New York Approves Significantly Lower Premium Rates for Exchange

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This week, New York officials announced that they have approved premium rates for 17 health insurance plans that will be offered to residents next year through the state's health benefits exchange, noting that the rates are more than 50% lower than rates of similar plans offered in the past year, the AP/Miami Herald reports (Virtanen, AP/Miami Herald, 7/17).

All plans that will be marketed through the exchange meet certain essential requirements as required by the Affordable Care Act, and they fall into four categories -- bronze, silver, gold and platinum -- based on how generous their benefits are, according to the New York Times.

A statement issued Wednesday by Gov. Andrew Cuomo's (D) office noted that eight of the 17 plans are new entrants to the state. According to the Times, the new premium rates will primarily affect residents who need to purchase their own coverage. The majority of state residents have coverage through their employers, with just 17,000 New Yorkers purchasing their own insurance coverage, the Times reports (Rabin/Abelson, New York Times, 7/16).

According to Politico, the news about the substantially lower premium rates is significant because New York's individual market "has long been one of the worst in the country," in part because insurers are required to accept all applicants regardless of any pre-existing medical conditions and charge community rates. However, unlike the ACA, New York did not enforce an individual coverage mandate, which caused premium rates to "skyrocke[t]" (Millman/Cheney, Politico, 7/18).

State officials estimate that as many as 615,000 New Yorkers will purchase coverage through the state's exchange during the first several years after the ACA is fully implemented next year. About 2.6 million state residents are currently uninsured, according to CQ HealthBeat (CQ HealthBeat, 7/17).

Details of Premium Rates

Officials said the decline in premium rates means residents of New York City, for example, would see their monthly premiums decrease from at least $1,000 currently to as little as $308 per month beginning on Oct. 1.

Meanwhile, a state resident with an annual income of $17,000 would pay about $55 per month for coverage under a silver plan, while an individual with an annual income of $20,000 would pay about $85 a month for the same coverage. A person earning $25,000 per year would pay about $145 per month for the same plan. However, some experts noted that the least costly silver plan might not offer consumers broad access to hospitals and doctors (New York Times, 7/18).

ACA Supporters, Critics Comment on Rates

ACA advocates attributed the drop in rates to the exchange, which is spurring competition among insurers. Officials with the Obama administration also touted New York's lower premium rates as evidence of the ACA's success.

HHS spokesperson Joanne Peters said, "We're seeing in New York what we've seen in other states like California and Oregon -- that competition and transparency in the marketplaces are leading to affordable and new choices for families" (New York Times, 7/16).

CMS Administrator Marilyn Tavenner also welcomed the premium rates news during a House hearing Wednesday, saying that it "reaffirms what competition and transparency can do in a marketplace."

However, critics of the ACA said that New York's current high rates for individuals demonstrate the effects the ACA will have on the rest of the country. In a National Review article, Avik Roy of the Manhattan Institute wrote, "New York has one of the costliest and least functional individual insurance markets in the nation because many of the regulations that Obamacare imposes nationwide are already present in New York, on steroids. Hence, New York's market is far from typical" (Politico, 7/18).


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