Some counties in the U.S. have almost 30 times more choices of health insurance plans than others do, a stark example of the lack of competition in many parts of the country as consumers try to shop for affordable coverage on the new federally run exchanges.
USA TODAY analyzed data from HealthCare.gov, the federal health insurance exchange selling plans for 34 of the states that didn't set up their own exchanges. The analysis clearly shows the impact of insurers' hesitancy to move into states where they aren't already doing business.
Insurance companies are being especially cautious during the first year rollout of the Affordable Care Act and are sticking to states and counties where they already have established networks of doctors and hospitals. That leaves consumers with few choices in many areas and may contribute to the slow sales on the glitch-ridden exchange.
"This is brand new and insurers are really risk averse," says Wendell Potter, a former spokesman for Cigna insurance, who is now an author and industry watchdog. "They don't know how the market will behave, so the for-profit companies in particular are going to be sitting this out. Shareholders have no patience for this kind of uncertainty."
Competition among health insurers varied widely county by county before the ACA, Department of Health and Human Services spokeswoman Joanne Peters says. "That's not something the law is going to change overnight," she says.
About 95% of consumers will have a choice of two or more health insurance issuers, "and often many more," says Peters. Last year, just one or two different insurance companies dominated the individual insurance market in most states, the White House said in May. One insurer covered more than 50% of all enrollees in the individual insurance market in 29 states.
State and county competition and coverage:
• Florida and Arizona stand out as hotbeds of competition, falling into a small category of states with several counties boasting 80 to 170 plans. Several insurers have already been selling Medicare Advantage plans in Arizona and Florida, making the states logical places for them to sell aggressively on the exchanges.
• Alabama, Mississippi and Maine have just two to 21 plan choices except for a small area of central Alabama where there are up to 30 available. Doctors tend to avoid smaller markets, which makes it harder for insurers to attract enough physicians to their networks to make plans competitive, Potter says. He worries that the high rate of uninsured residents in rural areas may not "change a whole lot in the new market."
But Kevin Lucia, a senior research fellow at Georgetown University's Center for Health Insurance Reforms, says even though Blue Cross Blue Shield has well over 90% of the market in Alabama, its rates are fairly competitive.
• Wisconsin residents have numerous options in eastern counties and fewer in the more rural western half of the state.
• Some states have no top-level platinum plans except in certain areas, such as Cincinnati, Northern Virginia, Salt Lake City, Chicago and the Peoria-Galesburg region. Alabama — a poor state with poor health rankings — has universal access to a platinum plan, but states such as Indiana and Maine don't have any. Platinum plans, which cover 90% of eligible medical expenses, also have the highest premiums, ranging from $196 to $497 a month for a 27-year-old individual's plan.
• Residents of Northern states tend to have more choices than those in Southern states, with the exception of Maine and New Hampshire. Indiana is evenly divided along those lines, with fewer choices in the southern, more rural region and more in the industrial, northern part of the state.
• Some unusual differences appear. Everyone in North Carolina, for example, has access to at least one platinum plan, but no one does in relatively affluent areas around Dallas-Fort Worth and St. Louis.
While some say too many plan choices could overwhelm consumers, others say having more choice is always better. Even if consumers need help navigating multiple choices, options provide "more pricing variability and more benefits variability," says Bryce Williams, managing director for consulting firm Towers Watson Exchange Solutions, which operates private health insurance exchanges for businesses.
Along with platinum, exchanges also typically offer options in three different metal categories. All prices could be significantly reduced by subsidies and other financial assistance available to people earning up to four times the federal poverty limit, or about $44,000 a year. Before subsidies, a 27-year-old would pay $135 to $335 a month for the least expensive bronze plan, a silver plan would cost that person $185 to $400 and a gold plan would range from $222 to $504, according to USA TODAY's review of HealthCare.gov's pricing.
Prices can vary widely depending on competition, however, which is why states running their own exchanges are trying to find ways to get more insurers to participate. Maryland requires insurers above a certain size to participate in their exchange if they already do business in the state. Colorado, New York and Oregon are trying waiting periods that would keep insurers out for a certain period of time after 2014 if they don't sell plans next year.
Expanding into states where they don't have contracts with doctors and hospitals is costly for insurers, Williams says. When insurance companies don't have established networks of health care providers, they often rent the networks used by other insurers. That means they have to charge prices others negotiated, plus an additional fee that makes the process inefficient and costly, Williams says.
Optima Health, a Virginia Beach-based insurer, is just selling HMO plans on the exchange and only in Virginia. It only has an established network of doctors in the state and wants to see what consumers are buying on the exchange before it expands, spokesman Bobby Pearson says.
"This is going to be a trial year to see what happens," Pearson says. "You may see a broader range of options going forward."
Optima is participating in all parts of the state except for part of the more urban Northern Virginia. John Holahan, a fellow at the Urban Institute who has been studying health care reform, says Optima — which had been a Medicaid provider — is helping drive down insurance costs in rural areas of the state by competing aggressively with insurer Anthem.
The paltry selection of plans in some states and counties covered by the federal exchange could lead to sticker shock for many of the working poor who aren't eligible for much or any financial help, but do need insurance, experts say. And it could undermine the idea that the Affordable Care Act will make insurance — affordable.
"We all wanted there to be a competitive dynamic," Williams says. "Whether or not it gets more affordable remains to be seen."
Depending on the state, "reform is likely to look quite different," Holahan says. "In some states, it's going to be working and in some states it could be a mess."