Sunday, April 19, 2015

New York to make health insurance *really* affordable for low-income residents

Very quickly, as I'm leaving the house in 40 minutes, big news (via Charles Gaba, natch)  from New York: it's becoming the second state to offer a Basic Health Plan (BHP) for lower-income insurance seekers, as enabled by the Affordable Care Act. A BHP is a low-cost, low-premium offering for buyers with incomes between the Medicaid eligibility cutoff (100% or 138% of the Federal Poverty Level*) and 200% FPL.   The premiums and cost-sharing compare very favorably with the mainstream private health plans offered on ACA exchanges as previously priced for low-income buyers. New York's BHP will have two tiers, with virtually no cost for plan holders with incomes between 100% and  150% FPL and just a $20 monthly premium and minimal cost-sharing for buyers in the 150-200% FPL range.

The 100% FPL starting point presumably means that the upper end prior Medicaid-eligibles (100-138% FPL) will be transitioned in. The benefit summary is below the jump. The plans will be available in 2016; enrollment will begin in November. The state will contract with private insurers to deliver the benefits.

While this is excellent news for New Yorkers with incomes under 200% FPL, it may raise challenges for the private insurance market in New York. In 2014, 53% of private health plan buyers had incomes under 200% FPL, so the market is being sliced more than in half. Minnesota, which has had a low-cost option for residents under 200% FPL since the launch of the ACA markets (and in somewhat similar form, before the launch), has struggled to meet enrollments targets. Enrollments are currently just under 62,000; the state is now aiming for 95,000 private plan enrollments by the end of next year, versus early projections at least twice as high.. The state's lowest-cost insurer in 2014 exited the market this year.
Presumably New York health officials are aware of these challenges -- I hope to learn more (and hope I haven't made any mistakes in my haste!). [See update below.] Meanwhile, here is the benefit summary -- the offering is here.

By way of comparison, a single person earning just under 200% FPL and buying a private health plan on an ACA exchange anywhere in the country will pay $119 per month for the second cheapest silver plan, which typically will carry a deductible, reduced by the Cost Sharing Reduction subsidies available only with silver plans,  ranging from $0 to $1500. She might buy a bronze plan for much less -- or even get one free, depending on age -- but it's likely to carry a deductible of $5,000 or more. On a silver plan, doctor visit copays may be roughly comparable to those quoted above for the BHP, but ER visits are likely to be much more, and vision and dental care are generally not included - dental is sold separately. (I can't get comparisons for New York, because the state exchange's "shop-around" feature doesn't incorporate CSR benefits in the quotes.)

According to the Kaiser Family Foundation, 34% of Americans and 57% of uninsured Americans have incomes below 200% FPL -- as do more than three quarters of those who have obtained insurance via the ACA.   That does raise the question why we need private insurance markets at all. Minnesota negotiates contracts with administrators of its BHP program with terms comparable to those negotiated for Medicaid. While Medicaid rates are probably too low in many states, particularly for primary care physicians, BHPs evoke (for me at least) the vision of a system of enhanced "Medicaid for all" who lack access to employer-sponsored insurance.  To whatever extent that private insurers add value through creative program design, they can do as well by administratering of public programs.

* In states that refused the Medicaid expansion originally mandated by the ACA and rendered optional by the Supreme Court in June 2012, eligibility for subsidies to buy private plans on ACA exchanges begins at 100% FPL. In states that embraced the Medicaid expansion, subsidized private plan eligibility begins at 138% FPL; those with incomes below that level qualify for Medicaid. In Minnesota, which accepted the Medicaid expansion, BHP eligibility begins at 138% FPL; in New York it apparently begins at 100% FPL. Thus those currently enrolled in Medicaid who have incomes between 100-138% FPL will presumably move to the BHP.

Post updated at 5:30 p.m. 4/19 and 8:00 a.m. 4/20.

Update 4/24: Re the challenge of running a private insurance market starting at 200% FPL -- I just noticed this comment on a prior post by Richard Mayhew, who blogs on health insurance topics at Balloon Juice and works in health plan design for an insurer:
Depends on the size of the state. California and New York are probably big enough to have a 200% to 400% FPL population pool to cover costs while Kentucky or Vermont or Rhode Island definately are too either too small or too poor to raise enough revenue to cover costs from only the 200% to 400% bracket. I don't know where the break-even point would be.
 P.S. Mayhew has a post about the NY BHP. He infers, as you would have to given the pricing, "The Basic plan is paying at either Medicaid plus a decent size kicker or Medicare minus something.  


  1. While this is excellent news for New Yorkers with incomes under 200% FPL, it may raise challenges for the private insurance market in New York. In 2014. About Health UK care in Richmond