In recent years, some cities, including Memphis and Phoenix, withered into health insurance wastelands, as insurers fled and premiums skyrocketed in the insurance marketplaces that were set up under the Affordable Care Act.
But today, as in many parts of the U.S., these two cities are experiencing something unprecedented: Insurance premiums are sinking and choices are sprouting.
In the newly competitive market in Memphis, for example, the cheapest midlevel "silver" plan for 2019 health coverage will cost $498 a month for a 40-year-old — a 17 percent decrease compared to last year.
And four insurers are now selling ACA policies in Phoenix. That's the same market that then-presidential candidate Donald Trump highlighted in 2016 because all but one insurer had left the region — he called it proof of "the madness of Obamacare."
Janice Johnson, a 63-year-old retiree in Arizona's Maricopa County, which includes Phoenix, said her monthly premium for a high-deductible bronze plan will be $207 for 2019, instead of $270, because she is switching carriers.
"When you're on a fixed income, that makes a difference," said Johnson, who receives a government subsidy to help cover her premium. "I'll know more in a year from now if I'm going to stick with this company. But I'm going to give them a chance, and I'm pretty excited by that."
Looking across all 50 states, the premiums for the average "benchmark" silver plan, which the government uses to set subsidies, are dropping nearly 1 percent. And more than half of the counties in the 39 states that rely on the federal HealthCare.gov exchange are experiencing a 10 percent price decrease, on average, for their cheapest plan.
In most places, the declines are not enough to erase the price hikes that have accrued since the creation of the health care exchanges in 2014.
Instead, next year's price cuts help to correct the huge increases that jittery insurers set for 2018 to protect themselves from anticipated Republican assaults on the markets. While Congress came up one vote shy of repealing the federal health law in the summer of 2017, Trump and Republicans in Congress did manage to strip away many of the structural underpinnings that induced people to buy plans and helped insurers pay for some of their low-income customers' copayments and deductibles. Insurers responded with a 32 percent increase, on average, for 2018 plans.
"Insurers overshot last year," said Chris Sloan, a director at Avalere, a health care consulting company in Washington, D.C. "We are nowhere close to erasing that increase. This is still a really expensive market with poor benefits when it comes to deductibles and cost."
For 2019, the average premium for the benchmark silver plan will be 75 percent higher than it was in 2014, according to data from the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)
When Republicans failed to kill the health law last year, they inadvertently may have made it stronger. Insurers banked hefty profits in 2018, and that attracted new companies to most ACA markets.
All these factors were especially influential in Tennessee, where the average benchmark premium is dropping 26 percent, according to an analysis by the federal government. That's a bigger drop than in any other state.
Seventy-eight of 95 Tennessee counties had just one insurer for 2018. That monopoly allowed the insurer to set the prices of its plans without fear of competition, said David Anderson, a researcher at the Duke-Margolis Center for Health Policy in Durham, N.C. "They were massively overpriced," Anderson said of all available policies.
But for the coming year, 49 Tennessee counties will have more than one insurer, with a few — like Shelby County, where Memphis is located — having four companies competing. There, Cigna dropped the price of its lowest-cost silver plan by 15 percent. Even then, Cigna was underbid by Ambetter of Tennessee, a company owned by the managed-care insurer Centene Corp.
"We're finally at the point where the market is stabilized," said Bobby Huffaker, the CEO of American Exchange, an insurance brokerage firm based in Tennessee. "From the beginning, every underwriter — [and] the people who were the architects — they knew it would take several years for the market to mature."
Still, the cheapest Memphis silver premium is nearly three times what it was in 2014, the first year of the marketplaces. A family of four, headed by 40-year-old parents, will be paying $19,119 for all of next year unless they qualify for a government subsidy.
"The unsubsidized are leaving," said Sabrina Corlette, a professor at Georgetown University's Health Policy Institute. "They are finding these premiums unaffordable."
The landscape in Phoenix is greatly improved from when Trump visited after the federal government announced a 116 percent premium increase for 2017; the number of insurers at that time had dropped from eight to one.
Now, three new insurers are entering Maricopa County. Meanwhile, Ambetter, the only insurer that offered plans for 2018, reduced its lowest price for a silver plan for next year by 12 percent — and it offers the cheapest such plan in the market.
Still, Ambetter's plan is 114 percent above the least expensive silver plan offered there in the first year of the exchanges. And neither Ambetter nor any of the insurers coming into the market for 2019 offer as broad and flexible a choice of doctors and hospitals as consumers had back then, according to Michael Malasnik, a local broker.
Since the start of the exchanges, Malasnik said, insurers have "raised their rates by multiples, and they've figured out you have to be a very narrow network."
Each plan in Phoenix for 2019 contains trade-offs, he said. Only Bright Health's plan includes Phoenix Children's Hospital. Ambetter's plan includes the most popular hospital and doctor groups, Malasnik said. But those providers are not as conveniently located for people living in the southeastern corner of the county, and that makes other insurers' plans more appealing for some customers.
"Geography is the name of the game this year," Malasnik said.
Theresa Flood, a preschool teacher who lives outside Phoenix, said none of the provider networks of the plans she considered included her doctors, such as the specialist who treats her spine problems. She has had four surgeries, and a neurologist who monitors a cyst and benign tumor in her brain is also outside the network she ended up choosing.
"I have to establish care with a whole new spine doctor and establish care with a whole new neurologist if I want to follow up on these things," said Flood, who is 59. "You're going from 'established care' to 'who in the heck am I going to see?' "
The plan Flood ultimately chose would have been too expensive, except that she and her husband John, who is a minister, qualified for a $1,263-a-month subsidy that will drop the cost to $207 a month. That bronze plan from Ambetter carries a $6,550-per-person deductible; so Flood expects she'll still have to pay out-of-pocket for her treatments and doctor visits unless she needs extensive medical attention.
"It's gone from being able to have a plan that you could sort of afford and got some benefit from, to putting up with what you can afford and hoping nothing happens that you actually have to use your insurance," she said. "At this point, I'll take what I can get."
Kaiser Health News, a nonprofit news service, is an editorially independent program of the Kaiser Family Foundation, and is not affiliated with Kaiser Permanente.
STEVE INSKEEP, HOST:
We are in the middle of open enrollment for the Affordable Care Act. It goes until December 15. People can sign up for health insurance plans under Obamacare. And holiday health insurance shoppers are finding something new this year - lower prices. Let's talk this through with Kaiser Health News correspondent Jordan Rau, who has looked at all the prices of all the plans in all the counties in the 39 states which rely on the federal government's healthcare.gov for their marketplaces. And he's here with results. Hey there.
JORDAN RAU: Hey.
INSKEEP: So what did you find?
RAU: Well, big surprise - prices are dropping in a lot of counties - over half of the counties - and sometimes, by large amounts.
INSKEEP: We're not talking about every single plan in every single place going down, right? But what's the average thing happening?
RAU: Well, it goes from place to place. Some places, like D.C., are actually going up. But a lot of places that have had very high premium hikes over the last couple of years, like in Tennessee and in Arizona, are decreasing. And we looked at a couple of different types of plans. We looked at the lowest price plan. That's a bronze plan, a high deductible plan. And then we also looked at the silver plans, which are the plans that about two-thirds of the people get.
INSKEEP: And those are both going down by - what? - a few percentage points.
RAU: It really varies from county to county. I mean, it can change a lot. But in some places, they're going down 17 percent, 20 percent.
INSKEEP: Wow. So why would that be happening?
RAU: Well, a lot of it is that the market is correcting. The insurers went way, way high over the last couple of years because of all the political instability. You know, at the time, they were looking at the possibility that the whole thing would be repealed and replaced. And then also, there have been some changes that the Republicans and President Trump have made that have destabilized the market somewhat. They've let in some plans that people can sign up. There are short-term plans that don't offer all the benefits. And those the insurers fear would siphon away some of their healthier people. And they made some other changes as well. So the insurers just baked all that into their rates. And so for the last couple of years, people have really seen some sticker shock.
INSKEEP: You had mentioned that prices had gone up the last couple of years because of the Republican Congress and the Trump administration. Hadn't prices actually been going up for several years, even before the Trump administration?
RAU: Right. Well, they took a big jump when these markets were created in 2014 because suddenly, people could get insurance, even if they had expensive conditions. And insurers had to cover all sorts of things, whereas before, they could pick and choose.
INSKEEP: Oh, when the plans got better, they also got more expensive.
RAU: That's right. You want more, you pay more. And then they continued to increase because in a lot of places, insurers decided that they didn't want to participate, that they were worried that they wouldn't make a lot of money or lose it. In some areas of the country, there would only be one insurer that was offering plans. And that insurer could set its prices wherever they wanted. People had no choice.
INSKEEP: How will people feel that difference? - because a lot of these plans are subsidized anyway, right?
RAU: Yeah, that's a great question. There's two groups of people. So the people that are subsidized - and that is you get a subsidy if you're, you know, a family of four with income under $100,000. Those people may not see a big difference because they're already capped. And in some cases, one of the weird things that's happening is that because all the prices are dropping, the subsidies are dropping as well. So it's possible some people may even see a small increase. But the big difference is going to be for the people that don't get a subsidy at all. And they have the potential of seeing much lower prices.
INSKEEP: So let me ask you about the prospects for the next couple of years because you mentioned that political instability - efforts to repeal and replace Obamacare - affected the prices and helped to drive them up. Now we have a period where Democrats are about to take control of the House of Representatives. We can presume that although Republicans still have a lot of power, they're not going to repeal Obamacare now for at least the next couple of years. Does that create a stable situation where prices might come down further?
RAU: Yeah, I don't think so at all because the fundamental, underlying problems of the healthcare system are still in existence. You still have no price transparency that allows a functioning market where people can shop around and also, the ability of some providers, some hospitals, some doctors to dictate their own prices. So really, most of the fundamental elements that have led to increases for everybody are still in place.
INSKEEP: So the good news is prices are going down. The bad news is they're still very high, and there's a big risk of further increases over time.
RAU: That's right.
INSKEEP: Jordan, thanks so much.
RAU: Thanks for having me.
INSKEEP: That's Jordan Rau of Kaiser Health News. Transcript provided by NPR, Copyright NPR.