Rural people will have fewer choices

Published 6:00 am Sunday, July 9, 2017

By Trudy Lieberman

As Obamacare approaches its fifth sign-up season, policyholders in many parts of the country are facing a marketplace with fewer choices and higher premiums.

A New York Times analysis has found that 45 percent of U.S. counties probably will have either just one insurer or no insurers to choose from. That means some 3 million people in nearly 1,400 counties might have only one carrier and about 35,000 people could have none.

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Many of those counties are in rural states like Nevada, Colorado, Wyoming, Nebraska, Ohio, Kentucky, Missouri, Mississippi and North Carolina.

In dollars and cents that means those living in areas without a carrier must buy coverage in the regular marketplace where they will get no subsidies to help pay their premiums. Subsidies are available only for people buying Obamacare policies on the state shopping exchanges.  About 85 percent of the 12 million Americans with Obamacare policies get subsidies, which make it possible to afford coverage.

For people with a single carrier in their county, limited options could mean high premiums for the policies available. “Blue Cross is out of Wisconsin, Indiana, Iowa, and Nebraska,” says Washington D.C. insurance consultant Robert Laszewski. “In Tennessee Blue Cross is out of two major cities and for the carriers staying in, the rate increases are through the moon.” The carrier will also be out of Ohio next year, a state where it had been a major insurer.

This is not exactly the outcome that supporters of Obamacare had hoped for. The politicians who wrote the law and its advocates tried to defy the basic laws of insurance. They wanted to keep the private insurance market and still allow everyone sick or well to get coverage. In other words, Obamacare tried to square the circle.

But insurers make money by selling to healthy people while trying to minimize the claims they get from the sick. The ACA called for insurers to issue policies to everyone regardless of their health status. That meant thousands of very ill people came into the risk pool, and in many areas not enough healthy people signed up for coverage to balance them out. Laszewski noted that only 40 percent of eligible people signed up, a recipe for trouble in too many counties.

“The most difficult place to make the marketplace work is in rural areas,” says Timothy McBride, a health policy professor at Washington University in St. Louis. “It’s an intractable problem in some places,” largely because rural communities have low populations, and the percentage of unhealthy people tends to be higher than in the cities. “Policymakers were hoping they’d get this fixed, but they haven’t been able to do that.”

Many carriers leaving the market, however, are blaming the Trump administration for causing market uncertainty. A press release from Blue Cross Blue Shield announcing a 21 percent rate increase in the parts of Tennessee where it will continue to sell noted “two significant uncertainties.” How will the risk pool change if the requirement to buy insurance is no longer enforced? (The Trump administration has loosened enforcement.) Will the government continue providing cost-sharing subsidies to people with low incomes?  This year individuals with incomes below $30,000 and a family of four with about $62,000 get extra help paying deductibles and coinsurance.

I have no clue how politicians will solve this.  I do know one thing: The cost of medical care continues to rise and that will be factored into everyone’s premiums each year. Unless there’s some serious cost control built into whatever comes out of Washington, premium increases could become very steep in the coming years taking health insurance out of reach for many Americans.

Cost containment has barely been discussed. It’s the elephant in the room. For one thing, insurers’ operating costs, which eat up about 18 cents of every premium dollar, are about twice as high as those costs in other countries. They include:  determining eligibility, processing claims, enforcing controls on care like preauthorizing procedures – and negotiating fees with thousands of hospitals, doctors, and other sellers of care.

Then there’s the matter of new healthcare technology and more use of older technology, which may account for as much as 50 percent of the increase in annual healthcare costs.

At the end of June, for example, the New York Legislature passed a law mandating insurers pay for 3-D mammography without requiring women to pay deductibles or coinsurance and without the blessing of the U.S. Preventive Services Task Force which has made clear that evidence for its use is lacking and “many important questions remain.” The cost of a mammogram could rise by a third.

This is just the tip of the proverbial iceberg. I will explore technology and its costs in a future column.

How do you think medical costs should be controlled? Write to Trudy at