Countdown to Coverage

Beginning on Jan. 1, 2014, health insurance in the United States will change for the foreseeable future. On that date, the central provisions of President Obama’s landmark Affordable Care Act will go into effect; individuals will be mandated to purchase health insurance and states required to have set up health benefit exchanges—essentially a marketplace for people to shop around for an insurance plan that best suits their medical needs and income level.

While many states resisted taking steps toward implementing the act after it was passed, assuming the Supreme Court would rule the law unconstitutional, New York was one of the few that set the wheels in motion in order to meet the federal deadlines for creating its exchange.

Now, roughly eight months after the Supreme Court upheld the legislation, some states are so behind schedule setting up their exchanges that the federal government will have to pick up their slack and operate their exchange in order to meet the mandated open enrollment date of Oct. 1. New York, however, has had relatively smooth sailing toward the creation of its exchange, and U.S. Department of Health and Human Services Secretary Kathleen Sebelius has pointed to New York as one of a handful of states that is well ahead of the curve. As a reward for its pace, New York has received millions of dollars in federal grants to support the state’s planning and operating of the exchange, including a recent $185.8 million award.

Despite its progress, there are still some significant hurdles that New York’s exchange will have to overcome in advance of the October deadline. One challenge is how the Department of Health, under whose purview the exchange falls, will conduct outreach and market the exchange in order to attract consumers and small businesses to use it.

Addressing this concern, Danielle Holahan, the deputy director of the New York State Health Benefit Exchange, explains that exchange officials have already set up a meeting with an advertising agency and will use a combination of different mediums, including social media, to reach out to the public.

“What we’ve done so far is really try to get as much detail as possible about who [the consumers] are before we kick off this [outreach] campaign, where we will try the target messages that best meet the interests and needs of our target population,” said Holahan, who estimates that when the exchange is fully operational it will cover roughly one million new customers. “We’ll have different messages for different groups. … There’s a fair amount that will go into paid advertising … [and] other outreach and marketing activities that we’ll need to do.”

Once consumers are engaged, the question becomes what sort of health plans and benefits packages will be offered. Exchange officials recently sent out invitations to a variety of health insurers, asking them to offer a health care plan in the exchange marketplace. Holahan said that she expected most of the insurers to reply to the invitation by Feb. 15, with actual applications for exchange participation to be sent in April. As far as the details of the various insurance policies, those have yet to be determined, although the state has chosen Oxford EPO, the largest small-group plan in the state, as the benchmark for the 10 categories of essential benefits that are required to be offered to individuals in the exchange.

Some experts, like Assemblyman Richard Gottfried, chair of the Assembly Committee on Health, had advocated that the state employee benefits package should be the model, rather than one of the small group policies, but he was overruled. “I felt that a broader benefit package made more sense and that the proposition that any health benefit that I as a legislator or the people who clean the buildings or the governor are entitled to ought to be available to the people on the exchange,” Gottfried said.

Gottfried has also raised the question whether people who are now eligible for Family Health Plus—the state’s public insurance program for adults age 19 to 64 whose income is too high to qualify for Medicaid—would be offered health coverage through commercial products on the exchange or whether the state will pursue the option in the Affordable Care Act to create what the federal law calls the Basic Health Plan. That plan would offer a similar policy to Family Health Plus but would be paid for using federal tax subsidy dollars and offer coverage for individuals with incomes between 139 and 200 percent of the poverty level. Gottfried said that because the federal government is dragging its feet in approving states’ proposals for the Basic Health Plan, the state is hesitant to move forward with it, but he believes having such a plan offered in the exchange would be a financial boon for the state.

“What I’ve stressed to the Health Department is for the consumers involved, the basic health plan route will save them significant money in avoiding deductibles and co-pays,” Gottfried said. “For the state treasury, there is perhaps in the ballpark of several hundred millions of dollars in federal matching money that we could obtain. I think that’s important enough that in the budget we should put our heads together and try to work out the complexities.”

Another issue that still needs to be resolved is how the state will handle the influx of high-risk patients into the exchange, which could cause insurance premiums to surge if not enough healthy individuals enroll. The state will also have a slightly different array of insurance plans for small businesses in a separate part of the exchange—businesses with anywhere from 2 to 50 employees will be eligible for coverage—with federal tax credits available to subsidize the insurance. And while the federal government is helping to subsidize the exchange in its first year, the law requires that it be self-sustaining by 2015, leaving little room for error after year one.

Still, Holahan remains confident that the state will continue to lead from the front when it comes to the exchange system.

“I would say to the skeptics: A lot has been done, and I think we’re well-positioned to meet our targets,” she said.