For most, the second-lowest Silver plan comes in at around $300 per month +/- $50. Alaska is the biggest outlier but that is unsurprising given how few people in Alaska and the generally higher cost of living there. Significantly below that comes North Carolina. Then Arizona is the only other state where the average is over $500/month. There’s a cluster of mostly smaller states around $450/month +/- $50, then suddenly a huge cliff and the majority at around $300/month +/- $50.
Why the huge disparity in rates? In some cases it’s obvious why — it’s in states with a small risk pool and few insurers. But then there are states like Arizona and North Carolina, where I have no reasonable explanation why they’re so expensive because both states have a fairly large population and thus a fairly large risk pool. All I can guess is that the risk pool is older and sicker there. But why is Arizona twice as expensive as Nevada, which is right next door and has a similar Republican government and similar population and access to health care issues? It makes no sense. Unless it’s because Arizona and North Carolina happened to have a lot of people with expensive medical conditions suddenly need care — I just found out that the reinsurance provision of the ACA, which allowed health insurers to put certain people into a nationwide high-risk pool, expires for 2017. Which could, I suppose, explain it if a few hundred people came down with condition that cost more than $1M to treat in a county that has only 120,000 rate-payers on the exchange like Maricopa County, AZ.
Something is clearly wrong with the whole marketplace concept in those states with premiums above $500 or which have only a single insurer participating in the Healthcare Marketplace. What happens if that one insurer decides to stop issuing policies? Nobody knows, because the ACA never envisioned such a thing, since it was written by the Heritage Foundation back in the early 1990’s and the Heritage Foundation is devoted to the notion that magic marketplace fairy dust fixes all problems. Luckily there *is* one provision in the ACA that states can fall back upon, if they have a state government willing to do so: they can apply for an ACA exemption and either create their own insurance company and enroll it into the ACA marketplace, or simply go statewide single payer using the subsidy money plus Medicaid money plus health insurance premium money.
But if a state isn’t willing to go the exemption route? Well. Nobody knows. I guess people in those states who can’t get insurance through their employer simply can’t get insurance. Which is hardly what was envisioned.
As for fixes? First, we need to get that reinsurance pool back. As I’ve repeatedly explained, you need a *large* risk pool in order to get the average risk of a pool down to near what the incidence rate is of illnesses. If your pool isn’t large enough, you can blow the top off your pool and go into an adverse selection death spiral quite easily. We need a nationwide reinsurance pool for very expensive illnesses like leukemia or end-stage kidney or liver disease. Secondly, we need to do something about the deadbeats. Nearly half of the people who qualify for insurance on the Marketplace and have the income to afford insurance on the Marketplace are still uninsured. Doubling the size of the pools would help drastically.
But in the end, none of that’s going to fix health care costs, and health care costs, not any of these other factors, are what is driving rate hikes in *most* states (I say *most* because clearly there are outliers like Arizona where something else is happening). And given the way that the U.S. Constitution works, which prohibits us from just setting provider profit caps by decree the way the Ministry of Health does it in France, the only way to do it is via a national single-payer insurance company which has the oligopsony power to say “this is how much money you will get above your costs from us this year, period.” That’s the only way to pass Constitutional muster while getting the required savings. Will it happen? Not this year. Not next year even. But eventually, this HeritageRomneyBamacare system is going to collapse under its own weight, because it simply lacks the tools to get provider costs under control.
– Badtux the Healthcare Penguin