Despite the promises of choice and affordability offered by the federal health care overhaul, many Minnesotans outside the Twin Cities area aren't seeing much of either.
In certain pockets of the state, shoppers on the new MNsure website have just a handful of insurance companies to choose from and face much higher premiums than those available in the metro area.
"I've got clients who are looking at paying $500 more a month than they're currently paying," said Rod Woxland, a broker with Minnesota Garot Christman Agency in Rochester. "They feel they're left out of this deal. If they want coverage, they have to pay the price or drive elsewhere."
The gap is greatest around Rochester, home of the Mayo Clinic, and surrounding counties in the southeastern corner of the state. Residents there have one or two insurance companies to choose from and face prices that are nearly double those in the Twin Cities.
People in the Arrowhead region of northeastern Minnesota, particularly outside of Duluth, also face lackluster competition. Residents have three choices of insurers and pay about a third more than the Twin Cities, where consumers can choose among all five of the state's major carriers and enjoy the state's lowest prices.
One thing the higher-priced areas have in common is a dominant hospital and clinic system — Mayo in the southeast and Essentia Health in the northeast.
Northern Minnesota has long trended toward higher medical costs, said University of Minnesota health economist Roger Feldman, perhaps because it is dominated by steelworkers and mine workers whose unions may have negotiated richer benefits that are both well-needed and well-used.
An aging population with more medical needs and Essentia's market power create a difficult market. "Costs are higher up there because providers charge more," Feldman said.
And what insurers call "the Mayo Effect" leads to a different market reality because Mayo's world-renowned care makes it a must-have in many insurers' networks. With such market power, Feldman said, Mayo creates a "take-it-or-leave-it" situation, particularly for those who live nearby.
Robert Coates of Rochester figured that out when he first logged onto the MNsure website. He and his wife live on his "small pension" and her monthly Social Security disability check. Tax credits will knock the premium down from $700 to $350 a month, with a high deductible, but that might still be a struggle.
"I think you will agree with me — that is neither choice nor affordable," he said. "It's ironic that Mayo is getting millions from the state of Minnesota, but the people who live in the county where it's located are getting screwed when it comes to getting affordable health insurance."
The issue of premium price and competition has reached a fever pitch inside the State Capitol in recent weeks, as legislators representing the Rochester area hear from constituents who have shopped the MNsure site.
Legislators have written letters, and regulators have been meeting with insurance executives to try to get consumers more choice.
In Olmsted and Dodge counties, for instance, residents have several options, but all are sold by a single company, Blue Cross and Blue Shield of Minnesota.
The situation arose after Medica, the other insurer offering coverage in the 10-county southeastern Minnesota region, carved out some ZIP codes around Olmsted County, which includes Rochester, and around Dodge Center when it designed its MNsure offerings.
The lack of choice is particularly stark for residents with a Rochester ZIP code. There is just one health plan offered on MNsure — a single silver-level plan from Blue Cross and Blue Shield of Minnesota. It costs a 40-year old nonsmoker $326 a month, with a $3,000 deductible. A comparable option for a Twin Cities resident would cost an average $154.
"No other carrier wants to work in this area partly because the Mayo Clinic is becoming too expensive," Rochester broker Woxland said. "That's what irritates people."
Mayo spokesman Bryan Anderson deflected the criticism, saying the giant system of hospitals and clinics finds itself at the "nexus" of a host of issues with the Affordable Care Act as new rules take hold next year.
Mayo not only is located in a rural area, Anderson said, but it draws sicker patients as an academic medical center. And Mayo's team-based approach to medicine is different from traditional medical models in which doctors get paid for each treatment.
"We're not unique across the country," Anderson said, noting that prices are also higher around academic centers such as UCLA Medical Center in Los Angeles, New York's Mount Sinai and Northwestern University's Feinberg School of Medicine in Chicago.
Mayo has contracts with most insurers, he said, but they're not offered on the MNsure exchange.
"We're committed to working with health insurers to increase access to the Mayo Clinic," he said. "We are disappointed that more of them didn't choose to offer plans down here."
It may take time
Cynthia Cox, a policy analyst with the Kaiser Foundation, said there hasn't been enough time to tease apart the reasons for disparities across regions, which are happening across the country.
There's a correlation between the number of insurance offerings and population density, but a competitive provider market plays a role as well, she said.
A New York Times analysis recently found that 58 percent of counties served by the federal exchange have just one or two insurance companies and that those in rural areas and small towns are paying for it.
But Cox and others point out that time will tell how competition and premium prices will shake out.
"We might not see this new level of competition that the law hopes to achieve immediately," she said. "It might be something that happens down the road."
The stated premium prices don't account for discounts many residents with low and modest incomes will get through tax credits and more generous publicly subsidized health coverage. And that those who already are sick likely are seeing less sticker shock, no matter where they live.
But a big fear is that price and lack of options will keep healthy people away from the exchange — the very thing needed to keep prices low next year.
So for now, brokers like Woxland are doing more research on policies sold outside of the exchange, writing their representatives, and trying to hold steady in the face of angry clients and no good answers.
"They blame me, or the insurance company, or the Mayo Clinic or the Obama exchange," Woxland said. "It's a little bit of all of that."