N.Y. Health Benefit Exchange, Part Of Obamacare, Will Dramatically Change How We Buy Health Insurance
By James Mulder Syracuse Post-Standard July 21, 2013
Syracuse, N.Y. - State officials are about to dramatically change the way individuals and small businesses get health insurance in New York by launching a new health benefit exchange that will start enrolling people Oct. 1.
The exchange, operated by the state Health Department, will be a marketplace where consumers can comparison-shop for health insurance, sort of like shopping online for a hotel room or airline ticket.
Consumers will be able to shop and enroll online, over the phone, in-person or by mail. Many people will be eligible for federal subsidies that will lower their premiums.
The exchange is part of the federal Affordable Care Act, also known as "Obamacare," which requires nearly all Americans to have health insurance by Jan. 1 or face a financial penalty.
New York has about 2.7 million uninsured residents. It expects about 1.1 million people to get insurance through the exchange.
About three of every four New Yorkers who get coverage through their employers or the government will not use the exchange.
Nearly 65,700 Central New Yorkers are uninsured.
Carl Clark is one of them who hopes to find affordable coverage through the exchange.
The Syracuse man has been uninsured since losing his job at the former New Process Gear plant in DeWitt, which shut down in August. Clark, 51, is pastor of Open Arms International Ministries, a congregation planning to open a new church on Syracuse's North Side.
"I believe every American should be entitled to good health, not just a few," he said. "Check-ups at my age are important. It doesn't seem like there are many resources out there for uninsured men."
The state said on average rates are 53 percent lower than premiums New Yorkers now pay for individual coverage. The average monthly cost for an individual health insurance policy is now about $1,300.
Danielle Holihan, deputy director of the exchange, said premium rates will be further reduced by federal tax credits.
Individuals and families with incomes up to 400 percent of the federal poverty level are eligible for federal tax credits that will offset the cost of health insurance premiums in the exchange. This income level is equivalent to $45,960 for an individual and $94,200 for a family of four.
A report issued earlier this year by Families USA, a national consumer group, estimated 57,000 Central New Yorkers will be eligible for the tax credits. Dollars from the tax credits will flow directly to the health plan in which an individual or family enrolls, offsetting the total cost of health insurance premiums for the plan. The credit will be available to pay the premium at the time the person enrolls in a plan.
Leslie Moran of the New York Health Plan Association, an industry trade group, said some individuals may have to pay more if they buy a policy with more generous benefits than the policy they have now. There is also no savings for individuals who are buying insurance for the first time.
"They are suddenly putting money out for something they've never spent money on before," she said.
A recent Gallup poll found nearly half of uninsured Americans are unaware they must get health insurance to comply with the federal law.
To get the word out, the New York exchange will kick off an advertising blitz in September. It has hired DDB, a Madison Avenue advertising agency, to help develop the campaign. The federal government is paying the $40.7 million cost over two years.
It's also enlisting nonprofit organizations to tell their constituents about the exchange. The exchange will activate a call center Sept. 1 to handle questions, Holihan said. It also will hire hundreds of navigators throughout the state to help enroll people.
"As we approach Oct. 1, people will start paying a lot more attention," she said.
New York is one of 17 states setting up exchanges. The federal government will operate exchanges in the remaining states which opted not to set up their own.
New York's effort to start an exchange was blocked for more than a year by the Republican-controlled state Senate. So Gov. Andrew Cuomo established the exchange by issuing an executive order in April 2012.
The delay left New York with little breathing room to meet the timetable for its exchange.
"It's a large task to accomplish in a short amount of time," Holihan said. But the exchange is meeting all its deadlines and will be open by Oct. 1, she said.
The Obama administration recently announced it is delaying by one year a provision of the Affordable Care Act that requires large employers to offer health insurance to employees. That sparked calls from Republican leaders in Washington, D.C., who oppose Obamacare, to also delay the mandate requiring individuals to have insurance by Jan. 1. The Obama administration said it has no intention to do that.
Holihan said that national decision will not affect the rollout of New York's exchange.
New York has received $370 million from the federal government to start the exchange. The exchange must become financially self-sustaining in 2015.
The New York exchange will offer standardized plans in four tiers that cover either 60 percent, 70 percent, 80 percent or 90 percent of a consumer's out-of-pocket health costs. The higher the percentage, the higher the premium.
By offering standardized plans, the exchange will make it easy to compare policies, Holihan said. Insurers also will have the option of offering up to three non-standardized plans in each tier.
The exchange also will offer a low-cost, high-deductible catastrophic plan for people under age 30.
People also will be able to enroll in Medicaid, the public health insurance program for low-income people and the disabled, through the exchange. The state is expanding Medicaid eligibility for single, adults with no children.
The eligibility income limit for them now is $11,490. That will increase to $15,282.
"We are building a fully integrated enrollment system," Holihan said. "Anyone can come to us. It's a 'no wrong door' approach."
New York's enrollment period will run Oct. 1 through March 31. Uninsured people who don't get coverage by Jan. 1 will have a three-month grace period to buy insurance before they are subjected to a penalty.
The penalty in 2014 will be $95 per adults, $47.50 per child (up to $285 per family) or 1 percent of family income, whichever is greater. The penalty will increase in subsequent years.
One of the biggest challenges for the exchange will be getting young healthy adults to enroll, according to Moran of the New York Health Plan Association.
Young healthy adults use relatively little health care and help offset the cost of insuring older adults, the biggest users of health services. Insurance costs could soar if there is a disproportionate share of older people in the insurance pool.
"If you are 27 years old and in the third year on the job and you are working to pay rent and a car payment and suddenly you are told you have to buy health insurance, do you spend $75 on that or $75 on your cell phone?" Moran said.
A young adult in that situation might opt to pay the $95 annual penalty, she said.
Holihan said the health benefit exchange will use social media to target this population, which she called "the young invincibles."
Making health insurance more affordable will help persuade many young adults to buy it, she said.
"It's not that people don't want coverage, they can't afford it," Holihan said.