Tuesday, March 11, 2014

Health-insurance costs on exchanges still vary by region, despite subsidies designed to equalize

Under the Patient Protection and Affordable Care Act, health-insurance costs vary from region to region and state to state, and federal subsidies won't remove all of the differences, Christopher Snowbeck and MaryJo Webster write for the St. Paul Pioneer Press. They looked at data from the U.S. Department of Health and Human Services and state-run health insurance exchanges and developed an interactive map showing costs of coverage for different ages and incomes, click here.

In cities such as Minneapolis, Pittsburgh and Tucson, where insurance prices are low, fewer tax credits are necessary. A greater number of federal subsidies will be needed in places with high premiums, such as rural areas of the South. "Because there is so much geographic variation in cost, the government does have to pitch in a larger portion of premium in higher-cost areas to make coverage affordable," said Cynthia Cox, a researcher at the California-based Kaiser Family Foundation.

Though some people feel that the law is unfair and that they don't receive the tax credits as high as in other areas, the ACA exists to ensure that "people at certain income levels pay no more than a set share of income to buy the midlevel 'benchmark' health plan where they live," Snowbeck and Webster write. Some variation in price disappeared, though, because insurance companies can no longer refuse to cover people who have pre-existing health conditions, said Jonathan Gruber, a Massachusetts Institute of Technology economist who helped craft the reform law.

Coverage prices are different in some areas because of factors such as competition among insurance companies, health status and cost-of-living. However, though the same plan goes for $170 per month in Pittsburgh and $450 in rural areas of Colorado and Georgia, federal subsidies based on income bring the cost under $300. That say to potential purchasers,, "It's now in the achievable range," Tracy Brosius of the Wyoming Institute of Population Health, told the Pioneer Press.

Sometimes the tax-credit system actually allows people in higher-cost cities to pay less than those from lower-cost areas. "Assessing which consumers wind up with the 'better deals' can be complicated, policy experts say, because the lowest-cost silver plans available in different regions likely have different coverage details, such as deductibles and networks of doctors and hospitals," Snowbeck and Webster write. Though some of argued that the new system doesn't offer incentives for regions that more effectively provide health care, Cox said "Insurers still have a financial incentive to keep premiums low to attract enrollees, particularly young enrollees who might not be tax-credit eligible." (Read more)

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