Effect of population size on rural health insurance premiums in the federal employees health benefits program

In the study of health insurance access and affordability in rural areas, a recurring issue is to understand the challenges that programs based upon the competitive market model, such as the Affordable Care Act’s Marketplaces, may experience in less populated areas. This article analyzes data for 2013–16 from the Federal Employees Health Benefits Program, focusing on premium and enrollment data for “state-specific” plans—which offer insurance policies and set premiums at the regional level. In nonmetropolitan counties, each additional plan enrollee was associated with a $0.10 lower per capita biweekly premium, whereas this effect was trivial in metropolitan counties. Low health care provider counts were not associated with higher premiums in nonmetropolitan areas, nor was the degree of insurer competition an important predictor of premiums. However, there was substantial correlation over time, which suggests that some variables may be viewed less as sources of premium variation and more as influencing long-term premium levels. These findings suggest that small risk pools may contribute to the challenges faced by private plans in rural areas, in which case risk reinsurance is a potential policy solution.