• Report on NY insurance costs is another shibboleth

    From the NYT :

    Individuals buying health insurance on their own will see their premiums tumble next year in New York State as changes under the federal health care law take effect, state officials are to announce on Wednesday.

    State insurance regulators say they have approved rates for 2014 that are at least 50 percent lower on average than those currently available in New York. Beginning in October, individuals in New York City who now pay $1,000 a month or more for coverage will be able to shop for health insurance for as little as $308 monthly. With federal subsidies, the cost will be even lower.

    Some thoughts on this:

    1) People need to note that the $1000 figure is for NYC, and not NY state. People in the city pay way more than people outside the city.

    2) That’s sort of the point. People in NYC will now be treated more like all other people. And so, their premiums drop. In fact, their premiums drop below the old state average of $357 in 2010.

    3) NY state had a somewhat regulated market already, without the individual mandate. So they had the adverse selection that comes from that. It’s one of the reasons insurance was expensive there. So the addition of healthy people to the market will bring the average cost down. That’s why the mandate (or something like it) is important.

    4) This won’t prevent some from pointing out (correctly) that the “bros” could have (maybe) bought crappy plans for cheaper than $308 on a website in the past. Premium shock!

    The purpose of the ACA remains the same. Everyone, even those with chronic illnesses, will be able to get insurance (often with subsidies) on the individual market at a comparable rate. For many, if not most, this will be a vast improvement. For some, it will be a premium increase, although likely for better insurance coupled with the promise that if they do get sick or get older, this will one day be a bargain.

    How you view this is likely dependent on your political lens. Own it.


    • “likely for better insurance coupled with the promise that if they do get sick or get older, this will one day be a bargain”
      yeah, but what are the odds of getting older or sick? 😉

    • $12K/year is just an astronomical price for insurance. The median income in NYC is $5K, making 12K$ nearly a quarter of income. I get so frustrated because all the conversation is about who will pay, not why anyone needs to pay so much.

      I don’t see a competitive individual market, which is about 5% of the entire market as doing anything to cut costs.

      I do wonder what percent of the individual market is less than healthy. And what percent is healthy “bros” who can reasonably expect few health care costs.

    • Some facts that may be worth considering.

      1. The lowest cost Bronze plan for New York city is indeed $308 [Fidelis], but other plans are much higher – 4 are in the $500 a month for individuals range.

      2. The low rates are for Bronze plans that cover roughly 60% of health care costs. It will be interesting so see how much we here after the exchanges start operation on the need to spend significant out of pocket dollars. I suspect many have thought that Obamacare would cover “everything” – and cost less. That is of course not possible or practical – but the expectations may be there.

      3. New York charges the same rate for all ages – something that dramatically increases the subsidy the young and healthy will provide for the old and sick.

      4. A look at the MEPS data shows that…
      – – males age 27-39 spend and average of $3,000 in the northeast on healhcare – so if they sign up for the $308 plan it appears at first to be a good deal. BUT 30% of that age range have NO health care costs in any given year – and the MEDIAN for them is under $700. So good luck making a rational argument for them to sign up for health insurance.

      Another interesting piece of data is that if we look at non-hispanic whites 27-39 we find that they have mean healthcare spending of $4100 and a median of just under $1500. But all others in this age range – hispanics, blacks and asians spend far less – a mean of $3,000 and a median of just under $800.

      Health insurance in New York is about to become a great deal if you are a female, white, old and sick – but not so much for anyone else…

      It will be interesting to see if this is still the case after 2-3 years of adverse selection…

      And don’t forget that the penalty does not apply if insurance cost more than 8% of your [self-reported] income.

    • Does anyone know if NY is planning to allow age rating on the exchange? I can’t seem to find any information about it on the state websites and the PDF does not mention it either.

      • Adjusted Community Rating
        New York has pure community rating, which means that in the individual and small group market, people are charged the same health insurance premiums regardless of age, sex, health status or occupation. Federal health reform introduces “adjusted community rating,” which would permit limited differences in rating based on age and tobacco use. It is our understanding that because New York’s standards exceed federal standards, New York can maintain its current requirements.


    • Not sure- maybe a typo? but the median income in NYC is surely > $5k…

    • I think people are jumping the gun and cherry picking to prove whether premiums will rise or fall. To me that seems premature as Obamacare hasn’t really begun. It is also counter productive or partially moot especially with regard to NYC and some other places around the country.

      Take Medicare and NYC. Has anyone on Medicare reading this blog tried to get an appointment with a physician in NYC? Virtually all Medicare aged patients have insurance, but does that translate to universal access? I don’t think so. Too many physicians are refusing Medicare and many other insurance carriers.

      We cannot forget that the premiums have to be high enough to pay a fee that physicians will accept. In NYC a lot expect cash refusing insurance payments and that number seems to be growing.

      That problem apparently is seen elsewhere as well at least based upon a PBS broadcast.

      “Endless searching. Repeated rejection. Trips to the emergency room when all else fails. The horror stories are familiar to seniors who can’t find a new primary care doctor willing to accept their Medicare coverage.”

    • Does anyone out there, irrespective of their “lens” still think that this mechanism for insuring that the sick and the poor can get health care is more ethically defensible and economically efficient than simply using general tax revenues to giving the sick and the poor the financial assistance that they’d need to get the health care they require?

    • Yes, it was 51K as the median income. But at 308$/month if the penalty is waived for people for whom insurance is over 8% of income, then everyone making less than 46K$ won’t need to pay it. If the policy costs $500/month, then everyone earning less than $75K won’t have to pay the penalty. In short, the people most likely to be uninsured will have no penalty.

    • SAO,

      Sometimes in these back and forths we lose site of the obvious.

      1. As you noted in your first post – 300, 400 or 500 is a pretty big chunk of one’s disposable income.
      2. While Emily may be right in this discussion being a bit premature – I wonder if the State [or insurers] have modeled different scenarios based on how many uninsured sign up for the exchanges. The cynical part of me worries that they are being overly optimistic and hope that they can get a high rate of participation. If the do not the rate spiral begins.
      3. We have talked a lot about the $308 plan – but there are other plans for the same market that are nearly twice as expensive – why is there such a large difference?
      4. Missing from the plan providers are the major health insurers – no Humana plans – and United’s plan is $548.06
      5. Also lost in the discussion is the fact we are talking about the Bronze plan – which covers roughly 60% of costs. I wonder how many of those making $50-$100K will be able to withstand multiple years of care for either chronic or catastrophic care AND pay $4-6K in premiums. One goal of the ACA was to avoid “financial ruin” – what we may see is a slow draining of one’s resources.

    • As a certified “bro” living in upstate New York for two years, I was able to get a crappy plan for around $200 per month. So cheaper plans did exist.

      Though I still don’t think that this should be a consideration in evaluating the ACA. Yes, there is redistribution involved. That was the whole point!