When you are shopping for health insurance, it is important to realize the regional nature of health care and how that relates to your health insurance rates. Here are some issues that arise due to the regional nature of health care .
Provider Contracting Issues
Some markets are more or less prone to competition due to ”provider contracting.” Provider contracting relates to which hospitals, physicians and other health care providers are willing to contract with health care payers (i.e. third parties who pay for health care such as insurance companies, individual businesses, health and welfare organizations, etc.).
In large urban markets, there may be many “payors” who compete for and arrange funding for benefit plans, thereby providing more competition. This tends to put a downward pressure on pricing. In smaller, more regional markets, there may be less competition among providers and insurers. Thus, providing a reduced opportunity for downward price pressure from competition.
Regional Overhead Expenses
In spite of the fact that negotiation and competition over provider contracts places downward pressure on health care pricing, in larger urban markets, many other factors tend to lead costs higher. If you look at rate tables for health insurance, you can see that, in some cases, premiums can more than double for those living in large urban markets versus smaller, rural markets – even within the same state.
What factors explain this phenomenon?
- Small urban markets, generally do not provide the scope of care available in a large city. Therefore, many patients with complicated health care issues are transferred to larger facilities in bigger cities in order to receive the treatment they need. More in-depth treatment, generally, requires more overhead to deliver (i.e. more facilities, specialized equipment, trained personnel, etc.).
- Overhead in general is higher in large urban markets. The higher cost of living increases wages, rent, operational costs, taxes and more.
- Large urban markets deliver more indigent and government sponsored care, causing cost overruns, that are transferred or “cost-shifted” via higher premium pricing to private payers.
Therefore, in spite of increased competition, large urban health care environments, tend to be much more expensive health care environments over all.
Health Care Consolidation
The combination of all of these factors leads to wide regional differences in care and funding options. Many insurers and health plans that are well known in some markets are entirely absent in others. For several years we have seen huge consolidations in health care plans as one insurer has swallowed up another in order to provide larger, more comprehensive health care networks overall. In the early days of managed care, there were many small health maintenance organizations and provider networks. One-by-one over time, most of them have been acquired by larger managed care organizations.
Shopping for Health Insurance Regionally
So, what does this mean to an individual who is shopping for insurance or a small company that needs to provide benefits for it’s employees? First, using an Internet search engine with the search words, “health insurance,” alone has a somewhat limited value and can lead to confusing results. National competition for relevancy in search terms such as “health insurance” is generally blind to the regional nature of health care. You’ll increase your odds of finding a good match, whether as an individual or as a group, by attaching a regional element to your search. “Health insurance Cincinnati,” “dental insurance Cincinnati” or “health insurance northern Kentucky” will generally provide you with more relevant search results.
A local broker who knows his or her stuff will be well aware of the insurers that are relevant in your region. Unique health care options still exist in most markets where excellent and well established plan options are available that are otherwise out of the national spotlight. In Cincinnati and northern Kentucky, as an example, one such option is “Dental Care Plus.” This is a relatively small pre-paid dental plan that is owned by dentists in the tri-state area (southwest Ohio, northern Kentucky and southwest Indiana). It is a terrific plan with a substantial local network, reasonable premiums and is very user friendly.
For more information on dental or health insurance in Cincinnati and Northern Kentucky, request a quote by FAX or mail, or contact our office at 513-891-9888.