Whether it's the densely populated Southern California coast or the mountains of rural Northern California, geography is going to play a larger role in the cost of health insurance under the federal health care overhaul set to take effect next year.
Health insurers are facing new rules and restrictions on how they set prices as part of the Affordable Care Act's aim to expand coverage to millions of Americans. No longer can insurers deny coverage because of a preexisting condition or place lifetime limits on medical care. While a person's age will remain a factor in setting rates, older customers cannot be charged more than three times what younger customers pay.
California also has rejected an option under the federal law that allows health insurance companies to charge smokers up to 50 percent more for their premiums.
All this leaves geography as one of the few ways insurers can adjust premiums. The premiums will not be set for most consumers under the law until summer, although estimates are available at the website of California's health benefits exchange, www.coveredca.com.
The federal government has proposed that a state should not create more than seven geographic rating areas to prevent insurers from charging excessively high premiums in certain areas.
To accommodate California's size and diversity, the state's health exchange is proceeding with 19 regions with the understanding that its plan eventually will receive federal approval.
To complicate matters, state lawmakers are scheduled to convene a special session next week, during which the Democrats who dominate the Legislature could come up with their own number.
"Should there be one rate for all of California, every zip code or something in between?" said Anthony Wright, executive director of Health Access California, which advocates for low-income families.
It's still too early to say just how much of a determining factor geography will be in setting premiums.
But one health plan rated the difference between east and west Los Angeles County by a factor of 50 percent, which could mean a difference of hundreds of dollars for a family of the same size and whose members are the same age.
Health plans argue that 19 rate-setting regions are necessary in California because premiums should reflect the underlying costs of care. Those costs include regional wage rates, number of hospitals and the amount of competition in the area for providing medical services.
Health policy experts say different regions carry different risks for disease and access to treatment. For example, the Central Valley has higher incidence of asthma because of its poor air quality.
But consumer advocates are concerned that smaller regions will give health plans the opportunity to target poor, rural or less healthy communities with higher rates, similar to how insurance companies have charged higher auto rates in some communities deemed higher risk.
California needs to balance the social benefit of spreading risk -- defined as having healthy people subsidize care for those who are less healthy -- against having people paying their own medical costs, said Marian Mulkey, director of the Oakland-based nonprofit California HealthCare Foundation's health reform initiative.
“There's probably some Goldilocks, just-right balance between there, but it's extremely hard to find," she said. "And that's why this is a sticky conversation and difficult to navigate."
California Secretary of Health and Human Services Diana Dooley said having seven rating regions is "completely unrealistic for California." The state is moving ahead with 19 regions with the understanding that the federal government will allow it.
"We're going to be making adjustments to this, certainly in the first few years and maybe over the course of the decade," she said. "When we see how this performs after a year or two, we may come back and make changes to those rating regions."
The U.S. Department of Health and Human Services is currently reviewing comments and plans to issue a new rule soon.
At this time, there is no geographic standard for setting premiums. Health plans typically have used nine rating regions in California because they also can use so many other factors in determining premiums, said Charles Bacchi, executive vice president of the California Association of Health Plans.
Health insurers had argued that California needs many rate-setting regions because the state is asking them to switch to a standard benefit design next year.
While it will allow consumers to make direct comparisons of health plans, insurers say the standardization of benefits could drive up premium costs. That is because it restricts the amount and the number of ways they can charge people for co-pays, co-insurance and deductibles.
Covered California, the state's health insurance exchange, is moving ahead with 19 geographic rating regions that insurers will be able to use to adjust premium prices. By county, they are:
Region 1: Alpine, Del Norte, Siskiyou, Modoc, Lassen, Shasta, Trinity, Humboldt, Tehama, Plumas, Nevada, Sierra, Mendocino, Lake, Butte, Glenn, Sutter, Yuba, Colusa, Amador, Calaveras, Tuolumne.
Region 2: Napa, Sonoma, Solano, Marin.
Region 3: Sacramento, Placer, El Dorado, Yolo.
Region 4: San Francisco.
Region 5: Contra Costa.
Region 6: Alameda.
Region 7: Santa Clara.
Region 8: San Mateo.
Region 9: Santa Cruz, Monterey, San Benito.
Region 10: San Joaquin, Stanislaus, Merced, Mariposa, Tulare.
Region 11: Madera, Fresno, Kings.
Region 12: San Luis Obispo, Santa Barbara, Ventura.
Region 13: Mono, Inyo, Imperial.
Region 14: Kern.
Region 15: Los Angeles County zip codes starting with 906, 907, 908, 909, 910, 911, 912, 915, 917, 918 and 935.
Region 16: Los Angeles County, all other zip codes.
Region 17: San Bernardino, Riverside.
Region 18: Orange.
Region 19: San Diego.