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Study States Exchange Coverage Will Cost More in Rural Areas

By John Reichard, CQ HealthBeat Editor

November 6, 2014 -- Rural areas are likely to see bigger premium hikes for the most popular health law exchange plans than big cities, according to a new study by the Urban Institute.

The analysis of 2015 premiums also found that in most rating areas, premiums either will drop for the type of plan studied or will increase less than five percent.

The study examined data from 17 states plus the District of Columbia. The areas were the first to review and approve rates for 2015 coverage sold in insurance marketplaces under the health law (PL 111-148, PL 111-152).

Many of the small increases or premium reductions in 2015 will occur in such cities as Baltimore, Cincinnati, Cleveland, Denver, Detroit, Minneapolis, New York City, Portland, Ore., Seattle and Washington, D.C., the study stated.

But rural counties in Tennessee will see a 21.4 percent increase in the average cost of silver plans, the most popular of the metal tiers of plans offered in exchanges, "Premiums will increase in the study's selected rural counties in Michigan by 6.7 percent, in New York by 7.9 percent, and in West Virginia by 9.0 percent," according to the study by John Holohan, Linda Blumberg, Erik Wengle, Megan McGrath and Emily Hayes.

People in many areas are going to have to switch carriers to pay the lowest rates for silver coverage. Of 39 rating regions, 26 will see a change from 2014 in the carriers offering the lowest silver premium.

The findings show that many of the lowest cost carriers in 2014 have fairly low premiums and believe that they can increase those rates, while other carriers are responding to competitive pressure in the marketplaces and will cut premiums in 2015. "This change is a desirable and direct outcome of market competition, but individuals will need to change plans to minimize their share of their premium payments," the study found.

Changing plans means braving a visit to the exchanges, where individuals will have to sign up for a new plan rather than be automatically reenrolled. But government and industry officials predict exchanges will be much easier to use in the upcoming enrollment period compared to their disastrous debut last fall.

People staying in their current plans will have to go to the exchange anyway to update their income-related information to calibrate their subsidies.

Price competition is driven by different insurers in different markets. Blue Cross Blue Shield plans "are highly competitive and will remain so in Connecticut, Delaware, Maine, Maryland, Michigan, Tennessee, Virginia, West Virginia and Washington, D.C.," the study said. "They are less competitive in Colorado, Ohio, Minnesota, Montana, and New York."

Researchers added that Kaiser Permanente generally will have premium reductions or small hikes in 2015 and become more competitive in Colorado, Maryland, Virginia and Washington, D.C.


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