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Health insurance policy with $100 bills.
The Affordable Care Act is likely to increase health insurance to varying degrees in most states. That's because insurance companies will have to take all comers, no longer being able to refuse coverage to sick people who cost more to cover. Raising everyone's rates will mean that insurance companies won't lose too much money by taking on the sick people who will cost them more. There are some limits written into the law to prevent exorbitant rates hikes, but in most states rates will go up.

But not in New York, according to a new study by Deloitte for the New York Health Benefits Exchange. New York has previously regulated the industry, in a system that has some of the same features of Obamacare, namely requiring that insurance companies take on all customers, regardless of pre-existing conditions. It also required that all carriers charged all customers the same amount. What it didn't have was an individual mandate. So sicker people got coverage, which drove premium prices up for everyone while healthier people ended up not purchasing insurance, but now ...

The health care law will shake up New York’s individual market in an especially interesting way. It will require New Yorkers to purchase health coverage, a requirement that doesn’t exist right now.

While insurers in states such as Maryland expect the general mix of people they cover to become significantly less healthy, as those with pre-existing conditions gain access to coverage, New York expects the exact opposite: Healthier people will be buying coverage.

Deloitte expects that this influx of healthier consumers into the market will mean that the average person buying her own policy will have health care costs that are 13.9 percent lower than those of the current population buying now.

The previous regulation—the one that means insurers have to charge everyone the same amount—is key here. Obamacare allows insurers to charge older people three times more than younger subscribers. This has resulted in most insurers deciding to raise prices higher on younger people, rather than bringing down premiums for older people. But in New York, it could mean real savings. That's the value of strict insurance regulation.

Originally posted to Joan McCarter on Mon May 06, 2013 at 09:58 AM PDT.

Also republished by Daily Kos.

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