The Cuomo administration announced Wednesday that the cost of individual health insurance plans in New York state will fall on average by half when a component of President Obama's health care plan goes into effect in January.
That conclusion is based on the costs of insurance plans to be included in the state’s “health benefit exchange.” Here’s your guide to understanding what it all means:
1. What are these exchanges anyway?
The exchanges are the way that individuals who aren’t covered by their employer or a government program like Medicaid will be able to purchase insurance. They are online marketplaces where people can compare the cost and quality of different plans, as Travelocity does for airline tickets—or as eHealth does already for health insurance plans. (The state’s version will likely be a lot more complicated than eHealth, by the way, but should also make it easier to compare plans and inform customers of goodies like which subsidies they are eligible for.)
2. Can rates really drop by more than half?
That’s what the Cuomo administration is claiming. If you take a look at the rate chart for the exchange, you can see that the monthly cost of a “gold”-rated individual plan—the second highest of four tiers in terms of quality—will range from about $400 to about $800 in Manhattan. Avik Roy, a senior fellow at the Manhattan Institute, has pointed out that according to the Kaiser Family Foundation, the average cost of health plans in the state was just $357 in 2010. (Kaiser says that figure includes a lot of subsidized programs.)
3. What if I still cannot afford to buy insurance?
The Affordable Care Act does include some exceptions for what’s called the “individual mandate”—the requirement that every individual be covered come Jan. 1, 2014: those whose incomes fall below the threshold needed to file a tax return, for example. In addition, in some states, including New York, Medicaid will be expanded to cover more people. What’s more, about 70 percent of the people in New York state who are without health insurance are expected to qualify for federal subsidies (in reality, credits on one’s taxes) in order to buy policies on exchanges. Or, failing that, one can always pay the penalty—which is $95 next year (but more in subsequent years). Those who would have to pay more than 8 percent of their income on insurance even after those subsidies also would be exempt from the mandate.
4. When will the exchanges be open for business?
They are scheduled to be open Oct. 1. That’s when people can start enrolling. The health insurance plans themselves will begin covering people Jan. 1, 2014.
New York already has its website up, though without any rate and subsidy information. Go to http://www.healthbenefitexchange.ny.gov/ to find out more information.
5. What about New Jersey?
New Jersey is not creating its own exchange; the federal government will implement the state’s health marketplace. More details, such as how much they will cost, are expected shortly. But enrollment there is also expected to begin Oct. 1.
6. What about the Obama administration’s decision earlier this month to postpone the employer mandate?
That decision postponed the penalties employers would have faced in some circumstances if they failed to provide health coverage to their employees.
While the Affordable Care Act does not explicitly require employers to offer health coverage to their workers, the federal government will eventually fine businesses if they employ more than 50 workers more than 30 hours a week (plus a couple other guidelines) and don't provide health insurance. The deadline for that coverage was pushed back from the beginning of 2014 to Jan. 1, 2015.
But that decision did not relieve individuals of the requirement that they be covered as of next year.
WNYC's Fred Mogul has been reporting on exchanges and maps out what this means for New Yorkers in the audio above.