Now that the Affordable Care Act is the law, we’re starting to see the reality of what its implementation looks like around the country.
Depending on where you live, you may be paying a substantially higher or lower premium for your plan. That seems to make sense—you'd expect people in a wealthier community to pay higher premiums, and a more moderate or low-income community to come with a lower premiums.
Except, according to new analysis from Dante Chinni, it's actually not working out that way.
Dante is the director of the American Communities Project at American University, and he recently looked at what Americans living in different kinds of communities across the U.S. are paying for their monthly health care premiums.
"You might expect that if you lived in a wealthier area, you would pay a bit more for insurance because the cost of living is higher and you get paid more," says Chinni. "The problem is that's not the way the private insurance system works. You get to more rural communities and you have a smaller number of providers, and often times you have older populations. So the pool you're put in with in those places, the premiums tend to be higher and you make less money. So actually it is often more expensive to buy insurance if you live in a rural locale and an older locale than in it is if you live in a big city where you make more money."
Chinni says that the old health insurance system was built on these disparities—simply put, there are inherent differences in the number of entities that offer policies in different places. He says that the Affordable Care Act was designed so it wouldn't disrupt the health insurance system too much, so the law was essentially laid on top of the existing infrastructure.
"The problem is you're forcing people in places to buy insurance under this old system that was full of these disparities, and it's going to create some problems," says Chinni. "We're still very early in the roll out of this law and ultimately what it's going to mean. But when you look at these numbers now, the disparities are not what you'd want to see."
Chinni says that one area where large disparities can be seen is in the African-American South (see communities map below). In this community area, the lowest premium a 21-year-old might pay for a mid-level "Silver Plan" would be around $231 per month—yet the average median household income is $35,000 a year. When looking at a large city, where the average median income is about $20,000 higher at $55,000 a year, the same plan is about $185. Chinni says that this is a real problem that isn't specific to just one area of the country.
"Native American communities have the highest average lowest premium—$234 a month is what they're talking about paying, and the average median household income in those places is $40,000. But in many of those counties [income] is much, much lower," he says. "The problem with a lot of those communities is a lot of people don't have insurance, there are much high rates of obesity, there's much higher body mass index on average, and problems with alcoholism a lot of times in those communities. That's why the rates are so much higher to begin with, and now the people in those communities are being forced to buy insurance—it's a really interesting quandary."
Chinni says that the numbers work the other way as well—the data shows that insurance rates were lowest in Mormon communities, with a 21-year-old with the same mid-level plan paying about $174 a month. Chinni says this is because Mormon communities tend to be young—making the larger insurance pool younger and therefore lowering premiums. Additionally, Mormon communities have low rates of smoking and alcohol consumption, which also drives down health insurance rates.
"Clean living actually pays dividends—or even living near people who are living clean pays dividends," he says. "The thing that's curious is that these places that are kind of more predisposed maybe to like the ACA in the first place are the ones that are going to do the best under this when you look at these premiums. The places that are more predisposed to dislike the ACA—particularly when get out to counties that we call working class country or Evangelical hubs—they're already predisposed to dislike the plan once they start paying out premiums under this."