Profiles in Coverage: Healthy New York

Overview

New York's Health Care Reform Act of 2000 included a number of coverage expansions, including Family Health Plus for parents of Medicaid-eligible children and subsidies to make health insurance more affordable and available to small employers and their employees, sole proprietors, and working individuals whose employers do not provide health coverage.

The Healthy New York (NY) Program is a state-subsidized reinsurance mechanism that reimburses health plans for 90 percent of claims paid between $5,000 and $75,000 on behalf of a member in a calendar year. When the program was inaugurated in January 2001, the risk-sharing corridor was between $30,000 and $100,000; however, it was lowered in July 2003 due to lower-than-expected claims activity. To reflect this change, most plans reduced their premiums by approximately 17 percent.

Eligibility and Enrollment

Qualifying small employers, sole proprietors, and individuals are eligible for the program provided they have not been insured in the past 12 months (some exceptions do apply). Small employers may buy into the program if they have less than 50 employees, 30 percent of whom earn less than $33,000 annually (adjusted annually for inflation). Employers must contribute at least half of the premium, and at least 50 percent of employees must participate in the program. Dependent and part-time coverage is available but employers are not required to contribute to the premium. Small employers may also be eligible for the program if they provide coverage for their workers but contribute less than $50 ( or $75 if the business is located in the Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, and Westchester counties) per month per employee.

Sole proprietors or workers whose employers do not offer coverage may apply for Healthy NY if their gross household income is below 250 percent of the federal poverty level. Eligible individuals must have been employed in the past 12 months or demonstrate that their spouse has been employed. The applicant must have been uninsured for the past 12 months, or lost their coverage due to one of the many acceptable reasons. Applicants with COBRA or public coverage may enroll directly in Healthy NY. In 2004, Healthy NY became a qualified plan for the federal Health Care Tax Credit for workers who have lost their jobs due to international trade.

Since its inception in 2001, Healthy NY has enrolled more than 123,639 workers. As of December 1, 2004, the program had approximately 76,700 active enrollees and is averaging 5,500 new enrollees per month in 2004. Approximately 60 percent of enrollees are working individuals, 20 percent are sole proprietors, and 20 percent are small-group employees.

Benefits Package

HMOs are mandated to offer a Healthy NY plan (with no variation except the inclusion or exclusion of a prescription drug benefit), which includes a streamlined benefits package, including:

Inpatient and outpatient hospital services;
Physician services;
Pre-admission and diagnostic testing;
Laboratory and x-ray;
Maternity care;
Preventive health services;
Emergency services;
Therapeutic services; and
Prescription drugs (now an optional benefit).

Covered services are subject to co-payments ranging from $10 for prenatal services to $500 for inpatient hospital services. There is a maximum annual benefit of $3,000 per individual for prescription drugs with a $100 annual deductible.

The prescription drug benefit was converted from a mandatory to an optional benefit in 2003 to further decrease premiums. All HMOs now offer enrollees the option of selecting a Healthy NY plan with prescription drug coverage or one without. The benefit packages without prescription drug coverage offer a further reduced rate on average of approximately 12 percent.

Home health care, chiropractic care, inpatient and outpatient mental health, and alcohol and substance abuse treatment are not covered.

Funding and Premiums

The state budgeted $89.4 million for Healthy NY in calendar year 2003, $49.2 million in 2004, and $22 million for the first half of 2005. The New York State Insurance Department is permitted to spend up to 10 percent of allocated funds on advertisement; the program maintains a toll-free telephone line and has aggressively marketed the program on television, the Web, and radio. Some of the subsidy is funded through tobacco taxes.

Premiums are community-rated, do not vary by eligibility category (i.e., small employer, sole proprietor, individual), and are divided into four tiers: one adult, two-adult, one parent with child(ren), and family. Rates may vary by county and by HMO.

Rationale for the Program

Questions for Governor George E. Pataki

1. Q. Considering that New York State has undertaken some of the most proactive health reforms in the past decade, why did you feel that Healthy NY was the next step that had to be taken to address the growing number of uninsured residents?

A. Healthy NY took a different approach toward offering health insurance. We recognized that New York state had the Child Health Plus program already in place for children under the age of 19 who are not eligible for Medicaid, and that plans were underway to assist uninsured adults with incomes that were greater than the Medicaid eligibility guidelines through the Family Health Plus program. Thus, we looked beyond these programs to develop a market-based approach that would assist those aged 19 and older who were uninsured but whose annual earnings exceeded the income guidelines of either Family Health Plus or Medicaid.

2. Q. How is Healthy NY -and the changes that recently have been made to the program-part of your larger strategy to reduce the number of uninsured in the state?

A. The goal of Healthy NY is to offer comprehensive health insurance to uninsured small businesses and individuals. Prior to the program's establishment in 2001, many people found that available health insurance products were prohibitively expensive, even when their income exceeded the guidelines for government-funded programs, such as Medicaid. Healthy NY created a lower cost option.

Program Administration

Questions for Insurance Superintendent Gregory V. Serio

1. Q. How has the adjustment in attachment points from $30,000 to $100,000 to $5,000 to $75,000 affected the price of coverage and the state's cost for Healthy NY ? Have other changes implemented in June 2003 affected the program significantly, and, if so, which ones?

A. When the reimbursement thresholds for Healthy NY were changed, Healthy NY premiums were reduced on average by approximately 17 percent. The other important change was to introduce the option for enrollees to select a benefit package that includes prescription drug coverage or one that does not. Enrollees can also opt to further reduce their costs by an additional 12 percent if they select the Healthy NY benefit package without prescription drug coverage.

Another change that was made in July 2003 was to simplify the process of enrollment and participation. Since this program is market-based rather than entirely funded by New York state, we've striven to reduce the bureaucratic red tape that is often necessary in more strictly regulated programs and have been able to develop application and recertification processes that are less cumbersome and easier to understand.

2. Q. How much of the rate savings can be attributed to the scaled-back benefits package as opposed to the reinsurance mechanism?

A. Both of these mechanisms are important components of the program. They work together to reduce premium costs for the lower-income population that the program is designed to serve.

3. Q. How are employers and individuals reacting to the new no-drug option? Have other benefit design changes-such as greater cost-sharing-been discussed to reduce the price of Healthy NY coverage?

A. From the information gathered during each annual report, it is evident that the population that Healthy NY serves is very sensitive to cost. There has been significant interest in the no-drug option, which translates into an approximate cost savings of 12 percent for consumers when compared to a Healthy NY package that includes medical coverage and a prescription drug benefit. In recent months, some of New York State 's HMOs have increased their rates, and this has generated even more interest among Healthy NY enrollees to switch to the lower-priced, non-prescription-drug option.

4. Q. How is the Insurance Department monitoring the overall impact of Healthy NY as well as the effect of changes to the program? For example, how long were enrollees previously uninsured?

A. At the end of each year, in accordance with the 2000 New York State Health Care Reform Act (HCRA) that established Healthy NY, an annual report is compiled by an independent organization that we have contracted with through the state's bid process. Between 2001 and 2003, the Lewin Group, in partnership with Empire Health Advisors, was the bidder selected to review the program. The contractor examines and assesses annual information that includes employer participation, claims experience, enrollees' satisfaction with the program, and the impact that the program is having on the uninsured.

5. Q. What kind of system has the Department put in place to monitor consumer experience under Healthy New York?

A. There are several ways that Insurance Department professionals are involved in monitoring consumer experience with the Healthy NY program. In Healthy NY's early years, quality assessment was performed by insurance department personnel who conducted surveys of health maintenance organizations (HMOs) in New York state to determine if the correct information was being given to consumers. Moreover, the insurance department today regularly assigns personnel to monitor the Healthy NY e-mail box. Consumers can access that electronic mailbox from the Healthy NY Web site (www.healthyny.com) when they have questions or complaints about the program. In addition, the Insurance Department's Consumers Services Bureau also handles and resolves complaints from consumers who are enrolled in the program.

In compiling Healthy NY's Annual Report, surveys with Healthy NY enrollees were conducted to assess their experience with the program. For the 2002 Annual Report, 1,000 households were contacted for this purpose after they called the Healthy NY hotline.

Many Healthy NY issues are resolved through the toll-free Healthy NY hotline, and those that aren't are forwarded to the New York State Insurance Department. This also allows staff in the department to have direct involvement with consumers regarding their concerns and complaints.

Marketing the Program

1. Q. How has the Insurance Department marketed the program? Has any single outreach strategy been particularly successful in enrolling small groups? Individuals?

A. The New York State Insurance Department reached out to public and private organizations that have potentially eligible populations. The department has partnered with various state agencies that have already established contacts and resources for small businesses and the uninsured, and by doing so have been able to make small businesses aware of the Healthy NY program and criteria. We have also partnered with the Mayor's Office of Health Insurance Access in New York City to reach out to their constituency.

I have traveled throughout New York state speaking to chambers of commerce and business groups. We have also worked with organizations such as: local Chambers of Commerce, the Medical Society of New York State and individual medical societies throughout the state, medical establishments such as Upper Hudson Primary Consortium, the Business Council of New York State, the National Federation of Independent Business, and other organizations such as the Farm Bureau.

Staff from the Insurance Department has participated in conferences and fairs to further awareness of the program amongst individuals and small businesses. By making a presence and having a contact person for local organizations or agents, we have been able to make individuals and small businesses aware of, and familiar with, Healthy New York.

The Department does an intensive radio and television campaign during open-enrollment months, September through December. Interest and enrollment in the program increases significantly while the media campaign on television and radio is underway, and continues for a period shortly thereafter.

2. Q. How has the broker community responded to Healthy NY?

A. There has been interest from the broker community in selling Healthy NY. Currently, 11 companies pay commissions on Healthy NY products. The New York State Insurance Department's licensing bureau sends out a list of those companies with information about the Healthy NY program in all online license renewals.

Target Population, Enrollment, and Retention

1. Q. What is the estimated target population for the program in the next year? What take-up rate do you expect?

A. Current enrollments in Healthy NY show the addition of approximately 5,000 to 6,000 people on an average monthly basis. At the current rate, considering the turnover in the program, we expect that the program will have approximately 110,000 net enrollees by the end of 2005. However, many factors could affect this figure.

2. Q. Why are the majority of Healthy NY enrollment individuals rather than small employers (60 versus 20 percent, with sole proprietors comprising the remaining 20 percent)? Do you think the crowd-out provision is a major obstacle to employer take-up? Has there been consideration of the "equity" issue, whereby Healthy NY is not available to those businesses that have been offering coverage to low-income workers? Are there other barriers to attracting employers? What strategies are available to you to address these barriers?

A. Small employers have more options than individuals do to obtain affordable health insurance. Throughout the state there have been innovative approaches that have targeted small employers, and entities such as trade organizations often provide lower cost group health insurance options for their members.

The program's 12-month crowd-out provision prevents businesses that are already arranging for and contributing at least $50 (or $75 if the business is located in the Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, and Westchester counties) to health insurance for their employees or have done so in the last 12 months from enrolling in the Healthy NY program. During the past two legislative sessions, New York State Sen. William J. Larkin (R) has introduced a bill that would allow sole proprietors and small employers (anywhere from 2 to 50 employees) to purchase Healthy NY without having to meet the program's eligibility requirements. However, these employers would not be eligible for the stop-loss subsidies that are available to individuals. Larkin's bill, if passed by the state Senate and Assembly and signed into law, would allow small businesses that are currently purchasing small group policies to purchase a Healthy NY basic benefits package that would be less expensive than other types of small group coverage, even without the stop-loss funds. This bill passed the Senate in 2003 and 2004, but has not made it out of the Assembly's Insurance Committee.

Some small employers have also indicated that they are not able to meet the requirement to pay at least 50 percent of the premium for their employees who work 20 hours or more per week. Another guideline that has posed a challenge to some employers is that they must have 50 percent participation from their eligible employees.

3. Q. Given that average Healthy NY enrollment is only six months, do you have a sense of why disenrollment is high? Where are enrollees going after disenrollment? How do you think this affects the plan's pricing?

A. Some enrollees have been on Healthy NY for several years and some enrollees may opt to switch the HMO that they are enrolled with but still remain in the program. However, it is clear that many people purchase Healthy NY during transitional periods.

Coordination with Other Markets/Programs

1. Q. Does Healthy NY coordinate in any way with the state's public programs for children and parents? Is there any evidence that the state's Medicaid program "crowds-out" enrollment in Healthy NY ? Is this being monitored?

A. There is an effort to coordinate with all of the state programs to better assist individuals who contact us for information. The Web sites for Child Health Plus and Family Health Plus, programs that are administered by the New York State Health Department, can both be accessed from the New York State Insurance Department's Healthy NY Web site (www.healthyny.com). When individuals make inquiries to the insurance department or the toll-free hotline, referrals are made to the appropriate program. The administrator of the Healthy NY hotline handled Child Health Plus and Family Health Plus calls at one point, so their operators are familiar with the programs and able to refer individuals elsewhere if appropriate.

Healthy NY was originally envisioned as a program through which parents who were interested in signing up would often be able to enroll their children in Child Health Plus as well, because the two programs' income guidelines are similar. Children are better served by the richer benefit package of the Child Health Plus program. Furthermore, parents who enroll their children in Child Health Plus can also purchase a less expensive individual or two-adult policy through Healthy NY instead of having to buy a family policy.

Applications for Medicaid and Family Health Plus are handled by facilitated enrollers and any one of New York state's 62 county Departments of Social Services. We have worked with many of these entities to make them aware of the program, and they often make referrals when they encounter individuals who are above the income limits for Medicaid and Family Health Plus.

Steps have also been taken to have the toll-free hotline refer individuals in the New York City area to alternative programs that have been developed there, such as Working Today or Brooklyn Health Works, if the caller is not eligible for Healthy NY. Referrals are also made to other New York State government agencies and programs, such as the Office of the Advocate of the Disabled and the Elderly Pharmaceutical Insurance Program (EPIC).

Medicaid does not crowd out Healthy NY.

2. Q. Healthy NY is a qualifying plan for the Health Care Tax Credit (HCTC). How does this work administratively? Has this been a viable option for New Yorkers who have lost their jobs due to foreign trade? What kind of information is the state receiving from the federal government on enrollees?

A. New York state now has several health insurance products that qualify for the tax credit. These include two standardized individual plans offered by all New York state HMOs and HCTC Healthy NY.

HCTC Healthy NY qualifies for the tax credit and is available for purchase by all individuals eligible for the HCTC. It offers the streamlined comprehensive health insurance benefit package that was developed for the public Healthy NY program. The benefits include hospital care, regular medical checkups, and a limited prescription drug benefit (capped at $3,000 annually). The HCTC Healthy NY product also includes a few additional benefits that are not included in the traditional Healthy NY benefits package (e.g., home health care, outpatient alcohol and substance abuse services, chiropractic care, and emergency ambulance).

HCTC Healthy NY is offered statewide by Group Health Incorporated (GHI). The Excellus Health Plan offers HCTC Healthy NY in central New York, and Univera Health Plan does the same for consumers in western New York.

There is quarterly reporting for individuals who register with the HCTC program to access their tax credit in advance. However, at this time, there is no way to gauge the number of individuals who will claim their tax credit when they file their federal tax return.

3. Q. Please explain how Healthy NY has coordinated with local initiatives to expand coverage, such as those in Brooklyn and Buffalo. Does the Insurance Department plan to reach out to other communities, and, if so, how?

A. In the Buffalo area, staff from an organization called Health for All of Western New York Inc. reached out to the New York State Insurance Department for our assistance in developing a program for eligible businesses that are enrolled in Healthy NY and employ between 2 and 10 employees. The organization has developed a pool of funds that subsidize a third of the Healthy NY premium.

Department staff worked with those from Group Health, Inc. (GHI) and the Brooklyn Chamber of Commerce on the design of the Brooklyn Health Works program. It is a community-based consortium that includes the New York State Insurance Department, the Brooklyn Chamber of Commerce, GHI, The Robert Wood Johnson Foundation, the Health Resource and Services Administration of the U.S. Department of Health and Human Services, the New York City Community Trust, The United Hospital Fund, the Sirus Fund, the Office of the Brooklyn Borough President, the health care service providers in northern Brooklyn, Program Planners, Inc., and other public and private organizations. Brooklyn Health Works couples the saving available through Healthy NY with negotiated provider discounts.

There is a program in central and western New York through which Excellus Health Plan has negotiated with providers for lower rates. Those reduced rates have been translated to the New York State Insurance Department's Healthy NY non-prescription drug plans that are offered through this provider. An enrollee can opt to purchase a discount drug card with this plan that they can use to buy prescription drugs at a lower rate.

The New York State Office of Children and Family Services approached the Insurance Department to see if they could use some funding they had for retention of day care workers in conjunction with Healthy NY. In an effort to encourage employees of daycare facilities to remain in their jobs by increasing their benefit opportunities, licensed day care workers and centers that met the Healthy NY eligibility guidelines could apply for a subsidy that reduces the health insurance premium by $50 for individuals and $100 for families.

4. Q. How does Healthy NY interact with the direct pay market stabilization fund that was established at the same time?

A. These funds serve two distinct purposes, as defined in insurance law. The purpose of the rate stabilization pool is to reduce premiums in the direct pay market.

5. Q. How has Healthy NY affected the state's small group and individual markets?

A. Healthy NY has provided another avenue for small employers to provide coverage to their employees. In the individual market, Healthy NY has provided a lower cost option for the uninsured.

Moving Foward

1. Q. Why do you think enrollment in New York City is lower than in other parts of the state? Have strategies been considered to address this?

A. There have been many local initiatives in New York City that have been developed to assist individuals in purchasing health insurance, including the Brooklyn Health Works and Working Today programs. At this time, income guidelines for the program are uniform throughout the state so cost of living and cost of health insurance do not affect the eligibility criteria of the program. Premiums for health insurance in New York City tend to be higher because the cost of almost all goods and services are higher there, too. Recently the Department filed a change in regulation that raises the amount that the employer may have contributed in many of the downstate communities in New York State. Now business located in the Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, and Westchester counties may be able to participate in Healthy NY if they have not contributed more than $75 per employee per month during the 12 months prior to the application.

2. Q. Has any consideration been made to further studying where people go upon disenrollment and why they disenroll? Do people enroll in Healthy NY as a transition between employment or are there larger issues at stake, such as inadequate benefits or affordability concerns?

A. Health plans have not found Healthy NY disenrollment to be significantly different than standard health insurance disenrollment. There is an understanding that the populations that enroll in Healthy NY may transition, however, between health insurance plans. The disenrollment figures also do not accurately reflect when an enrollee switches from one Healthy NY provider to another while still remaining in the program.

3. Q. Please reflect on the overall lessons learned since rolling out this program.

A. Healthy NY has a cost-sharing mechanism designed to help as many uninsured individuals in New York state as possible. Because the program is market-based, with the enrollee paying the premium and investing in the cost of the insurance, there is less need for the complicated enrollment processes that occur in other fully funded government programs. Program staff have worked to simplify the enrollment process and ease eligibility guidelines.

When Healthy NY was being developed, there was recognition of a growing gap between the New York state-funded Medicaid program and standard direct pay health insurance premiums. The New York State Insurance Department sought to develop a program that would offer more affordable health insurance coverage at a lower cost to small businesses and working individuals who were finding themselves unable to purchase coverage. The Department is pleased that we have been able to assist more than 120,000 individuals in obtaining health insurance coverage since the program began.

Additional Resources

Please see the Resource Details box below for SCI Issue Briefs on Reinsurance and Limited-Benefit Packages, and additional Resources on Healthy New York.