New York’s Individual Insurance Market Still Holding Its Ground, But Dangers Lie Ahead, Says New UHF Report
Posted October, 24 2018 by Amanda Dunker
Guest Post by Bob Cohen, Policy Director ,Public Policy and Education Fund and Citizen Action of New York
A new United Hospital Fund report found that New York State’s individual health insurance market held its ground in 2017, even if just barely, despite efforts by the Trump administration to undermine the Affordable Care Act (ACA). Happily, the worst case scenario – a “death spiral” of increasing rates and healthier people dropping coverage, leading to even higher rates – simply hasn’t materialized. However, it is certain that further attacks will come. “New York State has successfully defended the ACA markets for the most part, because of laws and regulations it already has on the books, and because of its own aggressive legal strategy,” the report found. New York has to keep up that aggressive defense to ensure that the individual market can thrive amid continuous federal threats and uncertainty.
The authors found that enrollment in New York’s individual market dropped six percent from 2016 to 2017, primarily attributable to declines in off market (non-NY State of Health) plans. This off-market decline is of great concern because these enrollees are generally healthier that those who enroll through NY State of Health. The authors found that the health of enrollees somewhat improved, but New Yorkers remained on average less healthy than enrollees in 37 other states. And, while the 11 percent average rate increase New Yorkers paid in the 2016-17 period was lower than the national average, 43 states still had lower rates than in New York.
The UHF report warned of greater danger ahead, in part because of Congressional repeal of the individual mandate penalty, effective at the beginning of 2019. This almost certainly will result in healthier individuals dropping their coverage in greater numbers than sicker people. Prices go up when that happens because health costs are being split between a smaller group of people, most of whom have worse health than the general population.
The report reviewed three potential reforms adopted or considered by other states to stabilize our state’s individual marketplace. One idea is reinsurance programs, which are a pool of funds that help insurers recover if they have an enrollee with extraordinarily high costs. In a sense it’s an insurance program for insurers. Reinsurance programs have been implemented by three states so far under the ACA (Alaska, Minnesota, and Oregon). UHF argued that New York should be skeptical about adopting such a program, as risk adjustment is likely “not… the most cost-effective approach” to keep premiums down. Another idea that UHF found more promising is a state individual mandate to replace the federal mandate: a study cited in the report predicted that this step could result in 142,000 New Yorkers gaining coverage and an average premium decline of about 10 percent.
The last strategy the authors examined is providing subsidies for consumers who buy health insurance. The ACA only provides subsidies for people earning up to 400 percent of the federal poverty line. However, premiums are still a big lift for people earning more than that – states could create its own tax credit for them. Or, it could provide additional tax credits for people who already get federal tax credits and who still find insurance rates unaffordable.
New York’s Legislature is going to heavily debate the appropriate response to the threats to the state’s individual market,, especially if enrollment declines again. HCFANY is exploring all of the strategies discussed by UHF and other experts as we consider our recommendations for next year. Additional proposals like an Essential Plan Buy-In and a “single payer” system need to be carefully looked at. As a state, we have to be ready to take big steps to prevent undoing the gains we’ve made under the ACA and making sure that the high-quality plans it created in New York are affordable to everyone.