Getting ready for rate review

photo for monday rate review blog post 2Guest post by Kyle Brittingham, Director of Small Business Assistance Program, Community Service Society of New York

Yesterday the Department of Financial Services posted insurance rate applications on their website. These are applications that insurers submit to request a change in their rates as part of New York’s rate review or “prior approval” process. What is prior approval you ask? Below, Kyle Brittingham of Community Service Society gives us a rundown on the annual process, including how you can get involved either as a consumer or an advocate.

Each year, health insurance carriers want to change premiums (i.e. the monthly rates) they charge their customers for health insurance. Sometimes (but rarely), carriers may want to decrease the cost of premiums because it turns out that they have more healthy people enrolled in coverage than they expected. More typically, the carriers want to increase the premiums to keep pace with the rise in medical costs. In order to raise rates, the carriers request approval of their new rates by the government body set up to regulate them, New York State’s Department of Financial Services (DFS).  DFS has to approve all rates before they can go into effect for the upcoming year.  This approval process is called “Rate Review” or, here in New York, “Prior Approval.” And it’s just getting started for 2014.

The process is laid down by the legislature in the law, and it goes like this.  First, the carriers send out notices to their clients to let them know how much they are asking to increase the premiums. In 2014, many customers have already started receiving these notices from their plans. Notices will outline the current year’s premiums, the desired rate change, and the percentage increase or decrease that is being proposed. Next, the carrier will outline some of the reasons for this increase. Here is an example from one of the notices that has already gone out to consumers this year: “The age of the population that choose to enter the Individual market was older, and consequently more costly, than anticipated.” Finally, the notice will inform the consumer of their rights during this process. This is most important part because this is how consumers, and consumer advocates, can work with DFS to keep insurance rates as low as possible.

On DFS’s website, all carriers have to post their requested rate changes and give a detailed explanation of why the carrier thinks this is justified.  Advocates and consumers then get 30 days to respond to the DFS about why they think carriers should or should not be allowed to increase or decrease premiums by the amounts they’ve proposed.  Comments are accepted directly through the website. Comments can explain why the increase would hurt you or consumers in general, they can dispute the carrier’s explanations, or the simplest ones can say you disagree with the increase. Any comment, especially from consumers about their plan, is important.

Each year, HCFANY monitors the prior approval and submits comments to defend consumers in New York State and ensure and preserve affordability of health insurance. You can learn more about our past efforts and read past comments on our website. We hope you will join us this year! To learn even more about how rate review/prior approval works, take a look at this new blog series from our friends at Families USA.

photo for the cost-sharing blog post

Guest post by Yao He, Master’s Student in Public Health, Columbia University

Do high premiums discourage enrollment? Or, is a premium of any size a deterrent when it comes to seeking health insurance? How does cost-sharing (deductibles, co-insurance, etc.) play into whether people get the health care services they need? Does income level matter?

The web has been abuzz with talk of health care costs and how they affect our access to and use of health care services. Here’s a rundown on some of the more interesting pieces we’ve read of late:

It turns out that Medicaid premiums can cause enrollees to leave their plans. A new study looked at how income-dependent premiums prompted Medicaid disenrollment in Wisconsin. Medicaid beneficiaries in the state with incomes between 150-200 percent of the federal poverty line (FPL) are required to pay premiums starting at $10/month. Premium amounts increase with income. The study found that the mere presence of a premium – no matter the amount – could increase the likelihood of disenrollment by 12 percentage points. These findings offer food for thought as our own state continues to expand public health benefits. The New York State Legislature recently authorized a Basic Health Program that would include a premium of up to $20/month for beneficiaries between 150-200 percent of FPL, the same income level as those in the Wisconsin study.

If premiums can cause people to leave plans or stay uninsured to begin with, what is the effect of cost-sharing (e.g. deductibles, co-insurance) on people’s health insurance habits? And how might cost-sharing have an impact on health care costs? The answer depends in part on whether a person is healthy or sick, rich or poor

A famous RAND Health Insurance experiment shows that the higher the cost-sharing in a plan, the less health care services people use – this makes people less costly for insurance plans to cover. But does this mean that higher cost-sharing plans result in health care savings? Not necessarily. More recent research shows that high-deductible plans with low premiums tend to attract healthier people who are naturally cheaper to cover. Moreover, the effect of high deductibles on health care cost reduction may not be sustainable. One study showed a remarkable 25 percent reduction in health care cost in the first year after the high deductible took effect, but reductions in following years were only around five percent.

The RAND study referenced above showed that lower use of care resulting from high cost-sharing does not have an adverse effect on most people’s health, especially if a person is generally healthy. However, this is not the case for those of us who are poor or sick. For people with chronic illness, cost-sharing can cause financial stress and may prompt some to skip recommended services, harming their health. If they happen to be older or live in low-income areas, they can be even worse off. Not surprisingly, less cost-sharing can ease the health and financial burdens on the chronically ill. For example, Medicaid and Children’s Health Insurance Program (CHIP), both public programs, allow those with chronic illness to get care more easily because these plans have very low levels of cost-sharing.

Finally, a new issue brief by the National Health Law Program provides a comprehensive look at how premiums and cost-sharing impact enrollment, service utilization, and health status in the Medicaid population. The brief leaves us with an important message: Medicaid can only serve its purpose to affordable coverage that meets the medical needs of the most vulnerable among us if it has the lowest possible premiums and cost-sharing. Since Medicaid beneficiaries have very low income, they are extra sensitive to the added burden of cost-sharing. At the same time, Medicaid beneficiaries are more likely to have chronic conditions and many health needs, which means unaffordable cost-sharing can force people to stop or delay using services that could improve health. This can bring bigger health issues in the future that cause more harm to people and require more expensive medical services.

Final Numbers for first open enrollment period

Yesterday, HHS announced that over eight million Americans enrolled in health insurance between October 1, 2013 and March 31, 2014. That’s over a million more than the original goal for that period (seven million) and over two million more than the revised goal. As recently as the middle of March, some media outlets predicted that enrollments would fall short of this goal. But, enrollments surged during the last month of open enrollment, with the administration reporting that nearly 3.8 million people selected a Marketplace plan in the final month.

Note, too, that both the federal government and New York’s own Marketplace, NY State of Health, issued a 15-day extension period for those who ran into barriers completing their applications during this time. So, the final count of “open enrollment” sign-ups will be even higher. In New York alone, nearly 100,000 people enrolled between April 1 and April 15.

We’re looking forward to the next report of detailed demographics data from NY State of Health, something like the December Enrollment Report they released in early January. In the meantime, the HHS report gives us a taste:

  • New York ranks 4th in the nation in terms of sheer number of Marketplace enrollments, with 370,451 enrollments in private Qualified Health Plans (QHPs). We’re behind only California, Florida, and Texas.
  • Just over half of enrollees were women.
  • About 1/3 of enrollees were young adults between 18 and 34.
  • Over half of enrollees selected a Silver-level plan and over 80% selected a Silver plan or above. 
  • Nearly 3 out of 4 enrollees received financial assistance (e.g. tax credits).
  • States also reported the difference between March 2014 enrollment and Pre-ACA Average Medicaid and CHIP (children’s health insurance) enrollment (July-September 2013). In New York, about 343,835 additional New Yorkers enrolled in Medicaid or our Child Health Plus program during the first open enrollment period.

The federal report also includes enrollment by race/ethnicity for the federal marketplace. We don’t have this data for New York…yet. Hopefully, the next NY State of Health enrollment report will include it.

 

 

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While we haven’t seen all the fine print, HCFANY is delighted to report that this year’s budget deal includes important protections for New York’s health insurance consumers.  The new budget deal includes:

  • Co-premium assistance for people between 138-150% of poverty (people with children that are currently eligible for Family Health Plus ).  Those who enroll in the Exchange with Silver-level plans will pay no premiums.  This measure is NOT conditional on federal financial participation.
  • Protection for people who currently have out-of-network coverage in the individual market.  These consumers will have the option to pay for a Platinum-level plan on the Exchange with an out-of-network rider and be “risk pooled” with the rest of the State’s individual market.
  • A requirement for SDOH to create a workgroup to study whether New York should adopt a Basic Health Plan
  • Fair consumer protections on the State’s new Navigator program
  • Funding for consumer assistance for New York’s health insurance consumers through Community Health Advocates
  • Still waiting details on Medicaid budget, but it looks like most optional benefits have been saved….

A special thanks to everyone who added their names to our sign-on letter, called the Governor’s office, and worked hard to get these important consumer protections. These budget victories would not be possible without you!!!

Stay tuned for more on the budget!