AP Analysis: Obamacare consumers face fewer choices next year

A new analysis by the Associated Press and Avalere Health finds that Obamacare consumers will have fewer choices next year than at any time in the health law’s history. From the AP:

The analysis by AP and consulting firm Avalere Health found that about one-third of U.S. counties will have only one health marketplace insurer next year. That’s more than 1,000 counties in 26 states — roughly double the number of counties in 2014, the first year of coverage through the program…

Five states — Alaska, Alabama, Oklahoma, South Carolina and Wyoming — have one participating insurer across their entire jurisdictions. Only Wyoming had faced that predicament this year.

Another eight states — Arizona, Florida, Georgia, Missouri, Mississippi, North Carolina, Nevada and Tennessee— have only one participating insurer in a majority of counties.

While the huge increase in premiums (22% nationwide) is getting most of the media attention, the lack of competition in many markets may be a bigger problem.  The AP relates the story of one family in Phoenix, Arizona which is looking at a monthly insurance payment that exceeds their mortgage:

In Phoenix, Ryan and Nicole Robinson are at the epicenter of the health law’s latest troubles. Maricopa County has seen the most insurers bail out, and premiums for a benchmark plan are spiking 145 percent next year, beyond any other major market on HealthCare.gov.

Ryan Robinson, who works in sales for an out-of-state health care company, said the family’s premium will go from $821 to $1,489. It’s more than their mortgage and they don’t qualify for an income-based subsidy.

The Robinsons have a daughter who needs special medication that costs $5,000 a month. Their new plan doesn’t seem to cover it and there are no competing plans being offered. Can they get an exception? Will they borrow money? Move? It’s just one example of how the pull back by insurers impacts people.

The Obama administration is betting that the big price increases this year are a one-time correction. However, there are millions of families like the Robinsons who are buying Obamacare plans without subsidies. Those who get hit with the big increase this year are more likely to drop out next year. Maybe not the Robinsons who need that expensive medicine, but people who didn’t really use any services above their deductible last year will be feeling pretty unhappy about those price hikes.

And that sort of individual calculation, multiplied tens of thousands of times, shifts the balance of healthy and unhealthy people in the risk pool. As it shifts, insurers need to keep raising premiums to cover the cost of the sicker than average customers who remain. If this cycle keeps repeating you have the death spiral we’ve been talking about for years. If it’s going to happen we could see it next year in lower than expected enrollment figures, ongoing losses among insurers and more companies deciding to back out to avoid those losses.

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