In rural Nevada, health insurance costs vary wildly on Silver State Health Exchange

When it comes to small networks and higher insurance premiums, Las Vegas has nothing on Lovelock.

Or on Battle Mountain, or Elko, or any of Nevada’s rural areas.

For a lot of reasons in play long before the Affordable Care Act, or Obamacare, began taking effect, finding coverage and getting in to see a doctor were harder for Nevadans living in small towns. Welcome to a world of naturally small networks, where hospitals can be hundreds of miles apart and where premiums long have reflected the shortage of bargaining power that comes with too few providers.

How Obamacare will alter this tableau is open for debate. As in Las Vegas, some rural consumers are seeing big premium breaks through the new Silver State Health Insurance Exchange, while others are seeing costs surge. It just depends on individual situations.

“We are anticipating increased premiums on the new plans, but it’s not going to be the same for everybody,” said Anne McMullen, a broker with ISU McMullen Insurance in Elko. “You can’t really categorize it. It’s going to be different for each family and each group, and it will depend on whether someone is subsidy-eligible.”

RURAL PREMIUMS RUN HIGHER

Even if costs vary by household, premiums in general always have been higher in rural areas, said Larry Harrison, a local spokesman for the National Association of Health Insurance Underwriters and a broker with benefits-consulting firm National Healthcare Access. Still, the difference hasn’t been “as drastic as it’s going to be” once the new plans kick in on Jan. 1, he said.

Consider that exchange rates from at least one big insurer are 30 percent higher across the board outside Clark and Nye counties, regardless of age, tobacco use and plan level.

Say you’re 40 and you don’t smoke. The cheapest plan Sierra Health &Life is offering in Southern Nevada costs $264.58 a month, according to a worksheet provided to the Review-Journal by a local insurance broker. The same plan starts at $343.96 outside Clark and Nye counties. For a richer plan that covers the most costs, you’d pay $346.25 in Las Vegas, but $450.12 elsewhere.

For a 40-year-old smoker, plans start at $354.54 in the south, versus $460.91 up north.

It’s important to note that if you buy on the exchange and you make 138 percent to 400 percent of the poverty-level wage — that’s up to $45,960 for singles and $94,200 for a family of four — you’ll get a federal tax credit and pay the same premium anywhere in Nevada, exchange spokesman CJ Bawden said.

Consumers who aren’t getting the subsidy can blame the price difference on several factors.

For one thing, there’s less competition outside Southern Nevada. Without competition, there’s less incentive to keep a lid on premiums. McMullen said the exchange has just four plans — three from Anthem and one from Nevada Health CO-OP — available in the Elko area. Contrast that with Las Vegas, where Sierra Health &Life alone offers nearly a dozen exchange plans. (Anthem and Nevada Health CO-OP also offer plans in Southern Nevada through the exchange.) And there will be no small-business exchange at all for rural areas, McMullen said.

Also hurting costs? Naturally small doctor networks. John Mauldin, owner of Vera Smith Insurance in Battle Mountain, said his town has three hospitals within a 150-mile radius, but only “two and a half doctors” if you include a part-timer “borrowed from Winnemucca.”

With fewer providers, insurance discounts are far smaller. A $1,000 procedure might net an insurer a $50 discount in a rural area, versus a $400 discount in Las Vegas, where networks have thousands of doctors doing volume business, Harrison said. And in small towns, there are fewer doctors to survey for a negotiated “usual and customary rate” paid by insurers.

Those aren’t the only network problems, McMullen said. All state exchange plans essentially are HMOs with state-based networks, and they don’t cover care outside Nevada. That’s a big problem in smaller, northern cities. For Elko residents, the closest services for critical care, such as a premature birth, are about three hours away, in Utah, McMullen said. Next closest in-state would be Las Vegas, seven hours away.

“So if you do have something that’s beyond the scope of what local providers can handle. That’s going to be an issue,” she said.

Bawden responded that the state Insurance Division annually vets every insurance plan sold in Nevada for network adequacy “to make sure everybody has available specialists and primary-care doctors within a reasonable driving distance.”

Adequate or not, smaller doctor numbers in the north affect what the new plans cost. Those rates are a definite plus for some rural Nevadans — but not for others.

COUPLE GETS A PRICE BREAK

Up until now, Mauldin and his wife couldn’t afford health insurance on the individual market because they have pre-existing conditions. Even bare-bones catastrophic coverage would have cost the couple $3,000 to $4,000 per month, Mauldin said. So they’ve gone without it.

Now, thanks to a federal prohibition on rating consumers based on health status, the couple is seeing exchange-based premiums of $290 a month.

Although his premiums finally are affordable, Mauldin acknowledged that “all I’m hearing about is increases” hitting friends and neighbors — typically anywhere from $40 to $220 a month on existing premiums of $300 to $400 a month.

Freelance writer Tim Plaehn of Gardnerville might wish his premiums were that low.

Plaehn, who recently moved back to Nevada from South America, shopped the exchange to shop for a plan — and ended up “kind of in shock.”

To cover himself and his beverage-manager wife, both in their late 50s with no pre-existing conditions, the cheapest plan he could find is $1,270 a month.

“That’s more than our house payment,” Plaehn said.

What’s more, the two earn too much to qualify for a tax credit to lessen the blow. So Plaehn bought an off-exchange plan that takes effect before Jan. 1, when higher coverage requirements kick in and some plans get more expensive. The couple pays $400 a month, with a $5,000 deductible.

Mauldin and Plaehn said they expect premiums to be even higher in a year.

A good decade before Obamacare took effect, premiums were jumping far faster than inflation, Mauldin said.

“Even the current system is not sustainable. It’s going to hit a critical stage. I don’t care who they blame, it can’t keep going the way it is,” Mauldin said. “Premiums are going to keep increasing to where they’re not affordable for the vast majority.”

Added Plaehn: “If it’s $1,300 a month now, from everything I’ve seen, I assume it’ll be $2,000 a month for my wife and me next year for a plan with a $10,000 deductible. I can afford a $10,000 deductible, but I don’t want to pay $12,000 a year to get it. I could put $15,000 a year in the bank and in three years have $50,000.”

VARYING VIEWS ON WHAT LIES AHEAD

Obamacare still is developing, but Nevadans have different ideas on what’s ahead for the law and its effects.

McMullen said she’s not expecting big business for the state exchange in Elko, at least. The area benefits from gold mining, with relatively low unemployment and an average wage of more than $85,000 a year. Most Elko residents are insured through work, and their incomes are too high to qualify them for a federal subsidy anyway. Nor are penalties for not having coverage, which start at $95 a year or 1 percent of income, whichever is bigger, enough to push people into the exchange, she said.

“Initially, it’s not going to be as beneficial for us as it will be for Reno and Las Vegas. Their contracting is broader, and they have access to both basic and specialized services. With greater access to care, those HMOs can work,” McMullen said.

“I’m trying to be practical and not say, ‘Can we start over?’ I know we’re too far down the road for that,” she added. “But Elko is different. The way the exchange programs are set up may work well in metro areas, but I don’t think, ultimately, that we are going to get enough enrollment. Maybe we need to step back and look at ways of blending the old and the new to respect the law of insurance, or the law of large numbers, because the (Affordable Care Act) doesn’t address that.”

Still, McMullen said she hopes the private market will step in and fill coverage gaps in the Elko area.

The problem with relying on big mining companies to cover rural Nevada is that not all outlying communities benefit from the industry, Bawden said.

“A lot of areas throughout the state don’t have mining, large construction projects or other big job bases, and they rely on individual mom-and-pop-type small businesses,” Bawden said. “Wages in those areas are not as high, and Nevada Health Link (the state exchange’s website) gives those Nevadans options.”

Bawden also urged patience. Four carriers are on the state exchange now, but he said officials expect more insurers to file plans in coming months.

“They will create more competition and expand network sizes in these areas,” he said.

Until that happens, rural consumers have their own suggestions for fixes. Letting insurers sell across state lines might help boost consumer buying power, Mauldin said, but he’d also look at taking it a step further.

“A single-payer system is where we ultimately need to be. This is one area where we need to exercise a little humanity,” he said.

Plaehn said he would prefer tax deductions for health insurance go to individuals, rather than employers. He also would like more simple options that offer catastrophic care but fewer benefits. In the end though, the answer for Plaehn might not even be in Nevada. It’s not his first choice, but he said that if things get bad enough here, he’ll return to South America for four or five months a year to buy coverage and see doctors there.

“We’re perfectly healthy. We see a doctor once a year. We’re just getting creamed, and I don’t know why. My hope is that lawmakers figure out a way to offer the type of coverage people like myself need.”

Contact reporter Jennifer Robison at jrobison@reviewjournal.com. Follow @J_Robison1 on Twitter.