Less insurer competition, more health issues raise health insurance rates in W.Va. 

A lack of competition in West Virginia's 2013-14 Affordable Care Act health insurance marketplace contributed to higher average premiums for consumers than in states with more participating insurers, according to a new study.

The study, conducted by the Robert Wood Johnson Foundation, is one in a series focused on monitoring and tracking the implementation of the ACA. The report focused on 10 states, and concluded that four -- Alabama, Arkansas, Rhode Island and West Virginia -- had very little competition in the first year of their marketplaces, and were dominated by Blue Cross Blue Shield carriers with strong pre-existing networks of coverage.

The study found that in its first year, Highmark West Virginia, a BCBS carrier and the only insurer to opt into the marketplace in the state, established premiums for the average 27 year old at between $215 and $250 per month, and between $366 and $426 for the average 50 year old. For the average 45 year old, the study found the average premium in Charleston was $325 -- the third-highest average rate among states included in the report, after New York's average of $359 for New York City residents, and an average of $331 for residents of Little Rock, Arkansas.

According to Fred Earley, president of Highmark WV, the insurer priced its coverage competitively when entering the marketplace, not knowing that it would not face competitors in the first year. Highmark's pricing for next year's marketplace will be similar, he said.

"We tried to get the best estimate we could around the impact of the changes in the rating regulations, around the age being much more narrow, around the fact that there wouldn't be any type of health screening statuses associated with them other than tobacco-use screenings," he said. "We did the best we could to estimate what would be the appropriate rate." 

The Kentucky Health Cooperative has entered the West Virginia marketplace and is set to establish a new cooperative in time for the next open enrollment period.

More than a lack of competition, Earley said pricing for insurance premiums in West Virginia relies heavily on determining the relative health of those the company insures, and many indicators of poor health, including obesity rates, smoking rates and physical inactivity, are prevalent in West Virginia: One in three adults is obese, 31 percent report low levels of physical activity, and more than 400,000 West Virginians smoke, according to the United Health Foundation. 

"The rates in West Virginia have much more to do with the underlying costs of healthcare services within the particular health demographics of the state," Earley said. "Whether it's obesity or diabetes or congestive heart failure or other myriad health issues, we tend to be at or near the top in most of those categories. As far as the cost of services, there's a direct proportion associated with that."

The report also notes that West Virginia has no "narrow networks" -- networks that encourage hospitals to compromise in pricing with insurers, and in exchange, an insurer excludes competing hospitals from its network. Narrow networks can allow for lower pricing, but are difficult to achieve in West Virginia, where there are many smaller hospitals that do not directly compete with each other, the report notes.

"In the West Virginia market, there are very limited opportunities to structure narrower provider networks given the number of markets where a hospital or hospital system controls the delivery of services," Earley said. 

Perry Bryant, executive director of West Virginians for Affordable Health Care, said the study gave good insight into the role of competition in shaping premiums under the ACA, but other factors -- including the income-based subsidies available through the health-care law -- must be considered in order to understand the true cost of purchasing a plan.

Individuals who earned up to 400 percent of the federal poverty level are eligible for subsidies under the ACA, and the average value of the subsidies equals $4,000 per person per year, according to Renate Pore, the health policy director for WVAHC. 

"I think competition does have an impact. If Highmark had known they were going to be the only carrier in the marketplace this year, I think the premiums would have been higher, but the underlying health-care costs drive premiums," Bryant said. "You're covering a lot of older, less healthy people, and there's no way to get around that."

Reach Lydia Nuzum at lydia.nuzum@wvgazette.com, 304-348-5189 or follow @lydianuzum on Twitter. 

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