Do New Yorkers pay more than others under the Affordable Care Act?
Open enrollment begins in just over two months. If you don’t have health insurance, you can go to the New York Affordable Care Act portal and choose a plan.
A viewer wrote us an interesting question about New York’s program compared to other states.
Lisa wrote, in part: “Obamacare was supposed to help make the cost of health insurance affordable. We pay almost $900 a month in premiums for myself and over $900 a month for my husband. … We just visited relatives in Pennsylvania who appear to have the same plans (just a different title) and who each pay less than $200 a month.”
Lisa wants to know if Affordable Care Act insurance programs are actually more affordable in other states. That’s a fantastic question.
First, let me give you some background. The Affordable Care Act is now federal law. It requires all states to set up a health insurance marketplace. Insurers in that marketplace cannot discriminate against you because you have a pre-existing condition or charge women more than men.
States can either operate their own marketplaces, partner with the government, or rely on the federal government to operate the state’s marketplace. And yes, the price you pay for premiums depends in part on the state you live in.
A comprehensive study by the Urban Institute found that premiums were lower in states with their own marketplaces. That’s because those states typically have more insurers participating and competition drives down premium prices.
The institute analyzed the average premium in each state for a 40-year-old nonsmoker. It found only 12 states with an average premium of over $500. These are Alabama, Alaska, Connecticut, Delaware, Louisiana, Nebraska, New York, North Carolina, South Dakota, Vermont, West Virginia and Wyoming. Nine of the 12 states do not have state-run marketplaces and, as expected, have higher premiums.
Connecticut, New York and Vermont all have state-run markets but some of the highest health insurance premiums in the country. Let’s ignore Connecticut for now; that’s an anomaly. But New York and Vermont have something in common. Both have a community-rating rule for health insurance that doesn’t allow insurance companies to use age or tobacco use, gender, health status or pre-existing conditions to determine premiums. Instead of personal risk factors, prices are based on the average cost of all insured people, according to doctor and hospital costs in a community.
The reason for community pricing is to ensure that we all pay the same and no one has to pay more because of individual risk factors such as age. But critics say community pricing could have unintended consequences by ultimately driving up prices for everyone because young, healthy people choose not to get insurance.
The average premium for a 40-year-old nonsmoker in New York is the sixth highest in the country at $621, and Vermont is in fourth place at $738.
Your income also affects the amount of your premiums, as premiums are subsidized for people with lower incomes.
So that’s the long answer to your question, Lisa. Yes, you will pay more depending on where you live and how much you earn.
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