WASHINGTON — Massachusetts residents will be able choose among insurance plans offered by 10 companies when a key element of President Obama’s health care law takes effect on Oct. 1. But Connecticut residents will be choosing from only three, while New Hampshirites will have just one option.
These are among the disparities — some of which are just now coming to light — that consumers who lack employer-provided plans and are ineligible for Medicare will face as they begin shopping online for health insurance under the federal health reform law.
The differences highlight how the consumer experience will vary widely under health reform, despite the law’s intent to make the complex world of health care more transparent, affordable, and equitable. That has led some supporters of the health care law to worry that consumers will be confused and upset by the state-by-state variations, just as the heart of the law — an online portal allowing people to shop for insurance, called a marketplace — is being implemented.
“For consumers in some states, it means there’s less choice. It’s a real problem because it reduces the competitive pressure on pricing and on other performance criteria,” said Jon Kingsdale, who set up the Massachusetts health insurance marketplace under the state’s groundbreaking 2006 law and who is now a consultant helping other states start their own marketplaces.
The wide range in the number of insurers reflects the states’ varying market conditions. Uncertainty about how the new system will work has led some carriers to postpone participation, especially in states like New Hampshire, which has actively resisted the health care overhaul.
About 10 percent of consumers are expected to buy insurance through the marketplaces for benefits that would start in January. The law requires most Americans to obtain insurance by Jan. 1 or face a financial penalty.
New England’s six states reflect the patchwork manner in which the 2010 law is being adopted across the country. In addition to the variable number of insurance options and differences in pricing, consumers will also confront inconsistencies in service and — for low-income residents — coverage, depending upon whether their state officials embrace or reject the health law, known as “Obamacare.”
Lawmakers in Maine and New Hampshire have been the region’s most hostile opponents of the federal law.
In Maine, Republican state officials have refused to set up the required online insurance marketplace, so the task is being left to the federal government, as the law allows. Maine is one of 27 states that have pushed the responsibility of setting up a marketplace onto federal officials.
The federal government is also taking a partial role in running insurance marketplaces in seven additional states including New Hampshire, bringing the total number of states with some Washington involvement to 34.
Consumer advocates said the federal government is overwhelmed by the challenge of implementing the law on a national scale amid widespread resistance. The vast amount of work required prevents the government from tailoring its efforts to the unique insurance markets of each state.
“The feds never thought they would be running 34 marketplaces,” Kingsdale said. The federal government is not spending as much to publicize the law in these states, he said, “and now they are facing the threat of Republicans shutting down the entire government to starve Obamacare.”
The online insurance marketplaces — a key underpinning of the federal law — are supposed to serve as a one-stop shop for consumers to compare insurance plans, making the experience of purchasing insurance as simple as buying a plane ticket.
Each insurance carrier may offer a variety of plans, tiered by price and benefits, but all must feature minimum health benefits required by the federal law such as maternity and newborn care, prescription drugs, and mental health services. Each state can extend its definition of essential health benefits beyond the federal minimum.
Some New England states may also benefit from the federal law’s requirement that two national insurance carriers be offered in every state by 2017, beginning with 31 states in 2014. The federal government has not named the states.
Dr. Jay Himmelstein, chief strategist for UMass Medical School’s Center for Health Policy and Research, said that consumers will have a better experience in New England states that create their own marketplaces, referring to Massachusetts, Connecticut, Rhode Island, and Vermont. “And you would expect that certain people in New Hampshire and Maine are going to get short shrift,” he said.
Thus far, New Hampshire is the only state offering just one insurance carrier for individuals buying coverage on the marketplace, according to the Center on Budget and Policy Priorities, which has analyzed the marketplaces of 30 states that have named insurers.
Moreover, New Hampshire’s legislature forbade the state from accepting federal money to publicize the law, making it harder to get residents to enroll. (Advocates recently figured out an end-run around the law by funneling the money through a quasi-governmental agency.) Tea Party activists, meanwhile, demonstrated against the law earlier this week in Laconia and New Castle.
“It’s not a marketplace when you only have one insurer. It’s more like a monopoly,” said Greg Moore, New Hampshire state director of Americans for Prosperity, which led the rallies. “This is one example of a string of broken promises under Obamacare, and it’s going to lead to more confusion and more uncertainty.”
The lack of competition could result in higher costs charged by New Hampshire’s sole insurer, some consumer advocates warn. But others argue that with such a large market share, the insurer wields strong negotiating power with hospital systems to keep costs in check.
Residents in Maine, Vermont, and Rhode Island will only be able to choose between two insurance carriers as the marketplaces are rolled out. Rhode Island, however, is limiting one of the companies to residents earning less than 250 percent of the federal poverty line.
Vermont, meanwhile, is simultaneously moving ahead with plans for a first-in-the-nation state-based, single-payer system, which is slated to begin in 2017. The state would fund all Vermonters’ coverage through some combination of federal money, state taxes, and individual contributions.
Health reform advocates hope that just as Obama modeled his health care overhaul on the Massachusetts plan, other states will follow the Bay State’s lead on developing a marketplace for insurance that attracts many companies.
Since Mitt Romney signed the health reform law as governor in 2006, the number of insurers serving the individual market in Massachusetts more than quadrupled over the seven years of reform, jumping from two in 2005 to nine in 2013.
During that time, Blue Cross Blue Shield of Massachusetts’ share of the marketplace dropped from 80 percent to less than 40 percent, according to a June report by the Robert Wood Johnson Foundation.
The state will add one more plan to the marketplace in 2014, offering Bay State consumers a total of 10 carriers from which to choose.
A state report found that average individual premiums in Massachusetts were 33 percent lower in 2008 than prior to reform.
Newly released data by four New England states show the average individual premiums for the cheapest “silver plan” will range from a low of $338 a month in Rhode Island to $455 a month in Connecticut, according to a recent report from the US Department of Health and Human Services.
New Hampshire and Massachusetts have yet to unveil new premium costs.