Long Island Follows Bumpy New York Road to National Health Reform

Media Advisory
Sept. 12, 2013

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON , DC—Despite an extensive Medicaid program and previous adoption of many insurance market reforms, partisan gridlock has contributed to a rocky road to national health reform for New York and the Long Island metropolitan area, according to a new Community Report released today by the Center for Studying Health System Change (HSC).

Funded by the Robert Wood Johnson Foundation (RWJF) and based on interviews with local health care leaders in 2012-13, the study examined the Long Island region’s commercial and Medicaid insurance markets.

Once the federal Patient Protection and Affordable Care Act (ACA) became law in March 2010, there was little doubt that New York would embrace reform. Yet, partisan gridlock in Albany has made for a rough road to health reform for New York. After many months of wrangling with the state Legislature, Gov. Andrew Cuomo (D) resorted to authorizing the state health exchange by executive order in 2012, giving New York’s exchange a later start than many states.

Another threat to successful implementation is the state’s commitment to stringent insurance regulations that exceed ACA requirements, most notably in small-group and nongroup community rating. Despite recently approved 2014 premiums that were lower than expected, it remains uncertain how sustainable these rates will be over time and whether they will remain sufficiently low to attract and retain a sizable pool of younger, healthier enrollees. Key findings of the report, Long Island Follows Bumpy New York Road to National Health Reform, which is available here, include:

• An affluent, well-insured community. Among the wealthiest counties in New York and nationally, Nassau and Suffolk counties have an educated, healthy population with high rates of private insurance coverage. The community’s affluence has attracted an abundance of health care providers. Unlike many markets, insurance expansions under national health reform are not expected to trigger primary care or other provider shortages.
• Limited—and declining—commercial insurance market competition. Health plan consolidation over the past two decades, combined with tight state regulation of health insurance, has limited competition in the market, especially in the small-group market.
• A miniscule, dysfunctional nongroup market. The combination of guaranteed issue and near-pure community rating in the nongroup market led to a “death spiral” in the 1990s, as unsustainably high and escalating premiums chased all but the sickest enrollees from the market.
• A consolidated hospital market. Contributing to Long Island’s high costs is a heavily concentrated hospital sector. Since the 1990s, nearly all hospitals have joined one of two large systems: North Shore-Long Island Jewish (LIJ) Health System and Long Island Health Network, each with 10 hospitals in the two-county region.
• A competitive Medicaid managed care market. Competition is flourishing among Medicaid plans, which include a mix of national for-profits and local nonprofits. The size of the Medicaid managed care market has grown in recent years with New York’s expansion of already generous eligibility standards and increasingly streamlined, consumer-friendly enrollment and renewal processes.
• Medicaid plans enthusiastic about state health insurance exchange. Many Medicaid plans view exchange participation as a growth opportunity, but among commercial plans, only Oxford Health Plan was viewed by respondents as a sure bet to participate in the exchange.

As health reform unfolds in the coming years, there will be ongoing issues to track in the Long Island-area health care market, including:

• Will the state health insurance exchange be able to overcome its late start and be up and running on schedule? How well will it function?
• Among the commercial health plans declining to participate in the first round of the state health insurance exchange, how much interest will there be in entering the exchange in subsequent years?
• How will Medicaid managed care plans fare in competition with commercial plans in the exchange?
• Will New York continue to adhere to rating restrictions that exceed ACA requirements, especially in the nongroup market?
• Will nascent limited-network commercial products gain momentum in the Long Island market? To what extent will these products evolve beyond provider rate discounts into plan-provider collaborations aimed at reducing the total costs of care?
• Long Island is one of eight metropolitan areas HSC researchers are studying on behalf of RWJF’s State Health Reform Assistance Network initiative—the others are Baltimore; Denver; Minneapolis-St. Paul; Portland, Ore.; Birmingham, Ala.; Richmond, Va.; and Albuquerque, N.M.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation's changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is affiliated with Mathematica Policy Research.