People in much of Minnesota, northwestern Pennsylvania and Tucson, Ariz., are getting the best bargains from the health care law’s new insurance marketplaces: premiums half the price or less than what insurers in the country’s most expensive places are charging.
The 10 regions with the lowest premiums in the nation also include Salt Lake City, all of Hawaii and eastern Tennessee. This ranking is based on the lowest cost of a “silver” plan, the mid-range plan most consumers are choosing.
The cheapest cost regions tend to have robust competition between hospitals and doctors, allowing insurers to wangle lower rates. Many doctors work on salary in these regions rather than being paid by procedure, weakening the financial incentive to perform more procedures.
Health systems focus on organizing patient care rather than let specialists work detached from each other.
The lowest monthly silver premium in the country is offered in the Minneapolis-St. Paul region, where a 40-year-old will pay $154 a month for a PreferredOne plan. Just across the Wisconsin border, that same level plan -- but with a different insurer and other doctors and hospitals -- costs nearly three times as much.
Insurers were able to negotiate low rates with hospitals and doctors in the Twin Cities because they could choose among four major health care systems. Both Fairview Health Services, which runs the University of Minnesota Medical Center and is included in the lowest plan’s network, and Allina Health, the largest system in the Twin Cities and operator of Abbott Northwestern Hospital, have been in the vanguard of experimenting with more efficient ways to care for patients, such as accountable care organizations and putting doctors on salary, said Stephen Parente, a health economist at the University of Minnesota.
“Minnesota has had years if not decades of experience with managed care,” he said.
Most counties in central and northern Minnesota also have premiums that are among the lowest in the nation. Michael Rothman, commissioner of Minnesota’s Department of Commerce, which regulates insurers, said the state moved early to enact cost-control measures such as restricting how much insurers can spend on things other than medical care and requiring annual insurance rates to go through state review.
Several of the other lowest cost areas, including the Salt Lake City region and Hawaii, also have major hospitals and health systems that have been at the forefront of integrated care, in which rules, payment methods and the bureaucracy are designed to foster collaboration among primary care doctors, specialists and nurses. But people who buy the cheapest Salt Lake City plan will not have access to Intermountain Healthcare, the most prestigious system in the area.
Innovative hospital practices do not guarantee cheap insurance. In Rochester, Minn., the home of the Mayo Clinic in the southeastern portion of the state, the lowest priced silver premium is $305, which is above the national median. Although Mayo’s doctors are salaried and the system practices integrated care, its prices are higher than in Minneapolis, said Dannette Coleman, an executive at Medica, the insurer that offers the lowest priced silver plan in that area. Given Mayo’s extensive network of clinics in the region, “you really cannot be in that area in that state if you don’t have the Mayo Clinic Health System in your network,” she said. Mayo officials did not respond to a request for comment.
In eastern Tennessee, cheap premiums are notable because many residents face chronic health issues. Obesity and smoking are common. “We’re the buckle of the stroke belt,” said Kevin Spiegel, president of Erlanger Health System, which is included in the network of the least expensive silver plan in Chattanooga. Blue Cross and Blue Shield of Tennessee was able to offer the lowest silver premiums in the Knoxville and Chattanooga regions — $180 a month for a 40-year-old — by cutting deals with just one hospital system and their doctors in each region, said Henry Smith, the insurer’s chief marketing officer.
“There are competing systems within those two regions to price against,” Smith said. These lowest premium plans are “the narrowest network we have by far.”
Likewise, in western Pennsylvania, Highmark was able to offer the low premium--$164 for a 40-year-old—by omitting nine hospitals and about 3,000 doctors who charge higher prices, according to spokeswoman Kristin Ash. Consumers wanting a wider network will have to pay Highmark 38 percent more a month.
These competitive markets are quite different than in southwest Georgia, the second most expensive region in the country. Blue Cross Blue Shield of Georgia had no choice but to include in its network the Phoebe Putney Health System, which controls 86 percent of the market. The lowest premium in southwest Georgia is $461, two and a half times the rate in Chattanooga.
The 10 least expensive regions were determined by the monthly silver premiums for a 40-year-old person. The list is based on rates listed in federal and state insurance marketplaces and data compiled by Kaiser Family Foundation researchers. (KHN is an editorially independent program of the foundation.) Cynthia Cox, a foundation analyst, said the cheapest silver plan cost less than $259 a month in half of the regional insurance markets.
Here are the least expensive areas:
- $154: Minneapolis-St. Paul. Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, Sherburne and Washington counties.
- $164: Pittsburgh and Northwestern Pennsylvania. Allegheny, Armstrong, Beaver, Butler, Crawford, Erie, Fayette, Greene, Indiana, Lawrence, McKean, Mercer, Warren, Washington and Westmoreland counties.
- $166: Middle Minnesota. Benton, Stearns and Wright counties.
- $167: Tucson, Ariz. Pima County.
- $171: Northwestern Minnesota. Clearwater, Kittson, Mahnomen, Marshall, Norman, Pennington, Polk and Red Lake counties.
- $173: Salt Lake City. Davis and Salt Lake counties.
- $176: Hawaii.
- $180: Knoxville, Tenn. Anderson, Blount, Campbell, Claiborne, Cocke, Grainger, Hamblen, Jefferson, Knox, Loudon, Monroe, Morgan, Roane, Scott, Sevier & Union.
- $180: Western and North Central Minnesota. Aitkin, Becker, Beltrami, Big Stone, Cass, Chippewa, Clay, Crow Wing, Douglas, Grant, Hubbard, Isanti, Kanabec, Kandiyohi, Lac qui Parle, Lyon, McLeod, Meeker, Mille Lacs, Morrison, Otter Tail, Pine, Pope, Renville, Roseau, Sibley, Stevens, Swift, Todd, Traverse, Wadena Wilkin and Yellow Medicine counties. In Chisago County, the lowest premium is $162.
- $181: Chattanooga, Tenn. Bledsoe, Bradley, Franklin, Grundy, Hamilton, Marion, McMinn, Meigs, Polk, Rhea and Sequatchie counties.
The rankings stay the same no matter the age or family size. However, Vermont and New York do not allow insurers to charge more to older people and less to young ones. Therefore, some older consumers in those states may find their premiums are less expensive than people of the same age in these cheapest regions.
The list of the 10 most expensive regions can be found here.