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Analysis looks at which consumers get better deal in the health insurance exchanges Date: 03/24/14

By MaryJo Webster and Christopher Snowbeck

When writing about health insurance premiums under the Affordable Care Act, reporters at the St. Paul Pioneer Press found significant premium disparities among rates in the Twin Cities, Rochester, Minn., and nearby western Wisconsin.

These discrepancies raised two big questions: Do such disparities exist throughout the entire United States? If so, who gets the better deal – consumers in the Twin Cities with low premiums and little chance of getting federal tax credits, or consumers in the higher-cost places who benefit from the subsidies?

To answer these questions, we built a database of premium rates for policies sold through 15 state insurance exchanges and the federal health insurance exchange. It took us four months, but we got the answers by using this data to calculate estimated tax credits at key income levels for every age in every rating area.

The resulting national story was published Feb. 28 in papers throughout the Digital First Media chain (the Pioneer Press parent company). The story included an interactive map created by Vaughn Hagerty of DFM’s data team. Other DFM reporters had early access to the data so they could localize the story or write their own sidebars.

Here are some insights into how we did it:

With help from others in Digital First Media, we started in late October to collect data on premiums from the 15 states that run their own exchanges. Once we figured out the correct terminology when making our requests, collecting the data wasn’t as hard as we first expected. By early January we had all the data we would need. Numerous public relations officials told us others had requested the same data. In some states, we had to go to the agencies that regulate insurance; in other places, we got the information from the exchanges.

We didn’t have to file official public records requests; a couple of states simply asked for a written request, though. A surprising number of states had this information on their websites (although, it was not always easy to find).

Most of the data came in PDFs that had to be dumped into spreadsheets. And, more often than not, the data included only the base premium, or premiums for a few key ages. We used the age multiplier tables – available from the states – to calculate the specific premiums at each age, in each rating area, for the lowest-cost bronze, silver and gold plans.

Several states gave us premiums for every product available on their exchanges. Others, including the federal exchange, provided only the lowest cost at each metal tier (such as bronze, silver or gold), plus the second lowest-cost silver plan, which is a key figure in the calculation that determines how much of a tax credit an eligible consumer might get.

Once we had these numbers, we needed to focus our analysis on the lowest-cost plans. Ultimately, we chose to focus on the silver tier since enrollment numbers from the federal exchange indicate that 60 percent of consumers were choosing this tier.

Initially, we were told that the tax credit calculation relied on the second-lowest-cost silver plan for the rating area. After completing data collection, however, we found places where different second-lowest-cost silver tiers exist within the same rating area. Typically, this happens when one or more insurance plans are offered only in certain counties within the rating area.

We decided to stick with running our tax credit calculations at the rating-area level, partly because there aren’t too many places where there are differences within a rating area, and the ones that do exist typically have premium variations of less than $25 per month.

Once we complied all the data, we ran calculations to estimate the tax credit and ultimate consumer cost (plus what percentage of their income that amount would be) for people at key income points between 200 percent and 400 percent of the federal poverty level (including different income amounts for Alaska and Hawaii). We also calculated cost as a percentage of income at 401 percent of poverty, and other income levels that are above the threshold for tax-credit eligibility.

One way reporters can use data like these is to show readers whether premiums are high or low in their area compared with the rest of the country or other parts of the same state. Local insurers or health care academics can help explain why.

Another potential story is that consumers in low-premium areas, who would normally be eligible for a tax credit because of their income, are confused and surprised when they don’t get a tax credit simply because the premium is already lower than the affordability cap under the ACA.

Our analysis showed that Twin Cities’ consumers truly do have the lowest premiums in the nation, and as a result, many of them are confused about not getting a tax credit. While answering that first question was relatively easy, we found it was much harder to answer our second question (Who gets the best deal?) because the answer is different at each age and income level.

There are certainly some high-premium areas where consumers pay less out of pocket after tax credits than similar consumers buying similar plans in the Twin Cities without any tax credits. But there are also cases where Twin Cities’ consumers still get the better deal, even without the subsidies.

Experts told us some of these disparities might be quirks resulting from this being the first year of enrollment under the ACA. Insurers might have set premiums higher or lower than usual because of uncertainty about who would purchase plans through the exchanges. As a result, it’s likely we’ll see an entirely different picture at the end of this year when rates are set for 2015 insurance policies.

MaryJo Webster (@MaryJoDFM) is a senior data reporter for Digital First Media. Christopher Snowbeck (@chrissnowbeck) is a health care reporter at the St. Paul Pioneer Press.