Healthy NYHealthy NY

Patricia Swolak, Esq.Patricia Swolak, Esq.NYS Insurance DepartmentNYS Insurance Department

Health BureauHealth Bureau

September 12, 2006September 12, 2006

New York StateNew York State

Population 19 million Approximately 2.5 million uninsured

Another decrease from prior years 78% - Workers and their dependents 52% of uninsured workers at employers

with <25 employees

Est. 1.3 million residents are uninsured but eligible for public coverage

New York StateNew York State

Community RatingCommunity Rating

Open EnrollmentOpen Enrollment

Small group market has mandated Small group market has mandated benefits benefits (law sets a minimum standard)(law sets a minimum standard)

Standardized individual marketStandardized individual market

Individual market experienceIndividual market experience

Anti-selection

Ever worsening experience

Ever increasing premiums

BackgroundBackground

Use of tobacco Use of tobacco fundsfunds

Reinsurance to Reinsurance to reduce premiumsreduce premiums

Market-based Market-based initiativeinitiative Does not appear Does not appear

like a public like a public programprogram

Small businessesSmall businesses Sole proprietorsSole proprietors IndividualsIndividuals

Eligibility criteriaEligibility criteria UninsuredUninsured Most vulnerable - Most vulnerable -

low income / low low income / low wagewage

Small businesses - ProfileSmall businesses - Profile 50 or fewer employees50 or fewer employees At least 30% of employees earn $35,500* At least 30% of employees earn $35,500*

or less in annual wagesor less in annual wages Employer has not Employer has not providedprovided insurance in insurance in

past 12 monthspast 12 months has not contributed more than a has not contributed more than a de minimusde minimus

amount per month per employee for coverage in amount per month per employee for coverage in past 12 months ($50/$75)past 12 months ($50/$75)

** adjusted annuallyadjusted annually

EligibilityEligibility

Individuals & Sole ProprietorsIndividuals & Sole Proprietors << 250% of FPL 250% of FPL Employed in past year (or spouse has Employed in past year (or spouse has

been)been) Not eligible for employer provided Not eligible for employer provided

insuranceinsurance Ineligible for MedicareIneligible for Medicare Uninsured for past 12 monthsUninsured for past 12 months

OROR lost coverage due to certain reasons: lost coverage due to certain reasons:

divorce, separation, death, change/lose job, change residence, loss of eligibility, reached max age for dependent coverage, or other coverage was COBRA or other public programs

EligibilityEligibility

Program DesignProgram Design

Premium Reduction Premium Reduction Controlled Benefit PackageControlled Benefit Package PoolingPooling ReinsuranceReinsurance (stop-loss) (stop-loss)

Health plans are reimbursed a portion of Health plans are reimbursed a portion of claims paid on behalf of memberclaims paid on behalf of member

Public – Private PartnershipPublic – Private Partnership

Standardized – all health plans offer the Standardized – all health plans offer the same benefit packagesame benefit package Reduced Benefits – provides comprehensive Reduced Benefits – provides comprehensive

benefits, but limited. benefits, but limited. Eliminates several Eliminates several mandates. mandates.

No home health care, alcoholism & substance No home health care, alcoholism & substance abuseabuse

No SNF, hospice, chiropractic, infertility, PTNo SNF, hospice, chiropractic, infertility, PT No mental health coverageNo mental health coverage Optional limited prescription drug benefit Optional limited prescription drug benefit

($3,000)($3,000)

Cost SharingCost Sharing

Benefit PackageBenefit Package

PoolingPooling

Experience is pooled togetherExperience is pooled togetherIndividual premium rate is same as group Individual premium rate is same as group raterate

Small employers Sole proprietors

Individuals

$100,000

$30,000

Reimbursement up to 90%Reimbursement up to 90%

$0 for claims over $100,000

$0 for claims under $30,000

Cla

ims

Original ReinsuranceOriginal Reinsurance

Other ElementsOther Elements

All HMOs are required to participate, All HMOs are required to participate, other other health plans may participate health plans may participate voluntarily.voluntarily.

• We have state-wide coverageWe have state-wide coverage• Employs managed care conceptsEmploys managed care concepts• We did not have to contract w/ health We did not have to contract w/ health plansplans• Creates a level playing fieldCreates a level playing field

Applicants apply directly to the HMOsApplicants apply directly to the HMOs

Marketing is done by the StateMarketing is done by the State

ImplementationImplementation

Regulations - rules for the programRegulations - rules for the program Subscriber contract approvalsSubscriber contract approvals

Model contract language developed and Model contract language developed and provided to health plans to ease processprovided to health plans to ease process

Premium rate approvalsPremium rate approvals RFP / Contract with fund administratorRFP / Contract with fund administrator RFP / Contract for annual studyRFP / Contract for annual study

Guidance to plansGuidance to plans training on eligibility and program rules, training on eligibility and program rules,

reporting requirementsreporting requirements

Establish toll-free hotline / hire Establish toll-free hotline / hire answering serviceanswering service

Outreach, public awarenessOutreach, public awareness Healthy NY consumer guide, brochureHealthy NY consumer guide, brochure establish websiteestablish website advertisingadvertising

More ImplementationMore Implementation

2003 Program Enhancements2003 Program Enhancements

Authorized a no-drug optionAuthorized a no-drug option Initially, saved 12% of premiumInitially, saved 12% of premium Savings even greater todaySavings even greater today

Stop loss corridors / ReinsuranceStop loss corridors / Reinsurance From $30k - $100K to $5k - $75kFrom $30k - $100K to $5k - $75k Instant premium reduction of 17%Instant premium reduction of 17%

$100,000

$30,000

Reimbursement up to 90%Reimbursement up to 90%

$0 for claims over $100,000

$0 for claims under $30,000

Cla

ims

Original ReinsuranceOriginal Reinsurance

$100,000

$30,000

Reimbursement up to 90%

$0 for claims over $75,000

$0 for claims under $5,000

Cla

ims

$5,000

$75,000

CurrentCurrent Reinsurance Reinsurance

UnadjustedMLR

Stop-Loss Adjusted MLR

Number of Health Plans Studied

Percent of Total HNY Enrollment

Calendar Year 2002

92.5% 88.9% 9 70%

Calendar Year 2003

113.2% 86.1% 13 82%

Calendar Year 2004

114.9% 82.0% 13 88%

Source: 2004 Report on the HNY Program, EP&P Consulting

Aggregate Medical Loss Ratios

FundingFunding

Up to 10% of the funding may be used for Up to 10% of the funding may be used for outreach, education, marketing.outreach, education, marketing.

Any unspent funds are carried forward to Any unspent funds are carried forward to the next year.the next year.

If shortage of funds, distributed on pro-rata If shortage of funds, distributed on pro-rata basis.basis. Enrollment suspension required.Enrollment suspension required.

8 %

20012001 $40 M$40 M

20022002 $106 M$106 M

20032003 $89.4 M$89.4 M

20042004 $49.2 M$49.2 M

20052005 $69.2 M$69.2 M

20062006 $109.6 M$109.6 M

$115,900$115,900

$715,000$715,000

$13.3 M$13.3 M

$34.5 M$34.5 M

$61.7 M$61.7 M

$ 75$ 75

$ 66$ 66

$ 449$ 449

$ 533$ 533

$ 498$ 498

Funding ClaimsPMPY

C / MYE

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

20012002

20032004

20052006

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2001 2002 2003 2004 2005 2006

Healthy NY - New Enrollments by Month

Numbers of Enrollees Disenrolled

0

1000

2000

3000

4000

5000

6000

7000

1 2 3 4 5 6 7 8 9 10 11 12

2001

2002

2003

2004

2005

2006

Rate of Disenrollment as % of Beginning of Month Enrollment

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

2001

2002

2003

2004

2005

2006

0

20000

40000

60000

80000

100000

120000

140000

Active Healthy NY Enrollment

What We’ve LearnedWhat We’ve Learned

Fear of the UnknownFear of the Unknown Complaints early in processComplaints early in process Conservatism in pricingConservatism in pricing

Standardization of applicationsStandardization of applications Easier for distributionEasier for distribution Less administrative burdenLess administrative burden Easier to explain program, answer Easier to explain program, answer

questionsquestions

Healthier population than expectedHealthier population than expected Claims for first two years of program very lowClaims for first two years of program very low SL claims corridors: loweredSL claims corridors: lowered Flexibility here is criticalFlexibility here is critical

Program life: Program life: start-up period should be sufficient, start-up period should be sufficient,

perhaps 5 year periodperhaps 5 year period Initial program funding for only 2 ½ yearsInitial program funding for only 2 ½ years It takes time for a new program to take holdIt takes time for a new program to take hold Experience data is not credible until maturesExperience data is not credible until matures

What We’ve LearnedWhat We’ve Learned

Price is criticalPrice is critical Price sensitive businesses and individualsPrice sensitive businesses and individuals Must be affordableMust be affordable in order to attract new in order to attract new

liveslives

True costs are lower than you thinkTrue costs are lower than you think Savings for other, more expensive programsSavings for other, more expensive programs Generation of premium tax revenueGeneration of premium tax revenue Generation of covered lives assessmentGeneration of covered lives assessment

What We’ve LearnedWhat We’ve Learned

Recognize indirect benefits of programRecognize indirect benefits of program Rejuvenated private marketplace discussionsRejuvenated private marketplace discussions

interest in new products for small groupsinterest in new products for small groups Cross-education of other programsCross-education of other programs

Family Health Plus, Child Health Plus, M/AFamily Health Plus, Child Health Plus, M/A Programs can work together to educate Programs can work together to educate

broadlybroadly

Don’t be overly rigid or complexDon’t be overly rigid or complex Don’t crowd-out your targetDon’t crowd-out your target Keep it simpleKeep it simple

What We’ve LearnedWhat We’ve Learned

ChallengesChallenges

Forced Market vs. Competitive OneForced Market vs. Competitive One

Premium RatesPremium Rates File & Use rate increasesFile & Use rate increases No longer prior approval authorityNo longer prior approval authority

Looking AheadLooking Ahead

HSA FeatureHSA Feature High deductible health plan option in HNYHigh deductible health plan option in HNY

RegionalizationRegionalization Unique approaches to local market needsUnique approaches to local market needs

Program Renewal DiscussionsProgram Renewal Discussions Current program funding through June 30, Current program funding through June 30,

20072007

Under Consideration / Under Consideration / DevelopmentDevelopment

Develop an eligibility screening tool on Develop an eligibility screening tool on the Healthy NY websitethe Healthy NY website

Provide more intensive broker Provide more intensive broker education on the programeducation on the program

Make HMO provider directories available Make HMO provider directories available onlineonline

Develop a Healthy NY report cardDevelop a Healthy NY report card

AffordabilityAffordability Provides a lower cost alternative for Provides a lower cost alternative for

private purchase of insuranceprivate purchase of insurance Less than half the cost of individual Less than half the cost of individual

coveragecoverage

AvailabilityAvailability Sold by every HMOSold by every HMO Every county in stateEvery county in state Choices of HMO selectionChoices of HMO selection

Addressing the NeedsAddressing the Needs

AccessibilityAccessibility Applications are easy to getApplications are easy to get

Website, mail, HMOs, Dept. events, toll-free Website, mail, HMOs, Dept. events, toll-free hotline, other agencieshotline, other agencies

Can enroll at any time of yearCan enroll at any time of year

AdministrationAdministration Simple application form and processSimple application form and process Simple annual recertificationSimple annual recertification Won’t lose coverage mid-year due to Won’t lose coverage mid-year due to

changeschanges

Addressing the NeedsAddressing the Needs

www.healthyny.comwww.healthyny.com

2003, 2004 and 2005 Annual Reports 2003, 2004 and 2005 Annual Reports on the HNY programon the HNY program

program growth, enrollment trends, program growth, enrollment trends, claims data, pricing impact, feedback claims data, pricing impact, feedback from enrollees and health plansfrom enrollees and health plans

www.ins.state.ny.uswww.ins.state.ny.us pswolak@ins.state.ny.uspswolak@ins.state.ny.us