Lack of Competition, High Rates in Alabama
By Jay Hancock
Fri, Nov 1 2013
MONTGOMERY, Ala. -- The letters landed in early October, cancelling health plans for thousands of BlueCross BlueShield of Alabama members and offering to enroll them in new coverage at often substantially higher cost.
"I thought my plan might go up like $30. I didn't know it was going to [nearly] double" to $478 a month, said Merry Hardy, who is self-employed and lives in Alexander City, in the middle of the state. "I'm thinking, please God, let Obamacare fail."
BlueCross, like Hardy, blames the Affordable Care Act, which it says disallows current, less expensive insurance for about 80,000 of its Alabama customers starting next year.
But others see insurance market dynamics as a big part of the problem. Because it covers about 90 percent of the Alabama individuals and families who buy policies directly, BlueCross faces little competition and few reasons to lower prices, critics say.
In the Huntsville area, where only BlueCross and Humana offer plans through the federal government's online exchange, the least expensive, medium-level "silver" policy for a 50-year-old costs $352 a month. A hundred miles north in Nashville, Tenn., where four insurers compete, the least expensive silver policy costs $253, or 28 percent less. These prices don’t take into account the federal tax credit subsidy many buyers will receive.
People in other states face similar situations. Single companies dominate individual insurance in New Hampshire, Arkansas, North Carolina and elsewhere, leaving few options for consumers in the health act's online marketplaces.
An analysis of the three dozen states relying on the federal marketplace shows that, on average, the least expensive silver plan costs 34 percent more in regions with one or two insurers selling through the marketplace than in regions with at least eight insurers.
The cancellation letters have hardened opinion against the health overhaul in a state where barely one voter in three cast a 2012 ballot for President Barack Obama.
"We're doing a good thing by getting people enrolled in affordable health coverage and it's a shame that other people are hearing their premiums are going up," said Lauren Banks, who is overseeing AIDS Alabama’s program to sign people up for the law's new coverage options. "It's definitely hurting our efforts."