In California and across the nation, geography is expected to play a larger role in the cost of health insurance under the Affordable Care Act, the AP/Sacramento Bee reports.
Under the ACA, insurers no longer can deny coverage based on pre-existing conditions or place lifetime limits on medical care. They also cannot charge older policyholders more than three times what younger enrollees pay.
Observers say that these restrictions leave geography as one of the only factors that insurers can use to adjust premiums.
The federal government has proposed that states avoid creating more than seven geographic rating areas to prevent insurers from charging excessively high rates in certain regions. However, California's health exchange has proposed using 19 rate-setting regions to accommodate the state's size and diversity.
Charles Bacchi -- executive vice president of the California Association of Health Plans -- said that health plans operating in the state currently use nine rating regions.
Comments Supporting Additional Calif. Regions
Diana Dooley -- secretary of the state Health and Human Services Agency -- said that the federal recommendation for seven rating regions is "completely unrealistic for California."
She said, "We're going to be making adjustments to this, certainly in the first few years and maybe over the course of the decade," adding, "When we see how this performs after a year or two, we may come back and make changes to those rating regions."
Health insurers in California argue that 19 rate-setting regions for plans in the exchange are necessary because premiums should reflect underlying costs of care in various areas.
Meanwhile, certain health policy experts also support the plan to implement 19 rating regions, saying that different areas of the state have different disease risks and access to treatment.
Concerns With Additional Calif. Regions
However, consumer advocates are concerned that smaller rate-setting regions will allow insurers to hike rates in areas that are:
- Rural; or
- Less healthy.
Marian Mulkey -- director of the California HealthCare Foundation's Health Reform and Public Programs Initiative -- said the state would benefit from having both healthy individuals and less healthy individuals in various regions. CHCF publishes California Healthline (AP/Sacramento Bee, 2/16).
On Saturday, the AP/KPCC's "KPCC News" reported on the use of geography in determining health premiums in California (Lin, "KPCC News," AP/KPCC, 2/16).