Dearth of Rural Plans Is Nothing New

ACA controversy aside, insurers have often avoided the countryside

The fact that residents in more and more rural counties will find themselves without an insurer next year seems to bolster arguments about the structural unfeasibility of the ACA. Insurers have been leaving the exchanges, citing the uncertainty about just what will replace Obamacare and whether that replacement will offer subsidies to those health plans serving older and sicker populations. There’s also concern about the future of the individual mandate, which spurs some younger people into getting coverage and thereby broadening the risk pool.

But as The New York Times reports, rural areas have always been something of a tundra when it comes to insurer presence. As the Times notes, “the large for-profit insurers have always been reluctant to offer coverage in sparsely populated areas because there are simply not enough potential customers to make it worth their while. If too many of those customers need expensive medical care, there are too few healthy customers to spread those costs around.”

In addition, insurers have more difficulty developing physician networks and find themselves at a disadvantage when negotiating with hospitals and large physician organizations that are essentially the only game in the village.

“And once a hospital and insurer have struck a deal, it can be harder for new insurers to enter the market on favorable terms, since there aren’t competing hospitals to use for negotiating leverage,” the Times reports.

Sources: The New York Times; June 29, 2017