New York businesses skeptical of state plan to boost health coverage

New York officials are ready to roll out their health insurance program for small businesses and a new stop-loss fund for the direct pay market.

In 2001, Healthy New York is to start offering small businesses subsidized health insurance with limited benefits. Healthy New York policies will cover most basic health care services, but the law waives many of the mandated benefits included in other coverage. In addition, there will be much higher copayments than in current small group policies.

To participate, businesses must have no more than 50 employees, no employer-based insurance for the previous 12 months (to prevent companies from dropping an insurance plan to qualify), and one-third of their employees making less than $30,000 per year. In addition, the business must pay at least 50% of the employee premiums. The state will reimburse plans for 90% of the claims paid per Healthy New York member per calendar year between $30,000 and $100,000.

Healthy New York also will provide $56 million over three years to subsidize insurance for individuals making under 208% [flag this number] of poverty who work for firms that do not provide coverage. Health plans will be required to offer a reduced set of benefits and high claims will be subsidized from a stop-loss fund that will reimburse direct pay policies for claims between $20,000 and $100,000 per member per year.

Funding of the state share of the programs will come primarily from some of the tobacco settlement money as well as a doubling of the state tax on cigarettes to $1.11 per pack. Such funding sources may help the program succeed because other states have found that they are better able to sustain a program when it’s not drawing on the state’s general fund, says Trish Riley, executive director of the National Academy for State Health Policy.

Although many interest groups came together to support passage of the programs, they did not meet with the approval of business leaders. Elliot Shaw, director of government affairs for the Business Council of New York State, says his members would have structured health insurance for the uninsured very differently.

"We would not have expanded Medicaid and created a two-tiered approach for small businesses. We would have tried to make insurance more affordable for all by making changes that would have helped the private sector provide coverage rather than relying on government," he says.

Mr. Shaw says his group will now assist with implementation, however, working to help small businesses become eligible for Healthy New York. "We’ll try the best we can to make the system work. Perhaps we can re-tool it a bit, too, as it gets implemented. We certainly would not want to re-open the whole debate, but we might be able to make some changes."

Contact Mr. Shaw at (518) 465-7511. See related story, "New York City, Texas, roll out purchasing alliances to broaden health coverage among small businesses," State Health Watch, May 1999, p. 10.