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Highmark denies premiums in federal insurance marketplaces affected by level of competition

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Highmark Inc. charges 80 percent more for insurance coverage on the federal insurance marketplace in West Virginia than it does for similar coverage in Western Pennsylvania but said the price in the neighboring state is not related to a lack of competition.

The Robert Wood Johnson Foundation, a Princeton, N.J., nonprofit that funds health care research, released a study this month that found states with less competition among insurers in online marketplace have higher premiums than in states with more carriers.

But Fred Earley, president of Highmark Blue Cross Blue Shield West Virginia, said two factors are responsible for the price differences. West Virginians are generally more unhealthy, and prices are lower in Pittsburgh because Highmark sells a limited-network plan, Community Blue.

“When we priced, we did price to be competitive because we wanted to be successful,” Earley said. “We were surprised as anybody that we were going to be the only carrier on the exchange.”

The Pittsburgh-based insurer is the only insurance carrier selling health plans on Healthcare.gov in West Virginia this year. A 27-year-old in Charleston paid $250.19 a month for the second-lowest cost silver plan.

In Pittsburgh, where Highmark is competing against UPMC and Aetna Inc., the same plan cost $139.38. In the Harrisburg area, where Highmark was one of four insurers competing on the exchange, the premium is $167.67.

In Delaware, where Highmark and Aetna are the only insurance providers in the marketplace set up under the Affordable Care Act, the monthly premium is $237.15, or 70 percent higher than in Western Pennsylvania.

Community Blue, which isn't offered outside Pennsylvania, excludes UPMC from its network and has premiums that can be 20 percent less expensive. Highmark's lowest cost silver plan that includes UPMC in-network access costs $193.43, or 39 percent more a month than Community Blue.

Highmark's dominance of the insurance market makes it difficult for other carriers to enter and compete, the Robert Wood Johnson Foundation said.

“Whether West Virginia will attract more competitors is unclear,” the report's authors wrote. “It is difficult for insurers such as Aetna/Coventry and United to compete successfully in West Virginia because they cannot contract with West Virginia hospitals at rates as low as Highmark.”

In America's Health Rankings, a project of United Healthcare's charitable foundation, West Virginia ranked 46 out of the 50 states for the poor health of its residents in 2013. It had the second highest rate of smoking among adults and the second highest rate of physical inactivity.

Pennsylvania ranked 29th; Delaware ranked 31st.

“We consume a lot of health care resources” in West Virginia, Earley said.

Timothy McBride, a health economist and professor at Washington University in St. Louis, agreed with the foundation's findings. His research on differences in exchange pricing concludes that greater competition leads to lower premium costs.

He examined premiums in all 500 rating areas around the country. The 50 areas with the highest costs all had similar characteristics — mostly rural, higher mortality and few insurance carriers.

While health status, income levels and other demographic factors influence insurance costs, McBride said his research found that the strongest factor affecting price is number of insurers.

“We would expect that with more insurers, the price would start dropping,” he said.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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