Health insurance always costs more in rural, sparsely populated counties that often have lower average incomes. But as The Wall Street Journal explains on Thursday, what's different under Obamacare is that insurers are avoiding areas with high concentrations of sick and unemployed people in favor of areas where they're more likely to make a profit. This probably has a lot to do with the fact that insurers can no longer charge less healthy people more, and they have to guarantee coverage.
Higher premiums in rural areas has been a fairly common trend in the insurance industry. Insurance costs more in rural low-income areas because there are fewer hospitals, fewer doctors, and smaller risk pools. And in places like the South, where smoking and obesity are more common, those costs increase and are passed on to the buyer. But insurers are applying a little more game theory in choosing where they offer plans. Aetna and UnitedHealth Group scaled back where they offer plans, and Aetna Chief Executive Mark Bertolini said last fall that "we were very careful to pick the markets" where the company could succeed, according to The Journal. That means places with stable employment, higher populations and low instances of disease.
In 515 counties across 15 states, only one insurer is offering plans on the marketplace. Some insurers, meanwhile, are skipping the marketplace to offer unsubsidized plans outside the exchanges. And areas where insurance was expensive before continue to see limited competition and high rates. In Southwest Georgia, the area with the second highest Obamacare premiums in the country, several factors pushed the cost of the least expensive silver plan for a 40-year-old to $461 a month. As Kaiser Health News reported earlier this month:
Expensive chronic conditions such as obesity and cancer are common among the quarter million people in this region. One hospital system dominates the area, leaving little competition. Only one insurer is offering policies in the online marketplace, and many physicians are not participating, limiting consumer choice.
In fact, in a list compiled by Kaiser, the majority of the 10 most expensive premium are sparsely populated. Residents of Colorado's mountain resort region are petitioning the state insurance commissioner, Margeurite Salazar, to do something about their high rates (the highest in the country), but there's not much they can do. Salazar said that rates have often been high in the area, where large hospitals tend to be far away, and specialists are hard to find. Hospital costs are 61 percent higher than the rest of the state. The only difference now is that Obamacare tells people how much more they're paying. “I think transparency has been a good thing,” Salazar said, adding that the state still needs to figure things out. "It doesn’t really help to have all these (health insurance) plans if nobody’s going to be able to purchase them.”
The irony of the situation is that the people who can least afford to pay more for insurance are going to continue to be charged more, since there's no incentive for insurers to offer them more plans on the exchanges. According to The Journal, the average family income in 2012 in the 515 counties with one insurer was $56,766. In counties with three or more insurers, the average income was close to $72,000. And while higher enrollment numbers, especially from young people, will help keep premiums down in the long run, what's helping people now are the subsidies. "Most people are receiving a high enough subsidy for coverage that they don't care," a Georgia insurance broker told The Journal.