Wednesday, 10 September 2014

New York Regulators Slash Health Insurance Rates For 2015

The average health insurance rate increase next year will be about 6 percent in New York State.

State regulators today set the rates for 2015 after reviewing proposals from insurers, which requested an average increase of about 13 percent. Westhill Healthcare Consulting

While some reduction was expected, some insurers told the Albany Business Review severe 2015 rate cuts by state regulators would harm the companies.

The state Department of Financial Services sets the rates.

"We closely scrutinized the proposed rate increases insurers requested and reduced them significantly where appropriate," Benjamin Lawsky, superintendent of the department, said when announcing the reductions. Westhill Healthcare Consulting Review

On one hand, CEOs of insurers said the rate increases must properly reflect rising medical costs. They also cited increased taxes and fees tied to the Affordable Care Act, or ACA, as a main factor in proposing the 13 percent average rate hikes. They warned recent losses and job cuts at insurers would only get worse if rates insufficiently increased in 2015.

On the other hand, some business owners say they can't afford the rate hikes. Prior to state regulators setting the average rate increase at 6 percent, business owners told the Albany Business Review that the 13 percent average increases for 2015 would threaten health benefit packages they offer workers.

In response to state regulator's decision to reduce the rates, Paul Macielak, president and CEO of the New York Health Plan Association, an industry trade and lobbying group representing health insurers, described the figures as irresponsible. He warned some insurers may rethink offering some coverage plans and products instead of adhering to the state adjusted rates.

"The bottom line is inadequate rates will result in reducing product choice or otherwise de-stabilizing the market, which is ultimately harmful to the health care system as a whole and the consumers who rely on it,” Macielak wrote in an email.

On the individual market, the average increase will be about 5.7 percent, down from the 12.5 percent requested by insurers.

For the small group market, the average increase will be 6.7 percent, down from 13.9 percent requested by insurers.

Here are details from the state Department of Financial Services about rates for each insurer.

The Albany Business Review also previously talked with health care leaders who explained why state regulators would reduce the proposed rates.


Tuesday, 9 September 2014

If Your Kids Get Free Health Care, You’re More Likely to Start a Company

Starting a business is risky enough in the best of circumstances. Most new ventures fail, and the prospect of forgoing a salary is enough to keep many would-be entrepreneurs from taking the plunge.

But think about how much harder it would be if your child had a health condition, and you couldn’t get her insurance if you struck out on your own.

That’s less of a problem in the U.S. than it was a few years ago, thanks to Obamacare, but until recently it was a very real conundrum. So does the extension of publicly provisioned health insurance prompt more people to start companies? That’s the question asked by a paper released earlier this year by Gareth Olds of Harvard Business School.

Olds analyzed Census data from before and after the passage of the Children’s Health Insurance Program in the U.S. in 1997 to assess its impact on entrepreneurship. CHIP, or SCHIP as it was previously known, provides publicly funded health insurance to children whose families don’t qualify for Medicare, but whose incomes still fall below a cutoff (typically around 200% of the federal poverty line).

His results suggest that the policy did significantly increase business creation by those families affected. The self-employment rate for CHIP recipients increased from just under 15% of those eligible to over 18%. That amounts to an a 23% increase. The rate of ownership of incorporated businesses — a better proxy for sustainable, growth entrepreneurship — increased even more dramatically, from 4.3% to 5.8%, an increase of 31%.

What about all the other factors that might skew this sort of analysis? Olds used several quasi-experimental statistical methods in his research to control for such variables. The basic intuition behind his methods is that a family just above the CHIP cutoff isn’t all that different from a family just below it. Whether you make 199% of the poverty line or 201% doesn’t matter for much, except whether or not you’ll be able to enroll in the program. With that in mind, his methods zero in on this sub-group, in order to confirm that the policy actually caused the increase in firm creation.

The mechanism by which Olds believes CHIP boosts entrepreneurship is relatively straightforward: it reduces the risk of “consumption shocks,” i.e. the possibility of having to pay out a large chunk of cash unexpectedly for a child’s illness. Lower the risk and more people start companies.

Though it may seem counterintuitive given the political rhetoric around social insurance and economic growth, Olds’ is not the only research to suggest that welfare programs can promote entrepreneurship. Previous research has found that American self-employment rates jump at 65. Why is 65 a better age to start a company than 64? Because you qualify for health insurance through Medicare.

All of this serves as a reminder that bigger government needn’t discourage entrepreneurship and risk-taking. The relationship between the two ultimately depends on what government chooses to spend money on.

The final takeaway from Olds’ work is just how many business owners do depend on public programs like CHIP. “12% of households with incorporated businesses report enrollment in a public program,” he writes, not even counting Social Security, Medicare, or veterans benefits. And “disproportionately more entrepreneurs are receiving public healthcare benefits than would be expected based on their income alone.”

Overall, though, entrepreneurs still hail from disproportionately well-off families. The lesson from Olds’ paper is that starting a business doesn’t have to be a risk only wealthy people can afford to take — and the government can help.