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NY goes ahead with health care exchange

Gwen O'Shea, president of the Health and Welfare

Gwen O'Shea, president of the Health and Welfare Council of Long Island, which is among the groups that have been helping to plan the exchange. (May 10, 2012) Credit: Newsday/Danielle Finkelstein

As the country awaits a Supreme Court decision on President Barack Obama's landmark health care reform law, New York State is pressing ahead to build an online insurance marketplace -- in anticipation of the 1 million residents expected to seek medical insurance as a result of the Affordable Care Act.

The act calls for such a marketplace, or exchange, to be up and running in each state by Jan. 1, 2014.

While the law seeks to provide health insurance for most people, it does not promise universal coverage and some -- such as undocumented immigrants or those who choose to pay a financial penalty rather than buy a policy through the exchange -- will remain uninsured.

About 600,000 individual New Yorkers are expected to enroll in insurance plans through the exchange, state Health Department spokesman Peter Constantakes said. Small-business owners, who can buy employee insurance through the exchange, are expected to obtain coverage for an additional 400,000 people.

Some health care advocates compare New York's planned insurance marketplace to eBay or Amazon.

"New York State is attempting to move forward," said Gwen O'Shea, president of the Health and Welfare Council of Long Island, which is among the groups that have been helping to plan the exchange. "This is an incredibly complicated system to put in place."

Under the law, the government could impose financial penalties -- which will vary depending on income -- on those who refuse to buy insurance.

New York and Rhode Island have established exchanges through executive orders, according to the National Conference of State Legislatures. Ten states have passed laws putting them in place. New York has received $88 million in federal grants to establish its exchange.

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Gov. Andrew M. Cuomo signed an executive order April 12 authorizing the establishment of New York's exchange within the Department of Health, after the Republican-controlled State Senate failed to include an insurance marketplace in its budget proposal.

On Thursday, New Jersey Gov. Chris Christie vetoed a law that would have established an exchange in that state.

Health reform challenged

Some states have challenged the constitutionality of the health reform act. The Supreme Court could let the law stand, throw it out entirely or just discard parts such as the requirement that most uninsured people must buy insurance. The court is expected to rule on the act in late June.

People who use the exchange will enter their incomes and other pertinent information on a website and choose from a menu of insurance options that fit their needs and finances.

Consumers will also be able to use a toll-free telephone number or walk into designated offices to buy exchange insurance.

The exchange will offer four levels of insurance at prices below those available on the open market.

Consumers will be able to choose from plans that will cover as little as 60 percent and as much as 90 percent of their medical costs.

Elisabeth Benjamin, vice president of health initiatives for the Community Service Society of New York, said the exchange is somewhat "like a Costco in the sky. It's a retail establishment where you can buy wholesale."

The state and insurers will negotiate rates for insurance offered on the exchange, Benjamin said. The federal government will provide tax credits and subsidies to keep prices down for individuals as well as for small-business owners who purchase insurance for their employees on the exchange.

Those who buy health insurance through the exchange will not have to pay more than 9.4 percent of their income for coverage.

People at all income levels will be able to use the exchange, but those with incomes exceeding the federal poverty level -- $11,170 for an individual and $19,090 for a family of three -- by more than 400 percent will not be eligible for subsidies to lower their costs.

And workers with employer-provided insurance cannot use the exchange except in unusual cases where their workplace insurance is extraordinarily expensive.

About 2.7 million New Yorkers younger than 65 have no medical insurance, and 275,000 of them live on Long Island, state and local officials said. Ronald, 37, a Floral Park man who didn't want to be identified, is one of them.

Ronald, who's single, lost his health insurance when he was laid off from his sales job in December and said his only income is his weekly unemployment check of about $400 a week or $21,000 a year -- too much to be eligible for Medicaid and too little to buy insurance.

"I'm barely paying bills and making enough to live," said Ronald, who lives with family members.

He looked into buying insurance, but said it would cost about $3,800 a year. Calculations by the Henry J. Kaiser Family Foundation show he might be able to buy exchange insurance for as little as $1,127 per year.

"Of course I would buy it if it costs $1,127," Ronald said.

Some individuals and families would pay thousands more for insurance on the exchange and the real cost has not been finalized.

"We don't actually know what coverage is going to cost," said Peter Newell, director of the United Hospital Fund's insurance project. "We won't actually know that until the insurance companies make their filings with New York State."

Insurers 'supportive'

Another uncertainty is how many insurance companies will actually agree to join the exchange.

"They are supportive" said Donna Frescatore, the state's deputy director for health care design. "It's too soon in the planning process to know how many will participate."

Leslie Moran, spokeswoman for the New York Health Plan Association, which represents the insurance industry, said it supports "the concept" of the exchange.

"There's still a lot of unknowns in terms of what the exchange will actually look like," she said. "We don't have a lot of specifics from the state."

Assemb. Richard Gottfried (D-Manhattan), chairman of the State Assembly's health committee, said he fully supports Cuomo's efforts to get the exchange up and running.

"My only concerns about it are the inherent problems with relying on the private insurance market," he said. "It will help us make the best of a seriously flawed health coverage system but that system still needs to be replaced."

Exchange explained

WHAT IT DOES The exchange that New York State is setting up for health insurance will allow the uninsured to buy coverage at lower rates.

WHO CAN USE IT People whose incomes are too low to buy insurance on the exchange can use it to apply for Medicaid and other public insurance programs.

PREMIUMS MAY VARY Two people might pay different premiums for the same plan -- based on income and the amount of tax credits they receive from the government.

WHAT IF To illustrate the prices New Yorkers might encounter on the state exchange, Danielle Holahan, the state project director for health insurance exchange planning, pointed to a hypothetical person with a $30,000 annual income.

CALCULATIONS MADE Based on calculations by the Henry J. Kaiser Family Foundation, a Menlo Park, Ca. health policy organization, Holahan said, a person making $30,000 might be able to buy exchange insurance in 2014 at an annual cost of $2,509, including tax credits.

ON OPEN MARKET A similar policy bought on the open market could cost $13,000 annually, Holahan said.

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