Commercial Health Insurance in New York

1
Commercial Health Insurance in New York

• Presented by Courtney Burke
• Rockefeller Institute of Government
• Director, Health Policy Research Center
• For
• New Yorkers for Accessible Health Coverage
  Roundtable
• January 27, 2009

2
Presentation Overview

• Background terminology, sources of insurance,
  and overview of different insurance markets in
  New York
• Regulatory landscape in New York
• Costs and affordability of insurance
• New York compared other states
• The future context, potential federal and state
  changes

3
Background terminology, sources of insurance,
and overview of private insurance markets in New
York
4
Private Insurance, Terminology

• Community Rating
• Guaranteed Issue
• ERISA, COBRA, HIPAA
• HSAs
• Portability
• Premium, deductible, co-pay
• Small group
• Reinsurance
• Subsidies tax credit, premium assistance

5
Distribution of InsuranceSource Kaiser
Commission on Medicaid and the Uninsured
6
Sources of Public and Private Insurance Coverage
in New York

• Public
• Medicare
• Medicaid
• SCHIP (Child Health Plus / Family Health Plus)
• Other public
• Private
• Employer-sponsored insurance, including
  self-insured, large groups, small groups, sole
  proprietors
• Direct pay
• Public/Private
• Healthy New York, Brooklyn Health Works, Working
  Today
• Medicaid buy-in for the disabled
• Family Health Plus buy-in

7
Information About Different Insurance Markets in
New York
8
Self Insured

• A self-insured health plan is one under which an
  employer or other group sponsor, rather than a
  health plan or insurance company, is financially
  responsible for paying plan expenses, including
  claims made by group plan members
• In general, self-insured plans are not subject to
  state benefit mandates or premium taxes

9
Other Employer-Based InsuranceSource United
Hospital Fund analysis of Census Bureau Data

• Small groups (2-50 employees) large groups
  sole proprietors
• 82 percent of employers sponsor insurance, 73
  percent offer to eligible employees in NY
• 80 percent of higher income workers receive an
  offer, 50 percent of lower income receive in NY
• Small firms are much less likely to offer
  coverage (48 percent vs. 82 percent for large
  firms)
• Full-time workers are twice as likely to be
  offered and eligible for coverage

10
Direct Pay MarketSources US Census and Issues
and Options for Reforming New Yorks Private
Insurance Markets Presentation by Mark Scherzer
at the United Hospital Fund, May 11, 2007

• Premiums range from 502 individual for an HMO in
  NYC to 7,980 for family HMO-POS in Suffolk
• The direct pay market in NY decreased from
  approximately 110,000 to 57,000 over 7 years
• HCRA 2000 40 million in stop-loss funds to
  reimburse health plans for 90 percent of the
  claims they incurred within a 20,000 to 100,000
  stop-loss corridor. Claims exceeded the
  stop-loss funds, covering only 39 percent of
  eligible claims in 2006

11
Healthy New YorkSource Healthy NY Annual Report

• Must be employed, live in NY, no employer-offer,
  employed within last 12 months
• Available to individuals, small businesses, sole
  proprietors, but income eligibility rules vary by
  type of applicant
• Enrolls about 150,000, primarily individuals,
  benefits are limited
• Reinsures claims between 5,000 and 75,000,
  costing about 110 million in 2006

12
Private Insurance Regulatory Landscape in New York
13
Regulatory LandscapeSource Kaiser Commission on
Medicaid and the Uninsured
14
Individual Market Portability Rules Source
Kaiser Commission on Medicaid and the Uninsured,
Information for 2007
15
HIPAA RegulationSource Presentation by Sandy
Praeger, Kansas Insurance Commissioner, 10/3/08

• Guaranteed Issue All small group carriers must
• Offer coverage to all small employers, regardless
  of their employees health status
• Accept all eligible employees
• Guaranteed Renewability
• Insurers must allow all small employers to renew
  coverage, including any of their employees
• Limits on Pre-Existing Condition Waiting Periods
  
• Insurers may impose a maximum 12-month waiting
  period for employees with pre-existing health
  conditions
• Insurers must credit prior coverage so
  continuously insured employees will not face
  waiting periods

16
Individual Market All but 7 States Have an
Access Mechanism for High Risk IndividualsSource
Presentation by Sandy Praeger, Kansas Insurance
Commissioner, 10/3/08
No Mechanism (7 states)
Guaranteed Issue (5 states)
High Risk Pool (32 states)
Blue Only GI (3 states)
Other (3 states)
HI
Only AL, AZ, DE, GA, FL, HI, and NV lack
high-risk mechanisms
17
Health Insurance Mandates, 2008 Source
Council for Affordable Health Insurance

• New York had approximately 55 health insurance
  mandates in 2008, more than any other state
• Thirty-seven are services, five are covered
  persons, three are additional mandates (e.g.,
  hormone replacement therapy, psychotropic drugs,
  ambulatory cancer treatment)

18
External Review in New YorkSource Kaiser
Commission on Medicaid and the Uninsured
19
Costs and Affordability of Private Health
Insurance
20
Private Insurance CostsSource Americas Health
Insurance Plans
21
Cost Trends

• Health care costs overall have been rising
• Employer-based insurance is decreasing
• Cost sharing has been increasing
• Over the past eight years (2000 through 2007),
  family health insurance premiums for New Yorks
  workers rose 7.3 times more quickly than median
  earnings. On average, health care premiums for
  families rose by 80.7 percent, while median
  earnings rose by only 11 percent. (Families USA)

22
Affordability Options

• Subsidies (e.g., premium assistance, tax credits,
  reinsurance)
• Pooling (e.g., merging markets, individual
  mandates, high-risk pool)
• Cost efficiencies (prevention, wellness,
  reimbursement reform)
• Targeted affordability (HSAs, Sec. 125)

23
New York State Private Insurance Market in a
National Context
24
New York Compared to Other States

• Pure community rating rare
• Larger than average spending and dependence on
  public insurance
• Decent employer offer and take-up rate
• Highest premium costs in small group market,
  2nd/3rd highest cost in individual market
• One of two state run reinsurance programs, also
  smaller exchange-like program (Health PASS),
  and group purchasing (Brooklyn Health Works),
  which is subsidized, and Working Today for
  freelancers

25
Variation in Rates Allowed by State LawsSource
Presentation by Karen Praeger, Kansas Insurance
Commissioner, 10/3/08
26
What May Happen with Private Health Insurance
in the Near Future?
27
Potential State Level Changes

• Studying coverage expansion options modeling to
  be released in April 2009
• Discussions and analysis of merging small group
  and individual markets
• Discussions and analysis about creating an
  insurance exchange
• Proposals for dependent coverage, Family Health
  Plus buy-in, greater reliance on public programs
• Emphasis on outpatient care, primary care

28
Potential Federal Changes

• Most money will expand public insurance, but
  there is likely to be money for subsidizing
  private insurance
• May see some modifications to minimum coverage
  requirements, perhaps more mandated benefits
  (FEHBP)
• COBRA wrap around for unemployed
• Investments to create efficiencies
• (IT, comparative effectiveness)
• ERISA reform?

29
National Context

• A panoply of organizations supporting coverage
  reforms (AHIP, NFIB)
• More sense of shared responsibility regarding
  costs
• Private insurers supportive of certain reforms
  (e.g., community rating if there is an individual
  mandate)

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Acronyms

• AHIP Americas Health Insurance Plans
• COBRA Consolidated Omnibus Budget
  Reconciliation Act
• ERISA Employee Retirement and Security Act
• FEHBP Federal Employees Health Benefit Plan
• FQHC Federal Qualified Health Center
• HIPAA Health Insurance Portability and
  Accountability Act
• HMO Health Maintenance Organization
• HSA Health Savings Account
• IT Information Technology
• NFIB National Federation of Independent
  Business
• POS Point of Service

31
Questions/Contact Information

• Courtney Burke
• Rockefeller Institute of Government
• Health Policy Research Center
• 411 State Street
• Albany, NY 12203
• [phone]
• burkec_at_rockinst.org