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New York Governor announces health insurance premiums will fall

New York Insurance Update

New York Governor Andrew Cuomo announced Wednesday that New Yorker insurance premiums  could decline as the Federal Healthcare law takes effect. According to state insurance regulators, given the new rates they have recently approved for 2014, the rates could be 50% less on average for some insurance buyers. Insurance regulators claim that individuals who now pay $1,000 on average per month for coverage may be able to find insurance for as little as $308.

Supporters of the Affordable care Act are saying the rate drop is due to the increased competition between insurers due to the creation of the new exchanges. The insurers also note that there should be a dramatic increase in new insurance participation rates. If this is true, this is great news for estimated 2.6 million New York residents who will now be able to shop for affordable health care.

“Health insurance has suddenly become affordable in New York,” said Elisabeth Benjamin, vice president for health initiatives with the Community Service Society of New York. “It’s not bargain-basement prices, but we’re going from Bergdorf’s to Filene’s here.”

New York is one of several states which have made progress establishing the exchanges, which are supposed to increase competition and transparency in the marketplaces leading to affordable and new choices.  According to Governor Cuomo, “New York’s health benefits exchange will offer the type of real competition that helps drive down health insurance costs for consumers and businesses.”

Most New Yorkers not affected

The decreasing rates will not affect many New York workers who currently receive their insurance coverage from their employer. The individual mandate will only affect individuals who are not currently insured, which is very high given the current cost of individual coverage.

No one is quite sure how many individuals will actually buy coverage, although the state estimates it could be high as 615,000. Some of the 2.6 million uninsured will also be able to get subsidies to help pay for the cost of individual coverage.

What will the New York plans offer?

Most plans offered in the exchanges will be basic plans, but there will also be more generous plans that an individual can pay more to receive. For instance, an individual with annual income of $17,000 will pay about $55 a month for a “silver plan,” state regulators said.

Right now officials in the Department of Financial Services say they have approved 17 insurers to sell individual coverage through the New York exchange. This includes eight new insurers who are entering the market for the first time. Some of these insurers will also try to create plans which meet the needs of lower income individuals.

Small businesses may also see insurance costs decline, although not as much. Small businesses may also be able to get tax credits, and the governor believes the exchanges will make it easier for them to choose a plan.
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