Residents of Telluride have a lot of good things going for them — world-class skiing, jaw-dropping vistas — but access to a wide variety of health care choices is not on that list.
There’s only one insurance company offering health plans in the individual market in Telluride’s home county, San Miguel. The nearest full-service hospital is two counties away. And residents of San Miguel County pay some of the highest insurance premiums in the state.
Now, a new report released Tuesday by the nonpartisan Colorado Health Institute is making clear how the first two of those factors may lead to the third. In counties where there is less health care choice, both among insurers and hospitals, health insurance premiums tend to be higher, according to the report.
The institute is calling this its competition matrix, and even just a quick glance at its tic-tac-toe-style chart shows the correlation. In the upper left corner are 13 counties with only one insurance carrier on the individual market and little hospital competition. Almost all pay the highest rates for insurance. In the lower right are eight counties along the Front Range with robust competition among both insurers and hospitals. They pay some of the lowest premiums in the state.
In the spaces in between are Colorado’s remaining counties and a general trend moving toward lower insurance prices as competition increases.
“I think that what surprised me — it surprised all of us — was just how strong it was, how strong that correlation between competition and price was,” said Emily Johnson, a director at the institute who spent months developing the matrix.
She cautions, as researchers often do, that correlation here is not proven to be causation. There could be other factors, like the relative health of a county’s population, that also play into the equation. But Johnson said the findings align with a standard tenet of economics — that competition creates leverage for consumers, which creates lower prices.
The institute’s findings also give support to the concerns of health care advocates, who are increasingly worried that consolidation in both the hospital and health insurance industry are leading to higher prices for consumers.
For instance, the report notes that, while there are 24 hospitals in the Denver metro area, 20 of those are owned by four large health systems — which have also expanded into less-populated areas of the state. And, while consumers along the Front Range generally have robust choice among insurance companies, two of those companies — Kaiser Permanente and Cigna — hold 75 percent of the market.
At a meeting last week of the Colorado Business Group on Health — a collection of employers working to address high health care prices — speakers talked ominously of the dangers of a consolidated market.
“There simply is no competition in most markets for hospital services,” said David Blumenthal, the president and CEO of the Commonwealth Fund, a foundation that studies the health care system. “The definition of a market is competition. It doesn’t exist for hospital services.”
The institute’s report suggests four ways to address the problem, some of which the state has already undertaken.
The state could embolden insurers to jump into potentially risky markets by helping them pay their most expensive claims — something the reinsurance program that lawmakers approved this year would do. Or the state could directly increase coverage options by offering its own plan — something lawmakers edged toward this session.
The two other options are for the state to be more muscular in how it regulates hospital and insurance prices or to encourage innovation in health care delivery — such as through remote visits with doctors via phone or videoconference, known as telehealth, which could bring more options to rural consumers without actually moving more doctors to rural areas.
But Johnson said there is no quick fix to the problem.
“Because of the complexity of these markets and variations across Colorado,” she and her colleagues wrote in the report, “it’s clear that solving the state’s competition conundrum won’t be a one-size-fits-all exercise.”
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