James Windus, a New York City personal trainer, got a nasty letter a few weeks ago from his insurance carrier, Emblem Health, a relatively new carrier formed a few years back through the merger of respected New York insurers GHI and HIP, which provided good, relatively inexpensive coverage to millions of New Yorkers over the years. Emblem Health told Windus that, as of January 2011, he and his wife could expect a rate increase of 64 to 69 percent for their “ConsumerDirect PPO Family” plan. “Sixty-nine percent!” exclaimed his wife, shocked by the size of the increase.
Emblem gave them three reasons for the increase. The company said it included a “basic increase for your type of plan.” Next it said there was an increase “resulting from the cost of benefit enhancements required by the new federal Patient Protection and Affordable Care Act,” in other words, the health reform law. The third reason for the increase, said Emblem, resulted from an elimination of a subsidy from New York State for small group mental health benefits known as Timothy’s Law. The company told Windus that New York regulators still had to approve the increase and told him where to get additional information or submit comments if he wanted to. Once again, New York insurance regulators must approve health insurance rate requests, a change mandated by the state legislature this year. For awhile they didn’t have that power.
The company also said there were cost-reduction options he could consider. Ironically, he had already considered them last year, when he choose the consumer directed plan with a $5000 deductible and a $10,000 deductible for out-of-network services. He and his wife thought it was worth the gamble, since they are both healthy, and it lowered their premiums from $9600 a year for a policy from Empire Blue Cross Blue Shield to $6700, a savings of about $3000 a year. The Emblem policy pays 100 percent of the costs after the deductible is met. The old insurance came with a smaller deductible, but it paid only 80 percent. They thought they had a good deal and control over their health care spending. It’s not clear they want to up the ante.
Of course, they can shop around and look for offerings from other carriers, or they can take a plan with an even larger deductible. All of which will be fine if they don’t have a serious illness that will require them to dig deep into their pockets to pay the bills.
Increases like the one heaped on Windus seem ripe for press exploration. Indeed, how much of the increase can really be blamed on the new health reform law? And what the devil is Timothy’s Law? Was the state’s subsidy a victim of the bizarre budget politics in Albany? The New York media told us a lot about the politics of the various showdowns legislators had throughout the spring, but very little about the substance of the cuts that they agreed to and what surprises they bring.
The New York press might also want to take a cue from the Los Angeles Times, which has repeatedly written about health insurance in the state—how rescissions were hurting Californians, and how other rate increases would hurt them as well. You might almost say it is an established beat out there. When Californians complained to the paper that WellPoint planned to increase rates by as much as 35 percent to some policyholders, it was big news all over the state and nationally. In fact, the size of the rate request (since reduced to fourteen percent on average) helped push health reform over the finish line. Health and Human Services Secretary Kathleen Sebelius remarked to one lobbyist that WellPoint and all its mistakes was the gift that just kept giving.
It would be cool if some New York media outlet took on insurance rates as a beat and followed what will happen to all those rate requests the state now has to approve. Sebelius said in her letter to AHIP last week that the feds had just given the states more money “to strengthen the review and transparency of proposed premiums.” Hey, that’s a good thing, at least in theory. It’s up to the media to take a look and check it out in practice.