It's important to note that New York is one of the states from which ACA looks better than most:
New York's announcement this week that insurance premiums would drop 50% next year for individuals buying their own coverage in new online marketplaces made good talking points for proponents of the Affordable Care Act, but consumers in most states are unlikely to see similar savings.
That's because only a handful have New York's rules, which — like the federal law — bar insurers from rejecting people with health problems. Unlike the federal law, however, New York does not require consumers to purchase coverage, so over time, mainly older, sicker people, have purchased coverage. That drove up prices and discouraged younger, healthier people from buying policies, as did a requirement that insurers charge the same rates regardless of age or health status.
As a result, premium prices listed for individuals often top $1,000 a month for some New Yorkers buying their own coverage, making the state's rates among most expensive in the nation.
And the old New York model of a lousy risk pool with unaffordable premiums is where ACA is potentially headed if the individual mandate "tax" isn't given much teeth.
I've followed NY insurance premiums in the individual and small business market carefully for the last several years, and it is very hard for me to see how anyone came up with the 50% drop statistic. The linked article doesn't really help unfortunately.
The only thing I can think of is that they are comparing apples to oranges. The standardized plans available in the exchange are somewhat different from almost all plans that were available last year in the private market. In particular, and surprising to many not paying close attention, none of the exchange plans downstate have any out-of-network coverage at all. Not even the usual and customary rate reimbursement. So while it's true that you could easily have paid $1000/month or more for an individual health care plan last year (and remember NY has even stricter community ratings than ACA, everyone pays the same) it isn't true that the same plan is $500/month on the exchange.
Well, the ACA stipulates 60/70/80/90% for bronze/silver/gold platinum plans. 90% is pretty high but I'm sure there are "some pre-ACA plans" that pay more.
In general, it's preferable for the consumer to "have some skin the game" so that they might negotiate or increase discretion.
The difference between fixed-size copays and 10% of expenses for the top 0.5% of costliest patients is probably a huge number, so the premiums for those patients would logically decrease though their aggregate out-of-pocket expenses would go up. The point is that it will be a future cost for some people who are currently happy about their lowered premiums.
But I actually agree that consumers should have more skin in the game. My issue is that the statement, "My premiums are lowered!" does not imply that, "The ACA saved me money!" It's more complex than that, and it's plausible that many of the people with lowered premiums are getting a worse deal here.
> It's important to note that [NY already forced insurance companies to cover sick people, so the provision in the ACA that forces everyone else to do the same didn't hit them as hard.]
Is insurance that vanishes when a patient becomes unprofitable really insurance? Social issues aside, it looks like the health care market used to have a defect permitting the sale of fraudulent plans. Now that the defect has been closed, only real plans remain. It should be both unsurprising and acceptable that the new plans are more expensive (acceptable in the "this is an improvement" sense, not the "we can't do better" sense).
> > It's important to note that [NY already forced insurance companies to cover sick people, so the provision in the ACA that forces everyone else to do the same didn't hit them as hard.]
> Is insurance that vanishes when a patient becomes unprofitable really insurance?
It didn't vanish when the patient became unprofitable; the opportunity to buy it vanished when the patient became sick. That is, if you were covered and became sick, you stayed covered; it was if you were uncovered and became sick that it became almost impossible to buy insurance.
> Social issues aside, it looks like the health care market used to have a defect permitting the sale of fraudulent plans. Now that the defect has been closed, only real plans remain.
No, the plans were not fraudulent, and there was no defect. I don't know why you'd expect to not pay for a service and then receive it.
(There is a side issue, which is that once one became sick, it was common for insurers to try to demonstrate that one had defrauded them, and was therefor ineligible for insurance--but that's a separate issue).
> It didn't vanish when the patient became unprofitable
Yes it did. That was one of the "dirty tricks" pointed out in OP's article. The insurance company would intentionally enter contracts that the customer had already violated (by inevitably messing up somewhere in their paperwork). So long as the customer was profitable, they would take their money, ignoring the paperwork errors. If a customer became non-profitable, they would dig out the errors and kick the customer out of the plan.
And then the opportunity to buy care from anyone else also vanished.
> No, the plans were not fraudulent
Fraud is "A false representation of a matter of fact .. practiced in order to secure unfair or unlawful gain." Companies accepted money to insure a customer while secretly and intentionally retaining the option to drop them even if they stayed within the agreed-upon limits. If that isn't fraud I don't know what is. The act of accepting their money was the false representation of fact. I used a shocking word because the practice itself is shocking.
Rescission was vanishingly rare. Regardless, it is a side issue, since it's not what the quote from the USA Today article was discussing. New York may have outlawed rescission too, but it was the requirement that "insurance" be available to purchase when you're already sick that made their pre-ACA premiums so high.
Yes, and those vanishingly rare cases were the most expensive ones.
My point was that the latter was partially caused by the former along with every other mechanism of dumping undesirable patients on the open market. I suspect the major one is the exploitation of the fact that most people will underestimate the extent to which high health costs correlate with decreased income and a higher rate of premium lapse. It won't be counted as "rescission" even though the industry benefits from it (and the people hurt because of it) in exactly the same way.
These mechanisms might not constitute the entirety of the central issue, but they certainly account for a healthy chunk of it.
New York's announcement this week that insurance premiums would drop 50% next year for individuals buying their own coverage in new online marketplaces made good talking points for proponents of the Affordable Care Act, but consumers in most states are unlikely to see similar savings.
That's because only a handful have New York's rules, which — like the federal law — bar insurers from rejecting people with health problems. Unlike the federal law, however, New York does not require consumers to purchase coverage, so over time, mainly older, sicker people, have purchased coverage. That drove up prices and discouraged younger, healthier people from buying policies, as did a requirement that insurers charge the same rates regardless of age or health status.
As a result, premium prices listed for individuals often top $1,000 a month for some New Yorkers buying their own coverage, making the state's rates among most expensive in the nation.
http://www.usatoday.com/story/news/politics/2013/07/20/kaise...
And the old New York model of a lousy risk pool with unaffordable premiums is where ACA is potentially headed if the individual mandate "tax" isn't given much teeth.