New York's health insurance rates to plummet: Vindication for ObamaCare?

Officials say mandated health care exchanges will cut rates in half

President Obama
(Image credit: Alaa Badarneh-Pool/Getty Images)

Insurance rates for New Yorkers who purchase their own coverage will fall by half next year with the implementation of a state-run health care exchange network mandated by the Affordable Care Act, New York Gov. Andrew Cuomo (D) announced Wednesday.

Starting in October — when the health care exchanges will go into place — New Yorkers will be able to buy insurance at rates around 50 percent lower on average than what is currently available. (You can see a full list of the current and future rates here.) The change will not affect those who receive insurance through their employers.

The timing and size of that drop, supporters of ObamaCare said, proved that the law would, in fact, reduce costs for consumers. The sharp decline in costs "demonstrates the profound promise of the Affordable Care Act," Elisabeth Benjamin, vice president for health initiatives with the Community Service Society of New York, told the New York Times.

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"Health insurance has suddenly become affordable in New York," she said. "It's not bargain-basement prices, but we're going from Bergdorf's to Filene's here."

Cuomo himself suggested rates would drop specifically because of the ACA, saying in a statement that the exchanges "will offer the type of real competition that helps drive down health insurance costs for consumers and businesses."

In another encouraging sign for ObamaCare fans, New York officials estimated that 615,000 people would sign up for coverage under the reduced rates. Only about 17,000 New Yorkers independently purchase insurance now.

Following the news, the White House announced that President Obama would deliver a speech Thursday to discuss the law's benefits to consumers. The president's Twitter account also crowed about New York's projected rate cuts.

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Yet the magnitude of the drop in New York's insurance rates can't be entirely attributed to ObamaCare. As the Washington Post's Sarah Kliff pointed out, New York has for two decades had the highest insurance premiums in the nation, so there was significant room for rates to fall.

A lot of it seems to trace back to a law passed in 1993, which required insurance plans to accept all applicants, regardless of how sick or healthy they were. That law did not, however, require everyone to sign up, as the Affordable Care Act does.

New York has, for 20 years now, been a long-running experiment in what happens to universal coverage without an individual mandate. It's the type of law the country would have if House Republicans succeeded in delaying the individual mandate, as they will vote to do this afternoon. The result: a small insurance market with very high insurance premiums. [Washington Post]

New York, with its heavily regulated insurance marketplace, already has in place some of the new regulations required by the ACA. Those regulations, which typically drive up insurance costs, therefore won't add costs for New York's consumers, though they will in other states.

"Adding ObamaCare to this mix [in New York] means adding elements like subsidies and the individual mandate that will tend to make insurance cheaper," the New Republic's Jonathan Cohn wrote. "Things won't work out so neatly in states like Florida or Texas, which don't have as many insurance regulations on the books already."

Still, the plummeting rates appeared to show that the health care exchanges are at least increasing competition and driving down costs on one front. And that in itself is a victory for the health care law.

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Jon Terbush

Jon Terbush is an associate editor at covering politics, sports, and other things he finds interesting. He has previously written for Talking Points Memo, Raw Story, and Business Insider.