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Obamacare Premium Hikes to Hit Rural Americans the Hardest

Within states, rural areas often face higher premiums than their urban counterparts. Yet two of the most rural states saw some of the lowest premium increases this year.

(AP/Pablo Martinez Monsivais)
It was hard to miss the news from the U.S. Department of Health and Human Services last week: Health-care premiums on the marketplace are rising by an average of 25 percent for the open enrollment season that starts today.

Health experts have been bracing for a sharp hike in premiums for months now, ever since most major insurers announced they would offer fewer or no plans on the exchanges, creating monopolies in roughly a third of the country.

But not everywhere will actually see a 25 percent hike. While some states are witnessing skyrocketing rates, others are seeing modest increases and a few counties are even seeing cheaper premiums than last year.

Regardless of what state someone lives in, though, rural Americans are facing fewer options and thus higher premiums than their urban counterparts.

In Colorado, for example, premiums are jumping 20 percent -- a change that Joe Hanel of the Colorado Health Institute attributes to higher rates in the rural part of the state because of its older, perhaps sicker population. Couple an older population with fewer providers and hospitals, and prices are inevitably going to jump, he said.

“Price of care and quantity of providers really drives what people have to pay,” said Hanel.

A standard bronze plan in Denver will cost $230 this year before subsidies, but for a resident in rural Mesa County, that same bronze plan will run $424 before subsidies. (It should be noted, however, that most people won't actually be impacted by rising premiums because about 85 percent of marketplace participants receive financial assistance from the federal government.)

The story is similar in Oklahoma.

The state will have a 76 percent increase in premiums, one of the highest in the nation. That could be attributed to any number of reasons: Rates that were set too low in the first place, an expensive pool of people using the marketplace and the fact that the state has just one carrier. 

But Mike Rhoads, a spokesman with the state's insurance department, also pins the rate hike to the fact that Oklahoma is a largely rural state. Insurance companies have been losing money in the exchanges, so to protect themselves, "they narrow their networks. And rural areas are catching the brunt of that," he said.

Ironically, North Dakota and Wyoming -- two very rural states -- had some of the lowest premium increases this year at 7 percent. Denise Burke, with the Wyoming Department of Insurance, said that could be attributed to proper rate-setting.

“We were the outliers a few years ago with the highest premiums in the nation, but now we’re moving more towards the center,” she said.

She also noted that, unlike most states, Wyoming doesn’t have any urban centers to compete with for price and providers.

“We’re a rural state across the board, there’s really no distinction from one county to the other when it comes to population," she said. "We’re always going to be an expensive state -- we just don’t have the population centers to make us financially viable."

While prices seem to be increasing in rural areas, that might not prevent rural Americans from getting plans through the state marketplaces. According to the U.S. Department of Health and Human Services, 90 percent of rural Americans qualify for a subsidy. And in 2016, 1 in 5 plans purchased on the marketplace was from someone in a rural area.

*CORRECTION: A previous version of this story misspelled Mike Rhoads' name. 

Mattie covers all things health for Governing.

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