Health Law Fails to Keep Prices Low in Rural Areas

Rich Addicks for The New York Times

A customer shopping at Montana Health CO-OP, where a third insurer helped lower prices.

As technical failures bedevil the rollout of President Obama's health care law, evidence is emerging that one of the program's loftiest goals — to encourage competition among insurers in an effort to keep costs low — is falling short for many rural Americans.

While competition is intense in many populous regions, rural areas and small towns have far fewer carriers offering plans in the law's online exchanges. Those places, many of them poor, are being asked to choose from some of the highest-priced plans in the 34 states where the federal government is running the health insurance marketplaces, a review by The New York Times has found.

Of the roughly 2,500 counties served by the federal exchanges, more than half, or 58 percent, have plans offered by just one or two insurance carriers, according to an analysis by The Times of county-level data provided by the Department of Health and Human Services. In about 530 counties, only a single insurer is participating.

The analysis suggests that the ambitions of the Affordable Care Act to increase competition have unfolded unevenly, at least in the early going, and have not addressed many of the factors that contribute to high prices. Insurance companies are reluctant to enter challenging new markets, experts say, because medical costs are high, dominant insurers are difficult to unseat, and powerful hospital systems resist efforts to lower rates.

"There's nothing in the structure of the Affordable Care Act which really deals with that problem," said John Holahan, a fellow at the Urban Institute, who noted that many factors determine costs in a given market. "I think that all else being equal, premiums will clearly be higher when there's not that competition."

The Obama administration has said 95 percent of Americans live in areas where there are at least two insurers in the exchanges. But many experts say two might not be enough to create competition that would help lower prices.

For example, in Wyoming, two insurers are offering plans at prices that are higher than in neighboring Montana, where a third carrier is seen as a factor in keeping prices lower.

It is unclear how the online marketplaces might evolve over time. Many large insurers are closely watching what happens in the first year to decide whether to more aggressively pursue new markets. In the meantime, problems with the healthcare.gov Web site are making it harder for them to know whether the exchanges' slow start is the result of technical difficulties or more serious underlying problems, such as a lack of consumer demand, that would discourage them from entering.

In some cases, competition varies markedly across county lines. In Monroe County, Fla., which includes the Florida Keys, two insurers, Cigna and Florida Blue, offer plans on the federal exchanges. In neighboring Miami-Dade County, there are seven companies, including Aetna and Humana, two of the nation's largest players.

In rural Baker County, Ga., where there is only one insurer, a 50-year-old shopping for a silver plan would pay at least $644.05 before federal subsidies. (Plans range in price and levels of coverage from bronze to platinum, with silver a middle option.) A 50-year-old in Atlanta, where there are four carriers, could pay $320.06 for a comparable plan. Federal subsidies could significantly reduce monthly premiums for people with low incomes.

Counties with one carrier are mostly concentrated in the South. Nearly all of the counties in Mississippi and Alabama, for example, are served by just one insurer, according to The Times's analysis. Other states with scarce competition include Maine, West Virginia, North Carolina and Alaska.

"The consumer wants some level of choice," said Alexander K. Feldvebel, the deputy insurance commissioner for New Hampshire, where one carrier, Anthem Blue Cross, owned by WellPoint, now offers plans. "You don't have that when you have a single carrier offering all the products."

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