I’ll start with my online chat with Brenda, on the HHS.gov site where I asked what accounts for the difference in premium prices among plans within the same metal level, eg platinum and platinum? After first providing me with an answer to a different question, sadly Brenda said she did not know. The information was not available.
So, I looked at the headlines of yesterday about New Yorkers being promised a 53 percent reduction in premiums, and further at the list of plans that you can find by searching “ny.gov, approved 2014 health insurance rates.”
A few things pop out, but they certainly do not provide the answer to my original question, why the tremendous difference among platinum plan premium rates? The first thing is that no New Yorker will have a choice from all of the 17 plans listed (there are 21 listed but 4 are off the exchange including the Oxford HMO, HIPIC, GHI and Atlantis. Only 2 of the 17 are offered to all 8 regions of New York.
The second thing is the huge range in the cost of premium for platinum level plans, with the United plan that's offered only in three regions, mid-Hudson, New York and Long Island coming in at $913.99/per month for an individual and the least expensive, Freelancers, which is offered in every region coming in at $423.64 a month.
Because Freelancers is available in every region, we’ll average out the cost of premiums for the same three regions that are included in the expensive United plan. For the same three regions, Mid-Hudson, New York and Long Island, the Freelancers monthly payment average comes to $497.56, still significantly cheaper than the $913.99 per month from United.
Without access to the details of the plans, it’s obvious that more examination is going to be required by NYers seeking insurance through the exchange, and that the Governor’s quote that the health exchange “…will offer the type of real competition that helps drive down health insurance costs…” probably is not evidenced by such a big range in offerings. I mean, if you can get equivalent platinum coverage for $497.56 a month, why would you choose platinum coverage at $913.99 a month?
OK, so what else could make platinum plans different from each other? Under the PPACA, the metal levels are determined by actuarial value of coverage, 60 percent for bronze and 90 percent for platinum. But actuarial coverage does NOT mean that each individual will get that level of coverage, it only means that overall the plan provides for that level of coverage for the costs the plan covers.
Gibberish? Not really. It means that the actual financial experience of coverage a given New Yorker has with a plan, even though the plan is platinum will vary depending on that individual’s health care needs. This is where New Yorkers will have to read through their plan alternatives.
The second consideration that might account for the differences among plans of the same metal level is provider choice, and provider acceptance in a particular region. Having a sufficient number of provider choices will influence level of care, quality of care and timeliness of care. New Yorkers will have to figure out whether those less expensive platinum plans offer less in the way of provider choice and participation. While qualified plans are obliged to ensure a sufficient choice of number of health care providers by the PPACA, this is likely going to be experience based.
The third unknown for New Yorkers is whether these plans will sustain their affordability beyond year one. In the announcement, “Governor Cuomo Approval of 2014 of Health Insurance Plan Rates for New York Health Benefit Exchange,” it states, “The fact that these average individual rates are effectively being cut more than in half is primarily because a greater number of uninsured individuals are expected to obtain coverage in the individual insurance market – lowering overall premiums.”
This brings us to the assumption that the plans will enroll enough of the uninsured individuals who are credited in the Governor’s statement as THE PRIMARY reason the rates can be offered. Not all plans will likely get enough enrollees to sustain their low rates. BUT, that’s borrowing trouble, although it’s worth paying attention to.
One of the unknowns is the concern that sicker people are likely to purchase more insurance coverage, eg higher metal levels because they anticipate higher medical bills. But plans don’t want to have unbalanced populations, they want fewer sick people and more young, healthy, payers.
Now, much as in the case of sufficient numbers of providers, qualified plans are required NOT to discourage enrollment by individuals with significant health needs under the PPACA, but again, without specifics, experience will better inform whether a plan is meeting this standard. There are also some temporary money-shifting measures that will be available to more evenly distribute money from plans with healthier people to plans with less healthy people.
It’s also important that in calculating expenses, New Yorkers pay attention to premium increases if they seek to cover spouses, children or their whole family. These increases don't include added premiums charged for older individuals and smokers under the PPACA.
There’s much work that has been done, and it’s likely that NY will greatly benefit from federal dollars that will provide additional premium savings in the form of credits available under the act as well as the financial contribution by the federal government for the expansion of Medicaid. However, without details, I believe it’s premature to declare Mission Accomplished, similarly to the premature declaration of President George W. Bush so many years ago.
