At least 137,000 people in the eight counties of Western New York have received, or will soon receive, a notice that President Obama said they would never get: a notice that their health insurance is being discontinued, and that they’ll have to shop for another plan.
That’s the number of people who get insurance from Buffalo’s three major insurers who are destined to get the government-mandated letter, a jargon-filled tome that one local insurance executive called “a 14-page packet-o-whacket.”
But one line of one version of the letter, which is being sent to people all around the country, is clear.
“Your current plan will cease upon your anniversary date,” said a letter sent to one subscriber in Washington, D.C.
Contrast that line with the words of the president.
“If you like your insurance plan, you will keep it,” Obama said shortly after the Affordable Care Act, his signature health care reform law, was passed in 2010. “No one will be able to take that away from you. It hasn’t happened yet. It won’t happen in the future.”
It’s happening, though, to approximately 12.5 percent of those at BlueCross BlueShield of Western New York, Independent Health and Univera Healthcare, according to numbers the three insurers provided to The Buffalo News.
And it’s happening for a reason, Obama said in a speech last week in Boston. The law now prevents insurers from offering “substandard” plans, he said.
“One of the things health reform was designed to do was to help not only the uninsured, but also the underinsured,” Obama said.
Nevertheless, Rep. Brian Higgins, D-Buffalo, a strong supporter of the health law that aims to provide insurance to millions of Americans who have been living without it while driving down costs, acknowledged a gap between what the president said and what’s happening now.
“The Affordable Care Act is meant not just to expand, but also to improve coverage,” meaning some people will have to replace their policies with something better, Higgins said. “I think that’s what’s occurring here. But you know, in truth, the president and others have said that if you have coverage, you can keep it, and that is clearly not what is happening here.”
Changes to Healthy NY
Here’s what’s happening in Western New York:
• A part of the state’s Healthy NY program, which targets lower-income sole proprietors, is ending, and some of the 10,700 or so people on that program in Western New York could face significant and costly changes.
• A far larger number of people who work at smaller companies are finding their plans – which in many cases do not include prescription drug coverage – will have to include that and other additional benefits in the future, making them much more expensive.
• Others will just see modest changes so long as they agree to re-enroll in new plans that are very similar to those that are being discontinued.
Families who get their health care through major companies, or through state or federal employment, will generally be able to keep their current insurance.
But for some individuals enrolled in Healthy NY, it’s a whole new health care world.
After Jan. 1, the state-sponsored health care program ends for sole proprietors of small businesses who make a little less than $29,000 a year if they are single, or less than about $59,000 for a family of four.
An upgraded Healthy NY will still be available for businesses with 50 or fewer employees, but the change means that approximately 10,700 sole proprietors in the region’s eight counties will lose their state-sponsored insurance and be forced to shop for new insurance on NY State of Health, the new health insurance exchange, or online marketplace, created under the new federal health law.
“The Healthy NY individual coverage is going away,” said Pamela Pawenski, regional vice president for sales at Univera Healthcare. “The state wants to migrate people to NY State of Health, where they will be eligible for subsidies.”
The change is happening because Healthy NY insurance plans did not provide all of the “10 essential benefits” required under the federal Affordable Care Act, Pawenski said. By buying insurance through the state’s online marketplace, she said, many of the low-income earners now using Healthy NY will be eligible for either the expanded Medicaid program or tax credits that will keep down their costs for better coverage.
Many, but not all.
More costs for some?
One West Seneca woman who is losing her Healthy NY coverage said that, so far, the numbers don’t add up in her favor. She is single and makes about $25,000 with the marketing business she started in 2010. She said she pays $192 per month now for insurance that does not include prescription coverage, with $20 co-pays for doctor visits and medical tests. There is no deductible.
At age 51, she considers herself generally healthy and found the affordable plan, purchased through Univera Healthcare, well-suited to her needs. To replace it, she investigated the NY State of Health online site on her own. She is eligible for a tax credit of $131 on a “bronze” plan that brings her premiums to $232 – with a $3,000 deductible. On the website it looks like her annual out-of-pocket maximum would be about $6,050 plus her premiums.
Add it all up, and the West Seneca woman, who asked not to be identified, said she’s bracing for a big financial hit because of the changes.
“All I know right now is the regular cost is way over 6 or 7 percent of my income, which is supposed to be the cap,” she said.
Then again, people in such situations could be surprised.
“They may be eligible for Medicaid,” given that that program is being expanded dramatically under the health law, “or qualify for subsidies to purchase coverage through the New York State exchange,” said Nora McGuire, senior vice president and chief marketing officer at Independent Health.
In addition, the vast new benefits now required by law could save that West Seneca woman money in other ways. Pawenski said the woman’s existing $192-a-month-premium plan for Healthy NY did not cover prescriptions, medical devices such as knee braces, chiropractic treatment, ambulance transportation, mental health treatment or reimbursement for gym fees – all covered by the 2014 plans, which also provide preventative care at no cost.
“Also, when our customers do pay for doctor’s visits, they usually pay the insurer’s negotiated rate, not the physician’s full rate,” Pawenski said. “This keeps the out-of-pocket costs down. Only about 15 percent of our members will hit their deductible in any year.”
Told this, the West Seneca woman said: “That would be amazing if I could get more insurance for less money, but I don’t have my hopes up right now,” she said.
Paying for drug coverage
People who work at small businesses that offer minimal health care coverage don’t have their hopes up, either.
In total, the region’s three major insurers are notifying about 126,000 people in their small-group insurance and individual plans that their policies are being terminated. Those subscribers will be offered new plans with the additional “essential” benefits now required under the Affordable Care Act, although they have the option of making other choices in the state marketplace.
The additional benefits could prove to be costly for a number of those 126,000 people, but it’s impossible to know how many of them will get hit with significantly higher premiums. The local insurers couldn’t provide data on how many of those people already had prescription coverage and how many did not – and adding prescription coverage will be what costs the most for those who previously had skimpy insurance coverage.
For example, the cost of Independent Health’s bare-bones Select Plan – which it offers under the surviving Healthy NY plan for small businesses – will increase 50 percent thanks to the addition of prescription coverage and the other new and enhanced benefits now required by law.
The trouble is, some people don’t want the enhanced benefits.
Lawrence Banach, a 53-year-old engineer from Lockport, had previously opted for an insurance plan that covered just major medical issues, not prescriptions.
But now that plan won’t be offered anymore. A new policy with prescription coverage will raise his out-of-pocket insurance cost by $700 a year.
“The thing that got me is that now I have to buy something I don’t want to buy,” just because the government says so, Banach said.
He’s not alone.
Rep. Chris Collins, R-Clarence, owns several small businesses, and one of them is already feeling the sting of being forced to change its insurance offerings. That company, Audubon Machinery of North Tonawanda, had offered its 60 employees a choice of two insurance plans: one with prescription coverage and one without.
But with the new law’s requirement that policies cover prescriptions, “we’re scrambling to figure out what we’re going to do,” said Collins, who expects the same thing to happen at his other businesses.
“It would appear that the president deliberately misled Americans in saying that if you have a health care plan you like today, you can keep it,” Collins said.
Modest changes for many
Changes will be much less significant for small businesses and their employers if those companies only offered robust insurance plans with prescription coverage in the past.
At Independent Health, those subscribers will be offered new plans with additional benefits – such as fitness, vision and dental coverage – for monthly premiums that are, depending on the plan, between 1 percent and 7 percent higher than they were paying previously, McGuire said. Other insurers expect similar changes.
“The benefits and plans that are offered are very similar to what we’ve had in the past,” save for the new benefits, McGuire said.
As for the higher costs, they’re attributable to the additional benefits as well as increased medical costs and utilization trends, as well as adding about 3 percent in new taxes and fees on all insurance plans that will be used to fund the Affordable Care Act.
Proportionally more people in other states, compared to New York, are likely to face bigger and more expensive changes when they get new policies, said Donald Ingalls, vice president for state and federal relations at HealthNow New York , the parent of BlueCross BlueShield of Western New York. Ingalls said that in many states, policies that are being canceled provided little coverage for the money.
“In New York, employer plans are traditionally better than in other parts of the country because of state mandates and our labor/management relations,” Ingalls said. “Other states have allowed the so-called mini-meds, but we don’t have those in New York.”
The mini-meds, offered by some employers to low-income workers, would provide a minimal amount of limited coverage, often much less than customers thought they were getting.
In New York, in contrast, many of the people whose policies are being cancelled will end up with nearly identical policies, insurers said. And they’ll have plenty of help trying to find them.
“We’re trying, in our letters, to include what options will be available for people who have to transfer their coverage,” he said. “We have certified application counselors who can help customers sign up, but they will be going through the NY State of Health site to get their tax credits.”
Individuals and small businesses who want help in applying for insurance can call Kaleida Health at (716) 859-8979, or Neighborhood Legal Services, (716) 847-0650, to make an appointment for free assistance.
The NY State of Health help-line is (855) 355-5777.