Before the current debate on health care and health
insurance reform began, New York State had its own very active discussion well underway. Recently,
however, New York’s discussion seems to have entered a period of suspended animation,
side-lined by a budget crisis and by the apparent belief of state policy makers that it makes no
sense to go down one road if the federal government may imminently instruct us to follow a different
path.
The implications of federal health insurance reform for New
Yorkers with serious illness or disability are certainly huge, but a purely “wait and
see” approach by the State while the federal debate plays out could hurt the interests of
people who struggle daily to balance their need for health care with other basic needs.
Lawyer
Mark Scherzer had occasion to examine both sides of this
process at two recent events. On December 3, at a forum in New York City recently sponsored by
SHARE (Self-Help for Women with
Breast or Ovarian cancer), he spoke as part of a panel examining the state of the federal health
insurance/health care reform debate and its implications for New York. The following day, at the
annual meeting of the
Health Care for All New York
campaign, for which Mark co-chairs the policy committee, he outlined the group’s tentative
agenda for legislation that should pass in the coming year in New York, and helped lead a discussion
on policy priorities with advocates from around the state.
Because New York has been a leader in State health insurance
reform, the law being debated in Washington would not change the rules as dramatically here as they
would in other states. Thanks in large part to advocacy by groups representing people with severe
illness and disability, New York has had “guaranteed issue” of health insurance for
individuals and small groups since 1992, meaning that no health questions can be asked when someone
wants to buy health insurance coverage. Federal rules guaranteeing every individual and small group
the right to buy health insurance coverage through an annual one-month “open enrollment
period,”may still not be as generous as New York’s year-round right to buy. Similarly,
new federal rules limiting the ability of health insurance companies to charge higher premiums to
older purchasers (older consumers could be charged three times the premiums of younger ones under
the Senate bill and twice the premiums under the House bill) would improve opportunities for older
Americans in most states, but will still not be as favorable as New York’s “pure”
community rating, in which everyone, regardless of age, disability or any other personal
characteristic, pays the same premium for the same health insurance product in the same geographical
area. Federal expansion of Medicaid will hardly expand eligibility at all in New York, because
we’ve already expanded coverage for low-income residents through such programs as Family
Health Plus. In some respects, New York’s challenge is to prevent federal health insurance
reform from making health care less accessible here than it is under current state law.
In other respects, however, the hundreds of billions of
additional dollars that federal reform will make available for health care stand to improve things
significantly for New Yorkers. Despite our liberal access rules, millions in New York remain
uninsured because they cannot afford the high health insurance premiums that are endemic to our
voluntary system in which those with significant health care costs – due to age, disability,
chronic illness like HIV/AIDS or Multiple Sclerosis, or life-threatening disease like metastatic
lung cancer – have a strong incentive to buy insurance but younger, healthier people may
decide not to participate. By both mandating that everyone purchase insurance and providing
subsidies to people whose incomes are less than 400% of the federal poverty level, the federal
reform should put coverage within economic reach of many more New York residents.
Similarly, new federal rules will define a set of
“essential” health insurance benefits that must be in health plans, will eliminate
lifetime coverage limits and many annual caps on benefits, and will set universal limits on out of
pocket deductibles and copayments. This should improve matters for New York consumers. New York
now permits health insurance policies to be sold with numerous internal limits, with exclusions for
all sorts of essential benefits, including prescription drugs, physical rehabilitation, and mental
health care. The details of the federal health insurance benefit mandates will be worked out
by commissions, and consumers will have to be involved to make sure that no arbitrary lines are
drawn. Nonetheless, it seems likely that the outcome will be coverage that is better suited to
meet the needs of those with serious illness and disability. At the SHARE forum, one audience
member described how radiation treatment for breast cancer left her with unpaid insurance claims of
$40,000, and reduced her to medical bankruptcy, even though she had health insurance. If health care
reform does not address this sort of underinsurance, it will not have done its job.
New York policy makers have a great deal to do immediately
to keep New York’s health insurance market, especially the fragile “direct pay”
market (where individuals buy their own health insurance), from disintegrating while federal reforms
are phased in. In the federal debate, they must advocate against unjustified exclusions that
have been proposed in the new scheme to deny coverage and subsidies to many immigrants. Too
many New Yorkers lack health insurance coverage because of their immigration status. Our
representatives must also advocate for funding that will support the State’s currently
underfinanced reinsurance pools. Those pools are supposed to cover catastrophic individual health
insurance claims and thereby reduce premiums. It is unfair to support other states that extend
health insurance coverage to high risk individuals through “high risk pools”, as the
currently proposed bills do, but not to support New York’s method of making sure that persons
with severe disease and disability can buy insurance coverage. They must seek more federal funding
for existing Medicaid expansion programs, like the ones New York has already adopted, and not just
for states that have kept their Medicaid programs to the bare minimum.
Meanwhile, at the state level, Governor Patterson and
the Legislature can increase the medical loss ratios (the percentage of premiums paid out in medical
benefits by small group and individual health insurance issuers), so that profits are limited and
premiums become cheaper. They can also merge the individual and small group health insurance
markets into a single large market, which will reduce individual premiums and avoid the
market’s collapse. They can reinstate Insurance Department authority to examine premium rates
before approving them; broaden consumer rights to adequate networks when they have EPO coverage; and
allow external review of disputes between consumers and health insurance plans over selection of
specialists. Each of these proposals would make existing health insurance coverage work better
at cheaper prices, and help stabilize a teetering marketplace until federal health reform becomes
effective in 2014.
The new federal subsidies are almost certainly not generous
enough to achieve universal health insurance coverage (by Congressional Budget Office estimates, 6%
of the population will remain uninsured under the House bill, 8% under the Senate bill). But the
subsidies and mandates will nevertheless increase the number of people with insurance.
