New York Might Drive Its ObamaCare Exchange Premiums Up Another 30 Percent

By John R. Graham

March 28, 2014 - National Center for Policy Analysis

According to the U.S. Department of Health & Human Services’ March enrollment report, New York’s state-run ObamaCare exchange has signed up fewer than half the people who were determined eligible for the exchange when they enquired.

What is the problem? One seems to be that the provider networks available in the exchange are very narrow.

What the proposed solution? At a recent presentation, exchange officials threatened to impose out-of-network access requirement on insurers who bid to participate in the exchange. If rolled out in the direction the officials appeared to point, this would be an Any Willing Provider (AWP) provision, long a lobbying priority for organized medicine:

The lack of out-of-network benefits for individuals shopping on the exchange has been criticized by some business leaders, physicians and legislators, who say it provides little choice for consumers and hurts doctors who can be bullied by insurers into accepting lower reimbursements. Insurance executives say they need that leverage to keep premiums low and attractive to consumers shopping on the exchange…If out-of-network doctors and hospitals were required to be reimbursed by the insurer, premiums could rise as much as 30 percent, according to the insurance industry.

This blog is not a fan of health insurers’ provider networks, as currently structured. Nevertheless, there is no doubt that the change proposed in New York would drive up costs dramatically. As noted in a previous blog, a simple model of health insurance allows insurers control of three variables: Premiums, benefits, and access to providers. Under ObamaCare, the government determines benefits, and insurers compete by (unsuccessfully) seeking to enroll younger, healthier beneficiaries. So, they limit access to providers to keep premiums low.

It’s hard to imagine health insurance in New York could become less affordable, but state officials might make it so.