New York's health benefit exchange opens Oct. 1 for enrollment, and uninsured individuals and small businesses will not only have more choices, they'll have new kinds of choices.
Three brand new health insurance companies will be plying their wares to the estimated 150,000 Long Islanders expected to enroll in the exchange.
North Shore-Long Island Jewish Health System, which is the first major health system in the state to form its own insurance company; Oscar, founded by three young, tech-savvy Harvard Business School graduates frustrated by their health insurance bills; and Health Republic, a new type of nonprofit health insurer -- created by the federal Affordable Care Act -- that will be directed by its customers.
The exchange, called NY State of Health, is a marketplace for health insurance plans for uninsured individuals and small-business owners with fewer than 50 employees as part of the federal Affordable Care Act. Beginning Oct. 1, people will be able to go online or work with trained "navigators" to compare prices and benefits for insurance coverage. Coverage can start Jan. 1, although people have until March 31, 2014, to enroll.
In Nassau, nine insurers are offering plans for individuals, in Suffolk, eight. Three insurers are offering plans to small businesses in both counties.
"Long Island is one of the markets around the country that is showing a true increase in choice," said Joseph Berardo, chief executive of MagnaCare, which manages plans for self-insured organizations in New York and New Jersey. "I think this is one of the most exciting and most competitive times in my 20-plus years in New York health care."
MagnaCare isn't participating directly on the exchange but is leasing parts of its network of 81,000 doctors and other health care providers to two of the newcomers: Oscar and Health Republic. The third, North Shore-LIJ CareConnect, will use its own 15 hospitals and 400 doctor and ambulatory care practices.
Benefits, costs still unclear
Each of the newcomers says it is offering a different approach to traditional health insurance. And the three are among the least costly of the plans being proffered. However, what benefits or doctors they provide or what deductibles and co-pays they and others require won't be clear until Oct. 1, when the exchange is open and people can examine each plan closely.
"Not all insurance is equal," said Janine Logan, spokeswoman for the Nassau-Suffolk Hospital Council, which the state has appointed to provide trained navigators at sites throughout Long Island. "It depends on what premiums you're willing to pay each month, how much coverage you want, and the provider networks the plan offers. Like anything else, you should comparison shop."
Depending on the level of care selected, the monthly premiums for individuals in the exchange can range from $284.50 to $1,019.18, the state has said.
North Shore-LIJ chief executive Michael Dowling said he decided to go into the health insurance business because it was a way to make money as the health care industry -- prompted by the Affordable Care Act -- undergoes a major shift in how hospitals will make money: from being paid for each service provided to being reimbursed for keeping people healthy and out of the hospital.
The health system has hired 60 people from the insurance industry and is building a storefront on Northern Boulevard in Manhasset.
Alan Murray, hired from United Health Care as chief executive of North Shore-LIJ CareConnect, said that the insurance exchange "really changes the landscape. It's a fundamental shift."
Now, he said, customers will have "a direct portal of entry" to compare health plans. And, he said, he knows that if their experience with North Shore-LIJ Connect is not good, "next year they can use their dollars and go elsewhere."
Health Republic is the product of a different approach: the cooperative. Freelancers Union, which started Freelancers Insurance Co. in 2009, is sponsoring nonprofit, member-driven health plans in some states.
These plans have been designated by the federal government as Consumer Operated and Oriented Plans (CO-OP). The federal government has allocated these health plans a $23.8 million start-up loan and $150.7 million loan to be used on an as-needed basis, both of which must be repaid.
Health Republic, which will be offered in New York City, Long Island, Westchester, Albany, Buffalo, Syracuse and Rochester, is the only CO-OP in New York and although a separate entity from Freelancers, uses the same model, said Health Republic chief executive Debra Friedman. "We're happy to provide alternative to traditional insurance models," she said.
It's the only insurance company in the exchange that is member owned. Because the majority of board members will be health plan members, the company will have fewer administrative costs.
"Because we don't have public profit margins, members profit from lower premium prices," Friedman said. "We're able to be highly effective and efficient."
Changing consumers' experience with their health plan is the holy grail of Oscar's three co-founders. Joshua Kushner, 28, a Harvard College and Harvard Business School graduate and founder of a venture capital investment company, said he decided to start a health insurance company when he opened up his insurance bill "and I had no idea what it meant."
What he also found perplexing, he said, was the typical relationship of the health insurer with the customer. "They do everything to acquire customers and then do everything to avoid dealing with them," he said. "What if you took that relationship that is broken and made it simple and transparent?"
Like 'a doctor in the family'
That is the "grand vision" that is driving Kushner and two friends from Harvard Business School: Kevin Nazemi, 32, a graduate of MIT and Harvard Kennedy School and a former director at Microsoft, and Mario Schlosser, 35, a graduate of Stanford University and a former senior investment associate at a hedge fund.
The company is housed in a sixth-floor loft in SoHo and employs 35. The founders chose the name Oscar because they wanted to make the company seem like a person. "It's like having a doctor in the family," Nazemi said.
In fact, an Oscar customer -- Oscar will operate in New York City, Long Island and Westchester and Rockland counties -- will be able to call a number and get a personal call back within 20 minutes from a doctor, who can prescribe medicine if necessary, the founders said. Customers will also get free, unlimited "telemedicine" visits, free wellness checkups and no-cost generic prescriptions.
Whether the co-founders will be able to keep something as dauntingly complex as health care simple and affordable and make a profit is unclear. But as Kushner remarked: "Young people want to work on big problems."
PROVIDERS ON INSURANCE EXCHANGE
Here's a list of the health insurers on New York's health benefit exchange, to begin Oct. 1:
-- Affinity Health Plan
-- Empire BlueCross BlueShield
-- Fidelis Care
-- Health Republic
-- Health Insurance Plan of Greater New York (EmblemHealth)
-- Healthfirst New York (being offered in Nassau County only)
-- North Shore-LIJ CareConnect
-- Oscar Insurance
-- United Healthcare
-- Health Republic
-- North Shore-LIJ CareConnect
-- United Healthcare