New Yorkers who buy their own health insurance may have been shaking their heads a few weeks ago, when many received word that their insurance plans would no longer exist as of next year, thanks to the Affordable Care Act’s creation of state-based health insurance exchanges. With the prospect of losing their coverage looming, information on what the new plans would look like was scarce.
New York’s new health exchange website, HealthBenefitExchange.ny.gov, promised that residents could sign up in October for new plans that begin in January 2014, but no information was available until today on just what those plans would cost.
Today, Governor Andrew Cuomo put some of that confusion to rest, when he announced the state has approved 17 insurers, offering plans that cost, on average, 53 percent less than individual plans cost on the private market now. Federal tax credits could decrease those rates even further for residents who earn less than $45,960 per year.
Statewide, about 17,000 residents, many of them self-employed, buy insurance for themselves. Mr. Cuomo is hoping the rates announced today will provide an incentive for the 2.6 million uninsured New Yorkers to purchase health insurance, causing more healthy people to be added to the insurance rolls, driving down the cost.
“New York’s health benefits exchange will offer the type of real competition that helps drive down health insurance costs for consumers and businesses,” he said in an announcement this afternoon. “The opportunity to choose among affordable, quality health insurance options will mean improved health outcomes, stronger economic security, and better peace of mind for New York families.”
New York has long had some of the most expensive insurance rates in the country because the state requires insurers to insure people regardless of preexisting conditions, but does not require that healthier people purchase insurance, which would spread the cost over a wider pool of healthier people.
Individuals with incomes below 400 percent of the federal poverty level, which is $45,960 for individuals and $94,200 for a family of four, will also receive a substantial reduction in their insurance rates through the IRS’s Health Insurance Premium Tax Credit, scheduled to go into effect in conjunction with the exchanges in 2014. The credit will be advanced to the insurance company when a person enrolls in the plan so that low income Americans don’t have to wait until they file their taxes the next year to pay for their insurance.
Those reductions can be dramatic. For example, an individual who lives at 100 percent of the poverty level, earning $10,830 per year, would pay a maximum of $18 per month for health insurance, while an individual at 250 percent of the poverty level, earning $27,075 per year, would pay a maximum of $182 per month for health insurance. Families who are enrolled in Medicaid or whose children are enrolled in Child Health Plus would be allowed to keep their existing no-cost or low cost plans.
Under the new plans, both individuals and businesses will be able to choose among four tiers of plans — bronze, silver, gold, and platinum — on the exchange. Each plan will have standardized contract terms and product offerings.
Mr. Cuomo said that currently, there are more than 15,000 New York plans that vary widely in terms of level and quality of coverage, a system he called ‘competition through confusion,’ which makes it difficult for people to do a side-by-side comparison of different plans.
“These plans and rates deliver on the promise that the exchange will offer quality health insurance coverage at a price that works for New Yorkers,” said Donna Frescatore, Executive Director of the New York Health Benefit Exchange. “We were pleased to see that there was much interest from health plans regarding participation in the exchange. Our partners at the New York State Department of Financial Services did a thorough job of negotiating affordable prices while ensuring that consumers will have access to the providers they need. Robust competition among health plans has resulted in meaningful choices and better options for consumers.”
A full list of the plans approved to date by New York State is available here.