Two recent Kaiser Health News articles compared health plan premiums in the Affordable Care Act’s recently established health insurance exchanges. The article reported that rates vary widely across different regions and examined why such large differences might exist, sometimes in very close proximity to one another. Unsurprisingly, areas with a lack of competition among providers, particularly hospitals and specialists, often had higher plan premiums because insurers were less able to negotiate lower prices.
In addition, how hospitals and doctors were paid, and the way that health systems organized their providers may also have associations with plan rates. When more physicians in a region were paid a salary, and not a fee for each procedure or visit, premiums tended to be lower. Further, regions with more integrated providers within plan networks tended to have lower rates.
Several regions within Minnesota had some of the lowest monthly premiums in the country (e.g., $154 for the lowest-cost silver plan for a 40-year-old person in the Minneapolis area). Michael Rothman, commissioner of the state’s Department of Commerce, cited the Minnesota’s experience with cost containment, including its earlier establishment of a medical loss ratio and insurance rate review, as a contributing factor.
Interestingly, areas with poorer population health did not necessarily have higher plan premiums. The most expensive region in the country, the area around Aspen, Colorado, has a relative healthy population. The monthly premium for the lowest-cost silver plan for a 40-year-old person was $483 in this part of the state, where both the cost and utilization of health services are relatively high.