Imagine shopping online for health insurance in the same way you shop for hotels, cars and flights.
That’s the goal of proposed legislation from Gov. Andrew Cuomo to create what are called “health exchanges” online where individuals and small businesses can shop for a health plan that fits them.
“This is a dynamic and flexible proposal that will protect consumers and help bring down the cost of health care for families, businesses, and taxpayers,” Cuomo said in a statement in early Feburary when he released the proposal.
Cuomo’s plan is meant to give New York a headstart on the health exchanges before states are required to create them in 2014. The exchanges are required under the new federal healthcare law enacted in 2010. The law is a centerpiece of President Barack Obama’s administration.
Nationally and in New York, it is under attack by Republicans, who raise concerns about the cost, complexity and government oversight. And the law does not tackle the rising cost of health care.
“We need to have more definitive guidelines from Washington,” said Scott Reif, spokesman for state Sen. Dean Skelos, R-Rockeville Centre. “The federal government has not been clear on how they’re going to pay for it.”
The exchanges would expand coverage for at least 40 million Americans without health insurance. Among them are 2.6 million uninsured New Yorkers, according to a recent study by the state. In Central New York, about 856,000 people are without insurance, the study found.
“Health exchanges will change how people get health insurance when they don’t have it through a job,”said Sarah Collins, a senior vice president at the Commonwealth Fund. It is an independent research institute on health care headquartered in New York City. Her work is focused on studying how to provide affordable health insurance to all Americans.
“Exchanges target the worst parts of our insurance system by helping individuals and small businesses negotiate for affordable and quality plans,” said Collins.
The exchanges would work like this: the state and federal governments will mandate basic levels of care such as mental health and pediatric care. Insurance companies will put their plans online for comparison shopping. Individuals and businesses will be able to choose insurance plans based on a four-tier rating system — Bronze, Silver, Gold, and Platinum — of increasing coverage. Those who can’t afford a plan will get federal subsidies to help them purchase one.
In Massachusetts, health exchanges insured millions of individuals. Today, 98.1 percent of Massachusetts residents are insured — the largest percentage of insured individuals in any state.
Massachusetts spent $25 million to start its exchange, the Health Connector. Now the Connector is self-sustaining with an annual budget of $30 million.
New York has already received $28 million from the federal government to help open its exchange. The New York exchange will have to be self-sustaining by Jan. 1, 2015.
But some New York small business owners aren’t convinced the exchanges will work for them. Bill Delavan runs a commercial real estate business in Syracuse. He criticizes the new law’s requirement that everyone buy health insurance.
“I think it’s a totalitarian act to force people to buy insurance,” said Delavan. But, Delavan said, he would wait and see if the exchange brings any savings to his four-employee business.
Among New York state lawmakers, Gov. Cuomo’s plan for an exchange is receiving some bipartisan support. State Sen. James Seward, R-Oneonta, chairs the state Senate Insurance Committee. Seward describes the plan as “sound” and has the ability to help individuals and small businesses.
But he admits that his Republican colleagues are not lining up behind him. Many of his Republican colleagues are concerned with potential costs and the unanswered questions, Seward said.
“I’m in an awkward position,” said Seward. It’s unclear, he said, when the state senate will take action. It could be that there are so many questions unanswered,” he said, “we may still put it off.”
Mike Durant, the New York director for the National Federation of Independent Businesses, agrees. There a just too many questions over the legislation, he said. Among those are how members will be grouped, the kinds of care mandated, and how the exchanges will be funded.
Supporters admit the exchange on its own will not save money. But, supporters argue, that exchanges will be paid for partly through changes in payments to healthcare providers from Medicare, the tax-supported health insurance for the elderly, and Medicaid, the tax-supported health insurance for the poor and disabled.
But Durant of the small business group isn’t buying that explanation. “To say that it’s going to be helpful or lower the costs for small businesses,” said Durant, “how can you say that when we don’t know what’s going to be covered.”
(Matt Porter is a graduate student in broadcast and digital journalism.)