NCPA - National Center for Policy Analysis

Commonwealth Study: "Healthy New York" for Low-Income Workers

January 11, 2002

Concerned that nearly three million New Yorkers are without health insurance, the state has created a program called Healthy New York to increase access to insurance by low-income workers. An estimated one million people are eligible for Healthy New York.

All Health Maintenance Organizations (HMOs) in the state must offer the program, although other carriers have the option to participate. This is an attempt to use managed care techniques to restrain health care costs. Healthy New York also requires each carrier to community rate the premiums for small firms and individuals/sole proprietors jointly for each of the different policy tiers for people it covers. Prices charged to individuals in each tier must be the same. If past claim history for those who enroll through small firms is better (or worse) than that of other individuals or sole proprietors, the people in small firms will cross-subsidize the others.

There are several features designed to hold down premiums.

  • The first is a stop-loss feature where a state fund will reimburse insurers for up to 90 percent of the cost of enrollees with annual claims between $30,000 and $100,000 -- a different approach than directly subsidizing premium payments.
  • The second is a leaner benefits package with exemptions from many state-mandated benefits such as drug treatment, mental health services, home care, etc.
  • Finally, the policy contains higher cost-sharing in the form of co-payments and in-network providers.

Initial premiums are lower than comparable small group HMO policies, and premiums for qualified individuals are 30 percent to 50 percent lower than the individual market.

Despite lower costs, premiums are still more than 5 percent of many workers' pre-tax income. Thus many experts wonder if many of those eligible for coverage will take up the insurance.

Source: Katherine Swartz (Harvard School of Public Health), "Healthy New York: Making Insurance More Affordable for Low-Income Workers," Commonwealth Fund, November 2001.


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