The Obama administration’s Affordable Care Act may end up hurting a portion of those it was intended to help.
As the ACA takes effect, geography will play a much larger role in the rates Americans, especially Californians, pay for health insurance.
Under the ACA, insurance agencies cannot factor gender or a patient’s pre-existing conditions to set premiums, and the use of age as a means to set premiums will be restricted. At first glance, this may sound great and fair but its consequences are not.
These restrictions leave geography as one of the only factors insurers can use to set premiums, which means you could end up paying more than others simply because of where you live.
Insurers will be able to raise rates in areas solely because they are deemed less healthy or more dangerous. This may include but will not be limited to cities with high crime rates, dangerous terrain and low income areas.
Wait a minute, wasn’t the ACA supposed to help people with low income?
Currently, the federal government warns that states should not have more than seven designated geographic regions to prevent insurers from charging unfair rates. However, there is no law against designating more than seven regions.
To accommodate California’s diversity and the changes in premium designation, the state plans to designate 19 geographic regions.
That’s 12 regions more than suggested, making it abhorrently easy for insurers to charge drastically different rates in areas very close to each other.
One health plan even “rated the difference between east and west Los Angeles County by a factor of 50 percent,” according to Chron.com. This means in one side of the county it would be much cheaper to obtain insurance than the other.
To use geography to determine how expensive a family’s health care will be is completely unfair. It isn’t a secret that lower income areas often have higher crime rates. Making it so easy for insurers to capitalize on those areas could mean many low income families remain without health insurance.
Proponents of the plan deny any such possibility of higher insurance for higher crime rates, ignoring the fact that auto insurance rates are also often higher in high-risk areas.
With auto insurance being the only relatable example, it’s easy to see why many are afraid that the area they live could be designated as one of the more expensive areas to insure.
Keep in mind, however, that most low income families don’t have much choice as to where they live. This means that insurance prices may still favor higher income families.
Somewhere, a middle ground needs to be found. Geography should not play the largest role in determining a family’s insurance premiums.
If it does, insurers will have to give areas deemed high-risk some slack to prove that health insurance will not end up like auto insurance.