As the U.S. Supreme Court weighs whether to keep or toss parts of President Barack Obama’s signature healthcare reform law, New York is confronting its own potential crisis over health costs.
Healthy New York, the 12-year-old insurance program for individuals and small businesses, does not have enough money to cover any new enrollees.
The program, which currently has 178,000 enrollees, receives $160 million annually to help cover claims costs up to a certain amount, but has decided to stop admitting new people into its standard plans, citing the rise in health care costs, a spike in the number of enrollees and flat funding for the program.
Now, according to the state’s Department of Financial Services, the plan will only admit new enrollees if they sign up for the program’s much less popular high-deductible health plan, which requires single people to pay $1,200 out of pocket before they begin to receive coverage, and requires families to pay double that amount.
Elisabeth Benjamin, vice president of health initiatives at the Community Service Society, said this change is something close to a disaster.
“I think it’s a hardship for anybody that doesn’t have a couple thousand dollars lying around for out of pocket healthcare costs,” Benjamin said.
Healthy New York is limited to people earning 250 percent above the federal poverty level, sparking fears that the new policy could force those already struggling into more dire fiscal straits.
For instance, a family of four covered by the plan that makes the maximum amount the plan allows, $47,000 a year, would pay a deductible of $2,400, on a monthly pre-tax income of $3,900.
“If you had a medical catastrophe, you’d have to spend more than half your monthly income to get care, which is not very realistic,” Benjamin said. “It’s almost like financial disaster for people.”
The Department of Financial Services says the problem is one that will be solved by federal health reform, particularly by the implementation of the health exchange program. Senate Republicans refused to put the exchanges in the state’s budget, but Gov. Andrew Cuomo has said he would implement the program via executive order.
“This problem will be solved by the health insurance exchange under federal health reform, where people now enrolled in Healthy NY or eligible for it would have access to federal subsidies,” said DFS spokesman David Neustadt.
Benjamin estimates that the exchanges will reduce the costs of private insurance by up to 66 percent for people in the individual insurance market.
“The fact that the state has had to cut back on Healthy New York, the fact individual health insurance prices continue to skyrocket every year, is all the more reason we encourage the governor to sign that exchange, so the moment January 1, 2014 hits, we can start enrolling people,” she said.
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