How will losing the individual mandate affect NY’s health care?
ALBANY - New York's robust health exchange with 4 million enrollees faces two immediate challenges: the loss of the individual mandate as part of Obamacare and the potential loss of funding for a key state insurance program.
The tax plan approved Wednesday ends the individual mandate piece of the Affordable Care Act, which requires people to buy health insurance or face a fine.
So NY State of Health, the state's health exchange, said it is evaluating the impact of the federal government's action.
“The ACA’s individual mandate is but one of a number of factors that has helped drive New York's uninsured rate to its lowest level ever," Benjamin Rosen, a spokesman for the state Health Department, which runs the exchange, said in a statement.
"Despite its repeal, New York's insurance market remains strong and the department remains committed to ensuring affordable coverage options for New Yorkers.”
Robert Mujica, the state budget director, said the loss of the individual mandate could have a sweeping impact on New York's insurance industry.
"More people are going to be uninsured; the costs for insurers will go higher — which will force us to potentially drive up our rates, which will drive up increased Medicaid costs," he told reporters earlier this week.
The individual mandate was a key plank of Obamacare because by requiring people — particularly healthy, young people — to buy insurance, it would limit the risk pool and lower rates.
But critics said the individual mandate hasn't worked as planned, and thus it was scrapped by the Republican-led Congress and President Donald Trump, who said Friday, "We have essentially repealed Obamacare."
Paul Macielak, president of the Health Plan Association, which represents insurers, said the decision to drop the individual mandate could lead to higher rates for insurers — and thus consumers.
“While it may be too early to know the extent to which the individual mandate repeal would increase premiums for 2019, it is not too early to plan for that possibility," Macielak said in a statement.
“New York’s individual market must be protected to prevent a return to the unsustainable market conditions pre-2013."
Still, it's uncertain whether the loss of the individual mandate will greatly impact New York's system, said Bill Hammond, director of health policy at the fiscally conservative Empire Center, an Albany based think tank.
This year, the tax penalty for not enrolling in health insurance is $695 or 2.5 percent of a person's income, whichever is greater.
But in New York, insurance plans for those not income-eligible for a low-cost plan is thousands of dollars more each year.
So some New Yorkers have been willing to take the tax hit rather than enroll in an insurance plan, Hammond said.
New York's highest cost of insurance, therefore, is "not compelling you to buy insurance," Hammond said.
About 400,000 took the tax hit rather than pay for health insurance in 2015, according to the New York Post, which cited IRS data.
More immediate, Hammond said, is the potential loss of about $1 billion a year in federal funding for New York's popular Essential Plan — which provides insurance to about 700,000 residents through the health exchange.
As a low-cost option for income-eligible people, the Essential Plan could lose federal funding next month after Trump in October said he would end so-called "cost-sharing reductions" paid to insurance companies that pay for programs like the Essential Plan.
Hammond said the Essential Plan's future may come "down to basically whether New York wants to find the money on its own."
But Gov. Andrew Cuomo has already warned about New York facing billions of dollars in health-care cuts from Washington, saying the state would either have to raise taxes or cut services if the cuts go through.
The state Health Department is urging federal leaders to retain the money for the Essential Plan.
"The Department of Health continues to call on the federal government to do the right thing for New York families and put a halt to draconian cuts that could devastate access to affordable health care in communities across New York state," Rosen said.
Rosen said the federal government has already told the state it should not expect its first payment for the Essential Plan in January.
"The potential impact on the Essential Plan is still being evaluated," he said.
Joseph Spector is chief of USA TODAY Network's Albany Bureau.