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Insurance Marketplace Prices Vary Regarding Location


Here's a reality - of the individual insurance plans being offered under the Affordable Care Act, the price you pay for the same coverage may vary tremendously, depending on where you live. In fact, you may well be paying three times as much for the same insurance as somebody else in a different part of the country.

We know this thanks to Jordan Rau. He's a senior correspondent for Kaiser Health News, and he ran the numbers. He's in our studios; welcome to the program.


INSKEEP: Three times as much as in different parts of the country - what are some examples of what you're talking about?

RAU: Well, your best deal is in Minneapolis and St. Paul, where if you are 40 years old, you're going to be paying about $154 a month for insurance. And if you're in Vail or Aspen, you're going to be paying about $480 a month for the same type of insurance, the same silver plan.

INSKEEP: OK. Let's talk this through here. Why would some areas be more expensive than others?

RAU: That's a great question, and it hasn't been fully determined. But a lot of the expensive areas tend to be rural, isolated places where there's just one, big hospital system in the area.

INSKEEP: Whoa. Whoa. Whoa. Because I would've guessed, if you said some parts of the country are more expensive than others, I would say well, naturally - it's true with everything, it's true with housing, it's true with groceries. It's more expensive in New York; it's more expensive in San Francisco. But that's not what you're saying is happening here with health insurance.

RAU: No. In fact, in Manhattan and in San Francisco and in some of the really big, pricey places where the real estate will set you way back, your health insurance is not going to set you way back whereas if you're in Southwest Georgia, everything else in the area is cheap but your insurance is among the highest in the country. And the reason for that is because there's just one, big hospital system there named Phoebe Putney. It controls almost the whole market, and they can pretty much charge what they want to.

INSKEEP: So you just mentioned that there's a limited number of health care providers; that raises costs. Then there's the matter of the insurance companies. Are there fewer insurance companies that want to play in some of these areas? Is that part of the reason that they're more expensive?

RAU: That is, definitely, although it's hard to determine cause and effect. In those areas you have far fewer than in a place like Atlanta or any of the big cities, where you have a lot of insurers competing against each other. And in the big cities, you also have a lot of hospital systems competing against each other.

INSKEEP: Are some areas, statistically speaking, just less healthy than other areas - and that affects the premiums that people have to pay in that area?

RAU: It does. But I was surprised, when we looked at the top and the bottom 10 areas, how little it matters. Now - and for instance, Eastern Tennessee has got a lot of problems - heavy tobacco use, obesity. One hospital CEO I talked to referred to it as the belt buckle in the Stroke Belt. But their premiums are among the lowest in the nation. Well, why is that? There's - in Chattanooga, there's different systems - the Catholic system, a for-profit system and a public system. And the insurers basically had everyone bid it out and pick the lowest system. So they've got a low-cost deal there.

INSKEEP: OK. We've been talking about health care costs; let's talk about health care quality. Is there any connection between the incredible variety of prices people are paying and the quality of care that they get? The people who are paying more, are they getting more for their money?

RAU: Well, you're not going to get some of the really high-profile, prestigious places. If you're in Minnesota and you want the Mayo Clinic in your network, you're going to be paying a lot more. But the systems that are in there are very good hospitals and a lot of good doctors.

INSKEEP: Some places where the prices are low for the silver plan - which is not everything, but a pretty good plan, they still manage to get pretty good coverage for very low prices.

RAU: Yeah. There's a lot of university hospitals that are in these networks. There's a lot of major doctors' clinics. I mean, you're doing fine, if that's what you want.

INSKEEP: Is it possible that some of the places where premiums are very high, that people are not getting very good coverage?

RAU: Yes. It's certainly possible because if there is just one hospital system there, well, if it's good or if it's not good, it doesn't matter. And in fact, that hospital system is going to have less opportunity to compete against other ones. so they have less outside pressure to improve.

INSKEEP: I'm wondering what Obama administration officials, or lawmakers, are thinking about what you're reporting here. Is this just a reality that you can't do anything about?

RAU: Well, it's the limits to how much was written into the law to control costs. And that's been well-acknowledged - that this law does not have a lot of strong cost-control elements. And in order for them to have done more, they would've had to do things that would've alienated doctors and the hospitals and the other medical practitioners. And they didn't do that, in large part, because they couldn't afford to alienate those political entities from supporting the law.

INSKEEP: Jordan Rau, of Kaiser Health News, thanks very much.

RAU: Thanks for having me.


INSKEEP: It's NPR News. Transcript provided by NPR, Copyright NPR.