“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” summarized Chief Justice John Roberts at the end of his landmark June 25th opinion in King v. Burwell. The decision upholds the right of people in states with federally-facilitated exchanges to get “premium tax credits”, the subsidies provided under the 2010 Affordable Care Act to help low and moderate income people afford health coverage.
Narrowly at issue in the case was a clause saying that subsidies are available in exchanges “established by the State”, leading to a legal challenge arguing that people in the 34 states that use healthcare.gov, the federally-facilitated marketplace, should not receive the subsidies. Chief Justice Roberts’s opinion, speaking for a 6-3 majority (Justices Scalia, Alito and Thomas dissented) makes clear that this language was a drafting error and totally contrary to the intent of Congress. Recent media interviews of those involved with drafting the law also support the decision.
In the 1990s, Chief Justice Roberts explained, New York and other states banned insurers from denying coverage or charging higher premiums to anyone due to their bad health. In response, many bought health coverage only when they got sick, forcing health insurers to increase premiums to account for an ever sicker risk pool, causing even more healthy people to drop their insurance (known as the “death spiral”). The ACA addressed this problem by adding two reforms necessary to make the system work: (1) a requirement that all Americans (with limited exceptions) maintain health coverage; and (2) the premium tax credits. In light of this history, Chief Justice Roberts said in his opinion, Congress could not have meant for residents of the 34 states not to get federal subsidies.
As a result of the decision, six million Americans will not be threatened with losing their coverage and health insurance markets are not facing chaos. But it’s also critically important that the ACA has turned a corner. The major legal challenges are over. A majority of Americans now support the law. As ACA supporters, we now have a new opportunity to increase our focus on making the law work rather than refighting the battles of 2009 and 2010.
New York’s Prior Approval law protects consumers
Each year health insurance companies in New York submit applications to the Department of Financial Services (DFS) that explain their requests to raise, lower, or maintain the premiums they charge consumers for health insurance coverage. Thanks to a strong state law, New York’s DFS can reduce rate increases proposed by health insurers if they find the proposed rate is “unreasonable,” “excessive” or “unfairly discriminatory.” Under the 2010 Prior Approval law, DFS may review rates in the individual and small group (2-50) markets. Most proposed rate increases will go into effect on January 1, 2016.
DFS considers many factors when deciding whether to approve a rate proposal, including the costs of medical care and prescription drugs and the insurer’s past claims experience and financial condition.
Consumers, consumer groups, and small businesses can submit comments to challenge rate proposals that they believe are too high, but the time period to comment is extremely short. Comments must be submitted within thirty days after the insurer’s filing is posted on the DFS website.
The rate increases began to be posted on June 2. Check the DFS website (myportal.dfs.ny.gov/web/prior-approval/rate-applications-by-company) to get the exact deadline for your own health insurer. Many comments are due before July 2nd.
You can make a difference!
Last year, many consumers were faced with double-digit rate increase proposals, but consumers weighed in and the average rate increases were almost cut in half.
In 2014, DFS reduced the average proposed rate increase from 12.5% to 5.7% for consumers on the individual market and from 13.9% to 6.9% on the small group market, saving policyholders in New York an estimated $1 billion!
This year, many consumers and small businesses are again facing rate increases over 10%. The weighted average for rate increases is 13.5% on the individual market and 14.3% on the small group market. Increases like these can seriously cut into family budgets and small business owners’ ability to provide health care for their employees.
What You Can Do:
1. Write a comment challenging your rate increase. You can do this online, through the DFS web page, or you can send it in by regular mail. The DFS web page shows you how.
To comment online:
- Go to https://myportal.dfs.ny.gov/web/prior-approval/rate-applications-by-company
- Find your insurance carrier in the left column and click
- Go to “Pending Applications” and “Under Review” in the right column
- Click on your plan – IND for individuals and SG for businesses
- Create an account and leave a comment
2. Get others to submit comments
- Share our Policy Brief on rate review with friends and family: http://hcfany.org/resources/issue-brief-you-can-weigh-in-on-next-years-health-insurance-premiums/
3. Get the word out on rate review and the need to act by writing a letter to the editor or through social media.
- Sample tweet: My insurance company wanted to raise my premiums by X% next year! I spoke up and you can too! http://on.ny.gov/1ALYFCs #RateReview @HCFANY
What Your Comments Should Say:
Your comments don’t need to be long or complicated. DFS wants to know how a premium increase would affect your life. A short explanation is fine. You may want to include:
- The name of your insurance company and plan
- How a premium increase would affect you and those covered by your plan
- What changes you would have to make to afford the insurance
- Whether you are likely to keep health insurance if the increase goes through
Your Comments Really Matter!
It is a great day for New Yorkers. The Cuomo Administration announced that it has slashed insurance companies’ proposed rate hikes by over 50 percent for people covered through the New York State of Health Marketplace and in the individual and small group markets.
“This is great news for consumers and small employers alike,” said Elisabeth Benjamin, a co-Founder of Health Care for All New York and Vice President of Health Initiatives at the Community Service Society of New York. “The Cuomo Administration has effectively applied the law to control premium costs—and this translates into $1 billion in real savings for New Yorkers.”
New York’s carriers had sought an average 12.5 percent rate increase on the rates individual consumers pay, but the Department of Financial Services approved an average 5.7 percent increase – consistent with the 4.2 percent rate increase approved by the Cover California’s Marketplace. Likewise, the Department cut the average 13.9 percent increase sought by carriers in New York’s small group market to 6.7 percent.
“This news proves the value of an open and transparent rate review process,” said Mark Scherzer, Legislative Counsel for New Yorkers for Accessible Health Coverage and co-Chair of HCFANY’s Policy Committee.
To view a chart of insurers’ approved rates by region, please visit DFS’ website.
The New York State Department of Financial Services is currently reviewing insurance companies’ rates for the coming year, 2015. Overall this year, 11 insurers asked for rate increases and four asked for decreases. You can read insurer rate applications here. Members of the public have the chance to comment on the rates. HCFANY recently submitted seven letters about these plans:
2014 insurance rates on NY State of Health, our State’s health plan Marketplace, declined by 53%. These affordable rates were an important reason for the enrollment of over one million New Yorkers. The Department of Financial Services has an important role in ensuring that health plan rate increases are in line with actual medical cost changes, and that rates remain as affordable as possible for consumers.
HCFANY’s comments first discuss the broader context that the Department should consider and then additional specific carrier issues. In addressing the broader context, HCFANY notes:
- Health care costs have been rising at slower rates for the past several years, and have been under 10% for the last 12, according to National Health Expenditures data. The California Marketplace held health insurers to a maximum 4.2% increase for 2015.
- It’s reasonable to expect the 2015 risk pool will be healthier than 2014, because less healthy consumers are likely to have already enrolled.
- The ACA “risk” programs should mean lower risk for insurers and lower prices for consumers. The ACA includes special programs – risk adjustment, risk corridor, and reinsurance programs – to compensate insurers for any increased risk they take on as a result of new enrollees. The programs were designed specifically to ensure stable insurance rates for consumers.
- Insurers should have lower administrative costs as a result of the ACA. Significant money and energy is being put into marketing and outreach for health insurance because of the ACA, which means insurers can spend less time and money marketing their products.
The Department of Financial Services should post the final rates sometime in the early fall.