New study compares state health insurance proposals for N.Y.

State-level health insurance plans have been getting a lot of attention the last few weeks. In Massachusetts, the landmark health reform legislation that created the Health Connector Authority to oversee Commonwealth Care, recently came under fire from a major healthcare provider and the agency’s own general council in the last few weeks. According to media reports, inadequate regulations are leading employers’ to exploit loopholes in the universal coverage clause of the law. But according to most employers, they are collapsing under the weight of health insurance costs. And just last week, Boston Medical Center filed the paperwork to sue the state because the hospital wasn’t getting its promised reimbursement rates for services to poor patients on Medicaid.

To address these and other issues, a state commission in Massachusetts agreed to dramatically change how doctors and hospitals are paid. In what some are calling a “historic” and “extraordinary moment,” Governor Deval Patrick’s administration voted unanimously to adopt a system where doctors and hospitals receive a monthly or annual fee per patient, rather than be paid for each office visit or procedure. According to a Boston Globe report, “The plan would require significant restructuring of the healthcare system, and some of its components would need legislative approval.”

Now, another state in the region is looking at different ways to reform the way healthcare services are delivered.

Last Friday, the New York Department of Health and Insurance released findings from a study that outlined how four proposals to reform the state’s health insurance system might achieve quality, affordable coverage for all New Yorkers.

According to the study, conducted in coordination with the Urban Institute, there is no silver bullet and each of the proposed plans has its benefits and shortfalls. The study looked at the cost and coverage implications of four health reform proposals, including: the Public-Private Partnership proposal, the New York Health Plus proposal, the Public Health Insurance for All proposal, and the Freedom Plan.

“This comprehensive analysis by the Urban Institute provides valuable insight and will inform the health care reform debate in Washington,” Governor David Paterson said in a statement. “I look forward to continuing to work closely with President Obama and Congress to ensure that working families have the health insurance they need and deserve at an affordable price.”

The Urban Institute’s study looked at the four proposals from a market and government cost/benefit to individuals and small businesses. Below are some of the study’s highlights:

  • Public-Private Partnership – simplifies and expands existing public programs and reforms private health insurance. The public-private model covered all New Yorkers, had a minimal change in employer-based coverage, with individual coverage costs increasing. Government spending under the public-private model would increase by 25.3 percent, with a total cost of $35.8 billion, but the net government cost per newly insured person was lowest under the public-private partnership at $2,633. Aggregate health care spending – the amount of new spending across the health care delivery system by all payers including government, employers and individuals – increases the second most under the Public-Private Partnership proposal.
  • New York Health Plus – a proposal that gives all New Yorkers an option to enroll in Family Health Plus, currently under consideration in Albany, care of Assemblyman Richard N. Gottfried. The Urban Institute found that the New York Health Plus model would cover all New Yorkers, drop employer coverage “significantly,” and completely do away with the market for individuals to buy coverage directly. Government spending under the Healthy Plus model would increase to $62.5 billion, or 119 percent from current levels, and it would increase the net government cost per newly insured to $12,508. However, in post-reform expenditures, the model reduces both individual and small employer spending; while increasing the aggregate health care spending more than any other proposal.
  • Public Health Insurance for All – a single payer public health insurance option. This proposal covers all New Yorkers, but it also ends employer-based and individual-paid coverage altogether, meaning that post-reform expenditures by individuals and employers is also eliminated. Government spending goes up the most under this model. An increase of 202 percent, for a total cost of $86.3 billion and $21,287 per newly insured, would be expected. The Public Health Insurance for All proposal has the lowest aggregate increase in health care spending of all proposals that achieve full coverage.
  • Freedom Plan – an option that relies on regulatory flexibility and tax credits. The Freedom Plan is the only plan of the four that does not cover all New Yorkers; it would leave 13.3 percent of New Yorkers uninsured. The cost to buy individual coverage increases under the Freedom Plan, but government spending only increases 9.6 percent to a total of $31.3 billion, or a cost of $6,605 per newly insured person. The Freedom Plan increases individual spending, but somewhat reduces small employer spending. And it achieves the lowest increase in aggregate spending, but does not achieve coverage for all New Yorkers.

Acting Insurance Superintendent Kermitt Brooks said, “The Urban Institute’s study provides a roadmap for reform options so that we can build on what we’ve done and fix the holes in our health insurance system.”

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