Urgent! NY should set up insurance exchange
As lawmakers in Albany move to pass the state budget before the end of the month, it's essential that they create a New York health insurance exchange. Mandated by the federal health care reform law passed in 2010, an exchange will lower premiums, enhance small-business growth and create jobs.
But some Senate Republicans, who last year agreed to create the exchange, are now blocking it. If New York waits any longer, the federal government will impose an exchange not tailored to the needs of our small businesses and consumers.
New York's more than 400,000 small businesses are our engines of growth, generating two-thirds of all new jobs. Helping those businesses grow will improve the entire state's economy. This should not be a Republican or Democratic issue -- it's about jobs.
Small-business owners need to attract talent and keep existing employees. But the lack of quality, affordable health insurance is a roadblock to recruiting and retaining good employees.
Faced with escalating premiums, over the last decade, employers dropped coverage for nearly 800,000 New Yorkers. Other businesses have reduced coverage or shifted costs to their employees. Still other small employers have let some employees go rather than cut health benefits and risk losing their best employees.
A health insurance exchange creates a reasonably priced alternative. Individuals and small businesses will be able to compare rates, benefits and the quality of competing plans in an open and transparent marketplace -- thus encouraging insurers to offer more competitive prices and plans. The exchange can also pool the purchasing power of individuals and small groups, which lowers costs. And federal tax credits will help consumers and small businesses pay for coverage.
This will all result in significantly reduced premiums. According to estimates from an outside firm, if the exchange were fully operational now, annual premiums for an individual purchased by small businesses would be reduced from an average of $5,890 to $4,630; if purchased by the individual, the average would go from $15,273 to $4,540.
These huge savings help everyone's bottom line. More than a million New Yorkers are expected to gain coverage as a result.
Further, the exchange will feature a small business health options program, which can act as a human resource department, helping employees make choices and enroll, and collecting premiums to send to insurers. Small employers can set a defined contribution toward employees' coverage, and employees can choose from a broader range of plans.
Senate Republicans have raised the issue of costs, but that's a smoke screen. New York State will not use its own funds. Federal grants are available to support the exchange through December 2014, when it should be self-sustaining. New York has already received $88 million in federal grants to set it up.
The federal government will operate exchanges for states that do not create their own. That means the exchange and its jobs could be located outside New York. More important, a federal exchange may not be the best design for our state. New York requires minimum benefits and prohibits insurers from charging higher premiums to seniors and small businesses with older employees. A federal exchange operating in New York may provide fewer health insurance benefits, while charging older New Yorkers higher premiums.
Certification for a state exchange begins this summer. If we don't start building ours immediately, we will have a federal exchange in 2014.
Last year, Gov. Andrew M. Cuomo and the Senate and Assembly agreed to compromise language to create the exchange. The language in this year's budget reflects that agreement. It's ready to go.
This issue is too important to too many people and businesses to let it be scuttled by politics in an election year. Let's pass the exchange now, to help New York's small businesses thrive and create jobs to lead our economic recovery.