insurance products, and the federal government examined premiums there.
A Reuters review of insurance filings in both states showed their insurance departments played an active role in examining the plans proposed by insurance companies before they were submitted to the federal government. In at least one instance in Texas, the review led an insurer to lower prices for their plan, the insurer said.
In Florida, the average monthly premium matches the national average at $328. In Texas, it is lower at $305. A check of the benchmark mid-tier, or “silver,” plans shows Texas is among the least expensive, costing $108 to insure a 27-year-old.
Florida’s silver plans start more than $100 below the national average price, with prices at around $200 for a 27-year-old available in much of the state. The figures are before government subsidies for people earning less than 400 percent of the federal poverty level, or $94,200 for a family of four.
Obamacare requires all insurance policies for individuals to cover 10 standard health benefits, including maternity and emergency services, making the estimated cost of covering an individual the single biggest factor in premium rate. Regional differences play a role in making those estimates, experts explain.
“Colorado is purportedly a very healthy state and knowing people who live there, I understand why. They are always out there climbing mountains,” said Jim O’Connor, a principal at actuary firm Milliman in Chicago.
Spending also varies by the price of medical services rendered in each region — the cost of an X-ray in Topeka versus Miami, for example. A third factor is how often someone living in the region typically goes to the doctor when they are sick, which can be heavily influenced by social norms.
Other wild cards involved in setting premiums include how many of the very sick people in their state will buy a particular insurer’s plan, and how many of the previously uninsured population will come in with pent-up demand for doctor visits and new treatments — one of the true tests of Obamacare.