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Blair Horner: The First Economic Benefits Of Health Reform

Last week some of the economic benefits of the federal health care reform law became evident.  The Cuomo Administration released its estimates on the costs of health insurance for those who must pay for coverage – people who don’t get health insurance from the government or their employer.  Virtually all New Yorkers will have to have health coverage by January 1, 2014.

The New York State Department of Financial Services approved health insurance plan rates for insurers seeking to offer coverage through New York’s Health Benefits Exchange – the entity through which uninsured individuals will purchase their coverage.  According to the Department, on average, the 2014 rates for coverage purchased by individual New York consumers will be roughly half the cost for the current’s year’s rates paid directly by individuals.  The reason for this rate cut is that the Department believes that a greater number of uninsured individuals are expected to obtain coverage in the individual insurance market – thus lowering overall premiums.

Under the provisions of the Affordable Care Act – the federal health reform law – consumers and businesses will be able to choose among plans in four easy-to-compare ‘metal” tiers (bronze, silver, gold, and platinum) on the exchange.  The plans within each metal tier will have standardized contract terms and product offerings, making it easier for consumers to comparison shop and encourage price competition among insurers.  Previously, New York insurers offered more than 15,000 plans that widely varied in terms of level and quality of coverage provided and made it virtually impossible for consumers to effectively compare plans.

And these savings do not reflect the assistance available for those of modest income.  Individuals with incomes below 400 percent of the federal poverty level ($45,960 for individuals and $94,200 for a family of four), could qualify for financial assistance that further lowers cost of coverage.  Enrollment in the New York Health Exchange begins on October 1, 2013 for coverage that will be effective January 1, 2014.

But the estimated savings in New York are not unique.  In a report also issued last week by the federal government’s Department of Health and Human Services, it was estimated that insurance premiums will be, on average, nearly 20 percent lower in 2014 than previously expected.

Specifically the report found that in the 11 states that have made information available for the individual market, proposed premiums for 2014 are on average 18 percent lower than HHS’ estimate of 2014 individual market premiums derived from earlier estimates.

This estimate is based on premium proposals for the lowest cost silver plan.  Actual premiums in 2014 may be even lower when health plans are offered in each state’s exchanges this Fall.  Already, in a number of states the rate review process and competition are resulting in final rates that are significantly below what was proposed earlier this Spring.  The report is available at the Department of Health and Human Services website (see: http://aspe.hhs.gov/health/reports/2013/MarketCompetitionPremiums/rb_premiums.pdf).

Coupled with the other changes in health insurance that have already gone into effect, such as eliminating annual and lifetime payment caps on the amount of medical payments made by insurers and ensuring that parents can cover children up to the age of 26, it is increasingly clear that the federal health care reform is making an irrefutable difference in the lives of hundreds of thousands of New Yorkers who are either paying exorbitant amounts for coverage now or living without health insurance altogether.   By establishing affordable rates on a statewide Health Insurance Exchange, the Cuomo Administration is giving New Yorkers who need coverage – including the thousands of uninsured New Yorkers who will be diagnosed with cancer this year – the power to make medical choices based on health needs, not finances.

Anyone who has had to individually purchase a private health insurance plan can attest to the exorbitant cost.  As a result of the government negotiating on behalf of its citizens, insurance costs will become more affordable; in turn, insurance becomes far more accessible to those who couldn’t previously afford a private plan.  New Yorkers are seeing this theory become reality today with the establishment of affordable rates for individuals who must pay for coverage themselves.  This was a crucial first step in the state's efforts to ensure coverage for those who need it. 

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