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Health Insurance & Affordable Care Act

Lack of Competition, High Rates in Alabama

WebMD News from Kaiser Health News

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.

Beyond Alabama 

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."

Aside from ads urging people to enroll, BlueCross, an independent nonprofit, is saying little except that existing plans won't comply with the law in 2014 and that new requirements such as accepting consumers with medical problems are affecting premiums. CEO Terry Kellogg declined to grant an interview.

KHN's Examination Of Cancellation Letters

Kaiser Health News reviewed nine cancellation letters sent to largely healthy consumers from ages 22 to 63 across the state who buy health insurance directly from Alabama BlueCross. The company offered new plans at price increases ranging from 38 percent to 100 percent - before government subsidies are factored in.

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