Health Insurance Choices Shrinking On Exchanges


If you thought your choices were few on the ObamaCare exchanges this year, just wait until you try to renew your policy next year; especially if you live in a rural area. That’s the message coming through loud and clear.

If you’ve been following this blog closely, you know that UnitedHealth recently announced they were pulling out of all but a handful of the 34 state exchanges where they sold policies this year. Humana has also reported plans to cut back. Anthem and Aetna plan to hold tight for now, but nobody is expanding.

Anna Wilde Mathews and Stephanie Armour of The Wall Street Journal say the impact of these changes is becoming clear. According to the Kaiser Family Foundation, more than 650 counties appear to be on track to have just one insurer on the exchanges in 2017. That is up from 225 in 2016, when the state of Wyoming, among other areas, already had just one ACA marketplace competitor.

The entire states of Alaska and Alabama are expected to have only one insurer offering policies on the exchanges in 2017. Large parts of several other states, including Kentucky, Tennessee, Mississippi, Arizona and Oklahoma will also offer only one choice. About 70 percent of the counties affected are in rural areas.

Consumers can count on higher prices. Kori Allen, a bookkeeper in Kodiak, Alaska, has an exchange plan this year from Moda Health Plan, Inc. , which will pull out of the state exchange next year. She worries about what will happen when there is only one insurer, Premera Blue Cross, offering insurance on the exchange. “It’s going to be a monopoly, basically; here’s the price, take it or leave it.”

An analysis by Inovalon, Inc., a health technology firm, shows Allen is correct. Prices are higher already on the rural exchanges – and destined to go higher still. Inovalon found that rural residents racked up significantly higher medical costs than urban enrollees in 2015.

“Individuals in less populated areas tend to be sicker,” according to the data, said April Todd, an executive at a consulting unit of Inovalon. But the cost gap was also driven by higher expenses at rural healthcare providers, she said.

The graphic below shows how medical expenses rise with dwindling population. In larger metropolitan areas, competition holds down prices. Fewer insurers in these rural areas will only widen the gap between prices in the city and the country.

Rural Exchange Prices

Regulators say they are worried. “When there’s more competition, consumers typically are better off,” said Mark Fowler, chief of staff at the Alabama Department of Insurance. He said Humana and UnitedHealth will no longer sell exchange plans in Alabama next year, leaving the entire state with just one ACA marketplace insurer, Blue Cross and Blue Shield of Alabama.

I’ve been reporting all year that insurance prices will be rising dramatically in 2017 for several reasons including:

  • Rising losses on the exchanges
  • The end of bailout provisions in the law
  • Declining enrollment by the young and healthy
  • Less competition by health insurers

Now add to the list fewer choices on the exchanges, especially in rural areas.

Buckle up your seatbelt; ObamaCare is sure to be a wild ride in 2017!

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