Texas Messes With ACA Rating Areas — With Promising Results

Merging urban and rural Affordable Care Act marketplace rating areas in Texas significantly increased carrier and plan choices and lowered overall plan premiums in rural Texas, according to a recent Health Affairs study.

When calculating premiums for customers, the ACA permits insurers to consider those customers’ area of residence — or rating area — among other factors including age, smoking status and family size. Yet the use of rating areas can lead to higher premiums for rural areas, where residents tend to have greater health care needs and where there’s a smaller risk pool due to lower population density.

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