Your health insurance premiums could be going up, thanks to New York State

Donna Abbott-Vlahos

New York State is on the verge of making health insurance more expensive for business owners and individual consumers.

That is the view of health insurers, who are nervously waiting to learn whether the state will require them to include out-of-network coverage in the plans they're selling on the state's online marketplace, called an exchange.

Those plans are targeted to individuals, including sole proprietors, as well as businesses with fewer than 50 full-time-equivalent employees. The exchange concept is a vital part of the federal Affordable Care Act, which is sparking fundamental change in the business model within the health care industry.

The mandate, which the state could add any day now, would jolt insurers and really muddle an already daunting task they face: figuring out what to charge for their plans on the exchange. 

Insurers had to invent special plans that comply with the exchange's rules. The exchange has been open less than six full months, far too short a time period for insurers to gather any reliable data on how much their current customers will cost them.

"It's worse than IKEA, where you get a picture but no good instructions for how to actually put it together. This is like you have IKEA, without the pictures," says Leslie Moran, senior vice president at the New York Health Plan Association, an industry trade and lobbying group representing health insurers. "They have no way to know how all those pieces fit together."

Despite that, insurers are convinced of one thing.

"It will raise prices considerably," said John Bennett, CEO of CDPHP. The Albany-based health insurer covers more than 400,000 members.

The exchanges are aimed at making health insurance more of a consumer good, creating an online marketplace where people can shop for coverage from competing insurers.

But this is another case where health care proves to be the atypical consumer good. The cost of health care in America is a common complaint, and the exchanges, through competition and government subsidies, attempt to make premiums more affordable for more people. Yet those same customers often demand exceptional care, where they want it and when they want it--often unaware (or disregarding) how expensive those extra tests and drugs and procedures and specialists could be.

Public comment on the state's proposal has ended. Part of the surprise, as Capital New York reported, is that the state had previously rebuffed pressure from state legislators and consumer advocates to add out-of-network coverage. 

In that story, a spokesman for the state health department said residents from around the state "have told us directly they would like the option to purchase coverage that includes both adequate provider networks and out-of-network coverage. For that reason, this issue is being examined."

Insurers must file their rates by the end of next month, to allow the state time to approve the rates or require insurers to lower them. By law, plans offered outside the state's exchange must mirror those sold on the exchange.

To comply with the "affordable" part of the Affordable Care Act, almost all of the 16 insurers on New York's exchange do not offer out-of-network coverage.

"It's such a little-used benefit, particularly upstate, where the [health] plans have very robust networks to begin with," Moran says. "Affordability was of paramount concern for the exchange, and insurers, in some cases, felt that was more important than having access to every provider out there."

The state Senate has held hearings where people testified about obscenely expensive bills they received for surgeries, for example, where they were unaware that some of the professionals assisting on the procedure were not covered by their insurer.

In a wide-ranging interview with Bennett, the leader of CDPHP, it was obvious those out-of-network charges are a sensitive topic. Bennett was a practicing cardiologist before becoming CEO of the physician group Prime Care Physicians PLLC, then CDPHP.

"I get a very visceral reaction. I continue to be very disappointed-- very disappointed--by my physician colleagues, ethically," Bennett said. "It gets down to, what do you feel is an appropriate charge to the patient? Some of these bills, you can't claim you are acting in the patient's best interest."

Adam reports breaking news and covers health care, manufacturing, government and sports business.

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