United Hospital Fund Analysis Finds That 2010 Was a Positive Year for New York's Health Plans
Report Also Examines the Impact of the Affordable Care Act
While premiums for all New York health insurance plans totaled nearly $51.3 billion in 2010—a 3.3 percent increase from 2009—the Prepaid Health Services Plan sector (which specializes in public programs) saw a jump of more than 20 percent in premium revenues from 2009 to 2010, with total premiums exceeding $8.2 billion. The 20 percent increase is due largely to growth in enrollment. These and other findings are featured in the fourth installment of the United Hospital Fund’s Big Picture, a series of yearly reports that highlight enrollment and financial results in New York’s public and private insurance markets.
Health plans serving the commercial market, despite declining enrollment, increased profitability in 2010, recording over $1.3 billion in net income, nearly a 50 percent increase over 2009 levels. When positive results totaling $200 million from Prepaid Health Services Plans are added in, the total jumps to over $1.5 billion. Medicare Advantage business accounted for a major share of health plan profits, particularly for their HMO licensees, despite ongoing reductions in federal premiums for coverage that are continued and broadened in the Affordable Care Act.
While the 2010 story for health plans was generally positive, there were cautionary notes as well. Six of 11 HMOs lost money on small group business, six finished in the red on the Healthy NY line, and Article 43 insurers posted overall losses on small group business of nearly $130 million.
With this detailed snapshot of enrollment and financial trends as the starting point, The Big Picture IV: New York’s Private and Public Insurance Markets, 2010, and the Affordable Care Act also examines the impact of the Affordable Care Act on New York's health insurance markets and reviews some of the important policy questions and regulatory challenges ahead.
Among the Affordable Care Act-related topics examined in the report:
- Enrollment in New York's standardized individual market dipped to just above 26,000 members in 2010, and rates for most of these plans now exceed $1,000 a month. But individual enrollment could increase to over 850,000 following implementation of the 2014-targeted provisions of the Affordable Care Act, which will bring an estimated $2.6 billion annually in new premium subsidies, individual responsibility provisions, and new products and simplified enrollment procedures through the health benefit exchange.
- The health benefit exchange’s affordability tax credits, slight changes in Medicaid eligibility rules, new state options for low-income populations, and other provisions in the Affordable Care Act will require state policymakers to reassess existing coverage options, such as the Healthy NY and Family Health Plus Employer Buy-In programs, as well as basic regulatory requirements for HMOs and Prepaid Health Services Plans.
- The ability of small employers to shift to self-funded coverage that is outside the reach of the Affordable Care Act requirements may prove to be an important issue for the law’s implementation. Significant shifts in self-insurance among smaller employers could present challenges to maintaining the stability of the small group market.
- While premium and cost-sharing subsidies for health benefit exchange coverage will not begin to flow until 2014, New York State has already received an estimated $1.05 billion in new federal resources due to the Affordable Care Act.
“The Affordable Care Act will help solve the worst problems facing New York’s health care system, including our dysfunctional individual market and the shrinking number of small group employers sponsoring coverage,” said Peter Newell, director of the Fund’s Health Insurance Project and lead author. “Federal support is already helping New York and its partners explore promising ways to restrain costs, improve primary care, and meet the needs of medically complex patients that account for so much of the state's Medicaid budget.”
“Along with the political uncertainties that lie ahead, New York faces a daunting list of implementation tasks,” said Jim Tallon, president of the United Hospital Fund. “It is somewhat comforting to view the enormous job at hand in simpler terms that have guided our work here at the Fund, and longstanding state efforts as well: provide a good array of affordable health coverage choices for individuals and families, identify the ones that are the best fit, and help them enroll. With the tools provided by the Affordable Care Act, these goals are in sight.”
Written by Peter Newell, Allan Baumgarten, a consultant, and Miriam Aziz, research assistant at the United Hospital Fund, The Big Picture IV: New York’s Private and Public Insurance Markets, 2010, and the Affordable Care Act is available on the Fund’s website at http://www.uhfnyc.org/publications/880849.
Support for The Big Picture IV was provided by the New York State Health Foundation.
About the United Hospital Fund: The United Hospital Fund is a health services research and philanthropic organization whose primary mission is to shape positive change in health care for the people of New York.
Editor's note: A preposition in the first bulleted item was corrected the day after this press release was issued. Originally reading "...could increase by over 850,000," the language now reads correctly as "...could increase to over 850,000." [The underlining emphasis has been added here for revision clarification only.]
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