NY makes so-so progress on uninsured

by Bill Hammond |  | NY Torch

Screen Shot 2016-08-26 at 4.50.02 PMThe news that major insurers are scaling back participation in the Affordable Care Act, coupled with the prospect of big premium hikes for 2017, is raising fresh questions about the viability of President Obama’s health reform law–and not just from the usual suspects.

A recent Vox.com story–titled “Is Obamacare failing?”–noted that consumers shopping for ACA coverage could soon be left with only one choice of health plan in large swaths of the country.

The site also quoted Princeton economist Uwe Reinhardt, who warned that Obamacare marketplaces are headed for a cycle of rising premiums and shrinking enrollment, pointing to New York’s pre-ACA “death spiral” as a cautionary tale.

So how is New York’s market weathering these crosswinds? Relatively well, in some respects, and poorly in others.

Here is a progress report:

Are insurers abandoning New York’s exchange?

Not yet. Although many insurers report losing money on ACA policies here, as they do elsewhere, there has been no sign of an exodus.

Of the two big companies pulling out in other states, UnitedHealthcare appears to be sticking it out in New York and Aetna was not participating here in the first place. A third company, New York-based startup Oscar Insurance, is quitting the Dallas-area market and the New Jersey exchange, but not New York’s.

A total of 17 insurers have applied to sell individual policies through the New York State of Health, the state’s exchange, for 2017, the same number as 2016. Consumers in all regions will have a choice of at least three plans; in New York City, they will have a choice of 10.

How expensive are ACA policies in New York?

Very. For private coverage, New York’s ACA premiums are some of the costliest in the country, and they’re increasing by a hefty average of 16.6 percent in the new year.

New York City’s benchmark silver premium for 2017 was the second-priciest among 17 markets analyzed by the Kaiser Family Foundation. A 40-year-old non-smoking city resident would pay $425 a month for silver coverage, compared to just $282 in Washington, D.C., $258 in Los Angeles, and $240 in Seattle.

This matches the pattern for employer-provided insurance, for which New York is also the second-most expensive state.

Federal tax credits significantly reduce the cost for lower-income enrollees, but 46 percent of those signing up here do not qualify.

On the other hand, New York is one of two states that offers government-sponsored coverage for residents with incomes up to two times the poverty level. Known as the Essential Plan, it charges premiums of either $20 a month or nothing, depending on a member’s income, and comes with minimal copayments and no annual deductible.

This provides a very affordable alternative for those who qualify, but risks crowding out the private market and driving up costs for those who must still use it.

What is happening with enrollment?

For private ACA coverage, New York’s enrollment numbers are low and going down.

The number buying a marketplace plan through the New York State of Health dropped by one-third from 2015 to 2016, to 272,000. That represents 22 percent of the target population, the second-lowest penetration rate of any state, according to a Kaiser analysis. By contrast, Florida, a state of similar size, sold more than 1.5 million private policies, reaching 58 percent of its potential market.

Dwarfing New York’s private enrollment were signups for government coverage in 2016, including 380,000 for the Essential Plan and 2 million for Medicaid. However, the Medicaid figure includes people who would have been covered by the program regardless of the ACA. The net increase in Medicaid enrollment since before the exchange opened in 2014 is about 700,000.

Still, New York’s Medicaid program ranks among the most expansive in the nation. It covers almost one in three New Yorkers, the second-largest share of any state.

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Source: New York State of Health 2016 Open Enrollment Report

What is happening with the uninsured rate?

By this measure, arguably the ACA’s most important benchmark, New York’s progress is middling.

The exchange itself, citing data from the Centers for Disease Control, estimates that the number of uninsured New Yorkers declined by 850,000 from 2013 to 2015.

Gallup surveys for that same period show that state’s uninsured rate dropped by four points, from 12.6 percent to 8.6 percent.

Proportionally, however, that decline was slightly slower than the national average. New York went from having the 12th lowest rate in the Gallup survey to the 19th.

What lessons can be drawn?

New York’s experience so far suggests at least two lessons:

First, broad insurer participation, by itself, does not guarantee low premiums or a successful private market. So long as New York’s underlying health care costs remain high–thanks, in part, to state-imposed taxes and coverage mandates–insurance costs will, too.

Second, even a very expansive Medicaid program like New York’s, by itself, will not achieve universal coverage.

The state with the lowest uninsured rate is Massachusetts, at 3.5 percent.

Massachusetts also happens to have the most robust private market for direct-pay private insurance, a legacy of state-level reforms that presaged the ACA. The Bay State’s exchange sells marketplace plans to 59 percent of its target population, the best performance in the nation and well more than double New York’s rate.