For an excellent dissection of how the federal Affordable Care Act will initially affect New York, see this article in yesterday’s New York Post by the Manhattan Institute’s Paul Howard and Yevgeniy Feyman.

Over the past 20 years, the Empire State has virtually destroyed its private health insurance market for individuals by imposing costly and counterproductive regulations, especially community rating andguaranteed issue.

As a result, “while the good news that rates will go down under ObamaCare, the bad news is that many uninsured New Yorkers won’t benefit from subsidies, and the state’s health care system as a whole will remain bloated, expensive, and subject to excessive regulation,” Howard and Feyman write.

Howard and Feyman make two good suggestions for immediate policy changes to limit the damage:

First, Albany should expand the state’s risk band away from pure community rating and embrace the ObamaCare’s maximum allowed 3-to-1 variation between the rates charged to older and younger applicants. If younger New Yorkers can find better rates on the (new federally mandated health insurance) exchange, more of them will sign up for coverage, keeping rates lower for everyone. Indeed, a 2009 Manhattan Institute study found that allowing broader underwriting based on age could reduce the uninsured by about 40%.

Second, the state can allow insurers to charge up to 50% more for tobacco use. Given the state’s other initiatives to reduce smoking related illness and mortality, giving enrollees another financial incentive to quit smoking would reduce health care costs and lower rates for healthy applicants even further.