DENVER — Bill Fales wanted a new baler and a better irrigation system for the 700-acre ranch where he raises grass-fed beef cattle, but he scrapped those plans when he saw his new health insurance premiums.
His Cold Mountain Ranch is in western Colorado’s Rocky Mountains, a rural area where outpatient services are twice as expensive as the state average. Fales recently saw his monthly premiums jump 50 percent, to about $1,800 a month.
Health care has always been more expensive in far-flung communities, where actuarial insurance data show fewer doctors, specialists and hospitals, as well as older residents in need of more health care services. But the rural-urban cost divide has been exacerbated by the Affordable Care Act.
“We’ve gone from letting the insurance companies use a pre-existing medical condition to jack up rates to having a pre-existing zip code being the reason health insurance is unaffordable,” Fales said. “It’s just wrong.”
Geography is one of only three determinants insurance companies are allowed to use to set premiums under the federal health care law, along with age and tobacco use. Insurance officials say they need such controls to remain viable.
“If premiums are not allowed to keep up with underlying medical costs, no company is going to survive,” said Robert Zirkelbach, a spokesman with America’s Health Insurance Plans, a Washington, D.C.-based industry group.
The nonpartisan Kaiser Family Foundation recently rated the Colorado region where Fales lives as the nation’s priciest, based on rates for the lowest-priced “silver” plan, a mid-level policy. In this part of the state, a region that includes Aspen, the cheapest mid-level plan is $483 a month. In Denver, the same plan is about $280 a month.
Other insurance price zones on the most-expensive list include rural areas in Georgia, Nevada, Wisconsin and Wyoming. But the cost differences between densely and sparsely populated areas shouldn’t come as a shock, because it’s simply more expensive to deliver care in such communities, Zirkelach said.