Hallelujah! New York’s insurance exchange—kept under wraps for months by the administration of Gov. Andrew Cuomo—has finally brought forth some information about the rates that health insurers will charge New Yorkers next year. What a story this has become, beginning with what appeared to be a leak to The New York Times in Wednesday’s paper in advance of a press release from the governor’s office. The Times ran the news with an A1 leader and a dramatic headline: “Health Plan Cost for New Yorkers Set to Fall 50%.”
Twitter was ablaze, with Obamacare advocates quickly cheering the great news. Igor Volsky, the managing editor of ThinkProgress.org, was particularly prolific. A sample of his tweets: “NYT story on NY health premiums falling as a result of Obamacare is on A1. Haven’t seen in other NY papers yet,” and “Will be interesting to see how much coverage NY premium rates get since producers/editors always play up the anti Obamacare stories.” Matt Yglesias of Slate tweeted “An ObamaCare triumph for New York State.” He carried on his commentary in a muddled post called “The New York Obamacare Triumph and Why It matters.” The New York exchange and the governor couldn’t have asked for a better debut.
But a closer look is in order.
Karan Chhabra, who writes for Project Millennial, a site that is gaining a reputation for incisive looks at health policy, tweeted a caution: “Read NYT NYS Insurance article to the end. Underlying reason (guaranteed issue w/o mandate not true in other states.” To explain a bit: For months, actuarial experts had been predicting that rates would fall in New York—and in other states that already had tight insurance regulation that mirror what the Affordable Care Act calls for in January. Obamacare requires insurance to reach certain standards. New York and a few other states are already there.
Most states currently are not. Jim O’Connor, an actuary at the consulting firm Milliman, told me those who live in states like Ohio or Indiana—where regulators have used a softer approach—will see higher rate increases than those in New York and New England, where rates are already higher because of tougher state regulation. New York already required carriers to insure all applicants no matter how sick they are, and those people generate high claims. The state also already uses community rates—meaning the old and the young pay the same for coverage. That has also meant that New York had higher overall insurance rates.
Higher premiums in other states do not negate good news in New York, of course. But New York will still have relatively high insurance premiums, because the cost of medical care in the state is among the highest in the country. The Times story was hardly a model of clarity about what is going to happen in New York, and committed some of the apples and oranges kind of sins I have been warning reporters about in their coverage of the exchanges.
The second graph, for example, reported that “individuals in New York City who now pay $1,000 a month or more for coverage will be able to shop for health insurance for as little as $308 monthly. With federal subsidies, the cost will be even lower.” But what kind of plans is the Times talking about? How old is the person they were comparing rates for? What kind of benefits would people get for $1,000 a month now versus $308 in January? On the New York Department of Financial Services website, which gives approved rates for policies to be sold in the New York exchange, I found New York Fidelus offering a policy for $308.33, a bronze plan sold approved for sale on the exchange for someone in New York City that covers only 60 percent of someone’s medical costs. What is the cost sharing? What is the coinsurance? Is it a high deductible plan? How large a choice of doctors and hospitals does a policyholder have.
To judge how good a deal this is, someone needs to know more than just the premium. And the same goes for the $1,000 plan from this year. What were its benefits and cost-sharing requirements? We don’t have a clue. The Times may have been comparing apples and pomegranates, as so many reporters have done in covering announcements from the state exchanges. It’s just not clear.