United Hospital Fund Report Presents an Unprecedented Portrait of New York's Insurance Markets
With Federal Health Reform Expected to Rely Heavily on Current Markets for Insurance, Greater Understanding Is Critical
A new United Hospital Fund report provides the first comprehensive analysis of New York’s commercial and self-funded health insurance markets, and public managed care markets for children and for Medicaid and Medicare recipients. Because there is wide disparity across the nation in how insurance works, an understanding of insurance in New York—with its relatively progressive, pro-consumer set of regulations for commercial insurance and its ambitious expansion of quality health insurance coverage for low-income residents—is especially critical as federal health reform may support or complicate the state’s efforts to date.
Written by Health Insurance Project Co-Director Peter Newell, The Big Picture combines a detailed statistical analysis of health plan enrollment and financial results, prepared by co-author Allan Baumgarten, with an in-depth review of how New York’s health insurance markets really work—the buyers, sellers, benefits, and premiums paid—and the key statutes and regulations governing the health insurance business in New York.
“By providing a comprehensive and detailed description of how our health insurance markets work, including some fascinating background on the political and policy developments that shaped them, The Big Picture informs the discussion of ‘what’s next’ at this critical juncture for health care reform,” notes Fund President Jim Tallon. “It portrays the context in which federal reform proposals would be implemented, and by informing New Yorkers on how these complex markets work today, it raises important questions about the potential for and challenges to real reform.”
More than 100 individuals were interviewed for The Big Picture, including current and former state regulators and agency officials, legislators, legislative and executive branch staff, lobbyists, agents, brokers, trade association officials, health plan executives, and consumers. Fund researchers also reviewed health plan annual statements and myriad other data sources to generate this incisive portrait of a complex and not well understood system.
“Clearly, Congress and the President have tough decisions to make to balance the goals of universal coverage and comprehensive benefits with spiraling health care costs and escalating federal and state budget deficits,” says Mr. Newell. “Our hope is that The Big Picture and other Fund work focusing on controlling costs in Medicaid and boosting enrollment in public programs can help New York prepare for an era when we may well have a more generous and committed federal partner.”
Support for The Big Picture was provided by the New York State Health Foundation.
Among the telling market trends discussed in the report:
- Buyers in New York markets—individuals, businesses, and government—paid health plans over $41.5 billion in premiums for coverage in 2006, the base year for the report. After an era of increasing consolidation among health plans, four companies collected almost two-thirds of those premiums, and enrolled nearly 80 percent of commercial group members, in markets with strong regional (upstate versus downstate) variations;
- Despite declining enrollment, commercial health plans enjoyed a strong run of profitability from 2000 through 2006. These healthy profits are linked to the explosive growth of enrollment and profit in the federal Medicare program, specifically Medicare Advantage products, which were revamped in 2003. Recent cuts in health plan reimbursement and additional reductions under discussion, however, could constrain profits in this segment;
- Public employees are an important piece of New York's insurance picture. The 1.25 million-member New York State Health Insurance Program, combined with New York City and federal employee benefit programs, accounts for over one-third of the market for large employers;
- With commercial enrollment sagging, enrollment in state public programs grew, reflecting New York’s aggressive public program expansion. Combined enrollment in New York’s three public programs now exceeds combined individual and Small Group commercial enrollment by about one million covered lives;
- Inexorable premium increases for commercial coverage are driving an array of cost-sharing mechanisms, a trend with broad implications—including a growing gap between public and private insurance benefit packages—for consumers, providers, and regulators. One notable side effect of that trend is the quickening demise of traditional, comprehensive HMO (health maintenance organization) coverage.
The Big Picture: Private and Public Health Insurance Markets in New York can be downloaded free of charge from this website.
About the United Hospital Fund: The United Hospital Fund is a health services research and philanthropic organization whose mission is to shape positive change in health care for the people of New York.