The Sacramento Bee
June 5, 2013
Geography affects premiums on California health insurance exchange
By Jim Sanders
For
the same health coverage from the same insurer, a 40-year-old
Sacramentan will pay $78 more per month than a Los Angeles County
resident through the state's new insurance exchange.
In rural Mono County, the disparity will be even
larger: $150 per month, nearly 60 percent higher than for identical
benefits and co-pays offered in Los Angeles County.
The
premiums provide relatively basic coverage from Anthem Blue Cross, but
similar regional differences exist in plans proposed by other insurers.
The numbers reflect new rate-setting standards: How sick you are no
longer matters, but where you live does.
A 25-year-old can buy the least expensive level of
coverage - bronze - at prices ranging from $147 to $274 per month,
depending on location.
For the first time,
Californians soon will be able to compare regional pricing because
federal law requires insurers selling policies on state exchanges to
offer identical benefits with rates based only on age, location and
household size.
A key factor in premium price differences, within a
region or in comparison to other California communities, is the provider
network created by each insurer, officials said.
The
willingness of doctors or hospitals to join a network can be affected
by rates that insurers agree to pay them. Those are negotiated privately
and tend to vary based on the number of health care providers within a
region and the intensity of competition for patients.
Tom Epstein, vice president of public affairs for
Blue Shield of California, said costs for medical care generally are
higher in Northern California than in Southern California.
"There are a number of large hospital systems that dominate the Northern
California market, whereas there are many smaller hospitals and
hospital systems in Southern California that compete," Epstein said.
Comment: Although, with guaranteed issue, health plans will no
longer be able to adjust premiums based on the health status of the
applicant, they will still be able to adjust them through community
rating.
Insurers can charge higher premiums in communities that
have a less healthy population enrolled in their plans. But market
forces also play a major role. In communities in which physicians and
hospitals have greater market clout, they can demand higher payment
rates when contracting to become part of the insurers' networks. The
differences can be very significant.
This is yet one more example of why it is irrational
to try to fund our health care system through a specific premium
assigned to each individual or family and administered by an expensive
administrative intermediary - a private insurer.
As many other studies have shown, the private
insurers have not been very effective in controlling health care
spending anyway. Why would we want to keep them in charge?
We
should replace these wasteful, ineffective intermediaries with a
publicly-administered single payer program. Payments would be based on
legitimate costs with fair margins, using global budgeting and various
forms of administered pricing or capitation. Our public stewards would
sit down with the health care professionals and administrators and see
what they really need, and pay that - no more, no less.
For those who don't believe that would work, simply
look at the other OECD nations. They all have government oversight
through some form of social insurance and are able to provide health
care to everyone at an average of half the price that we are paying for a
system that leaves tens of millions out.
Who says this isn't feasible? It's the status quo under Obamacare that isn't feasible.
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