Each state has its own department of insurance that regulates the laws governing insurance in that state. This can lead to wide disparities between states, with premiums and coverage varying from one state to the next. Although The Affordable Care Act has helped to regulate some parts of the insurance industry, it also introduced new challenges. Now, states with their own health exchanges and expanded Medicaid coverage tend to have cheaper insurance than their neighbors who have not participated. Other factors also influence differences from one state to another.
Ten Top States
The states below have been chosen based on the number of participating insurance companies offering policies in the state, the cost of insurance, and the number of people who have obtained individual policies since The Affordable Care Act went into effect. Unless otherwise noted, all information has been sourced from the Kaiser Family Foundation study of marketplace enrollment figures, and two studies from The Heritage Foundation: one on the relative cost of insurance between all states and the other on the number of insurance companies participating in the state.
Colorado has a high insurance enrollment figure among its eligible population, according to the Kaiser study. It also traditionally has low insurance prices due to its reputation as an overall healthy state. Colorado is one of the few states whose insurance premiums noticeably decreased as a result of the Affordable Care Act, with premiums for individuals dropping by as much as 30%.
There are ten insurance companies participating in the Colorado insurance exchange.
2. New York
New York is one of the few states to see a significant decrease in premiums in the wake of the Affordable Care Act. The average cost of an individual policy fell by around 28%, and a family policy costs about 6.7% less than it did before the law went into effect. This is due in part to the high number of insurance companies participating in the state exchange.
With 16 participating providers, New York has the highest number for any state according to figures released by The Heritage Foundation.
3. Rhode Island
Rhode Island is another state where insurance premiums dropped as a result of the Affordable Care Act. The state has just two insurance companies participating in its exchange, but it has one of the highest enrollment numbers per capita in the country according to Kaiser.
Premiums have dropped by as much as 28% for individuals thanks to the new law. The state's exchange, HealthSource RI, provides ample information about the program and allows shoppers to contact a navigator to help them use the exchange. This may explain the high enrollment numbers in the state.
California was the first state to establish its own insurance exchange, and it has the highest number of enrollees in the country. Its success is due in part to a well-organized website that offers detailed plan information. It also has one of the highest numbers of insurance companies participating in its exchange, with 12 carriers offering individual policies.
Cost increases in the state were lower than many other states after ACA went into effect, with the average cost of a family policy rising by just 3.4% before subsidies were applied.
Massachusetts was ahead of the curve for insurance reform, and it's been running a system similar to the Affordable Care Act since 2006. It seamlessly integrated the new policies with its existing programs.
There are currently nine carriers participating in the state insurance exchange, and all pre-existing state programs continue to be in effect in the state.
Wisconsin has the second-highest number of participating insurance companies in its exchange, although not every plan is available in every county. Altogether, 13 insurers sell policies through Wisconsin's state exchange.
The average cost of premiums did rise in the state, but lower-income insureds have a greater variety of plans to choose from than before thanks to health subsidies and the laws regulating plan quality.
Washington has one of the highest insurance enrollment figures per capita in the country. This is due in part to the state's exchange site, which has experienced fewer technical problems than many other exchanges.
Seven insurance companies offer policies through the Washington exchange, and though premiums have gone up for many policy holders, the number of uninsured people now qualifying for Medicaid has greatly increased.
Florida opted to partner with the federal government to provide health insurance rather than establish a state exchange for individual policies. It has, however, established a discount exchange for other related health services, such as low-price dental plans and prescription discount cards, that gives additional benefits to state residents.
Eight insurance companies sell policies in Florida, and options may increase as the state discount exchange adds benefits and features.
Utah chose not to establish its own exchange for individual healthcare, instead deciding to default to the federal exchange. However, it does offer its own state-run exchange for small businesses, with six participants. This gives it an advantage over other states that offer fewer options to small business owners seeking insurance.
Vermont has the highest percentage of insurance exchange enrollment among its eligible population, thanks in large part to its well-run exchange site. It has a low number of participating insurance companies, however, and rates have increased more in this state than any other on the list.
Nevertheless, Vermont's state-run exchange does give it an advantage over states that have no similar resource and no Medicaid expansion.
Factors Behind Healthcare Costs and Quality
The cost of insurance depends substantially on the amount of competition an insurer has in an area, though it's not the only factor behind insurance costs. Insurance tends to cost more in areas where healthcare expenses are also high. As with health insurance costs, insurance prices tend to be highest along the East Coast, with the highest costs in the country localized to the District of Columbia.
Healthcare and insurance costs are affected by many factors:
- Population density: Highly populated areas will tend to have higher medical expenses due to a high demand for care.
- Population age: Aging communities will spend more on healthcare than areas with younger populations.
- Obesity: Communities where people are physically fit will pay less for healthcare than those who suffer from obesity, due to the number of obesity-related health issues that can arise.
- Availability of insurance: States with expanded Medicaid and local insurance exchanges offer more affordable coverage than areas without these benefits.
- Competition between insurers: Where multiple companies compete for market share, the cost of insurance will tend to be lower and the quality of coverage higher.
Geographic Cost Considerations
If you're looking at moving, the cost and quality of health insurance in that state is certainly a factor to consider. Bear in mind that these costs are fluid, and the individual cost of your own policy will be affected by your age, health, income and more.
In other words, there are no guarantees that your health insurance will be affordable simply because you've moved to an area where the average cost of insurance is lower. Instead, look toward trends that might affect the cost of your own policy, like a state with multiple competing insurers or a well-designed exchange. This will give you the best chance of finding suitable and affordable coverage for yourself and your family.