More About Sarah Lueck

Sarah Lueck

Lueck joined the Center in November 2008 as a Senior Policy Analyst.

Full bio and recent public appearances | Research archive at CBPP.org


Another Health Reform Attack Falls Flat

October 2, 2014 at 3:00 pm

Many health reform opponents warned that people buying health insurance in the individual market would face a sharp, pervasive spike in premiums.  The Manhattan Institute predicted that “Obamacare” would bring double-digit premium increases, while the Heritage Foundation wrote, “individuals in most states will end up spending more on the exchanges” (or marketplaces) than they previously paid.  Not only did those dire predictions fail to come true, but there’s good news to report about premiums as open enrollment under the Affordable Care Act (ACA) approaches.

To be sure, some people buying coverage in the pre-health reform individual market saw their premiums rise, partly due to more robust benefits and market reforms under the ACA that barred insurers from charging higher premiums to people with health conditions.  But for many others, health reform’s consumer protections and premium subsidies to buy marketplace coverage brought lower premiums or the ability to buy coverage for the first time.  Now, as the November 15 start of the ACA’s second open enrollment season draws closer, the outlook for 2015 premiums in the individual market is even more encouraging.

Unsubsidized premiums for the silver-level “benchmark” plans in 16 cities around the country are falling by an average of 0.8 percent compared with 2014, according to a recent report by the Kaiser Family Foundation.  The cheapest bronze-level plan (a basic plan under health reform) in those same areas is rising by an average of just 3.3 percent in 2015.

Those rate changes mark an improvement over the pre-ACA market.  Individual-market health insurance premiums rose an average of 10 percent each year in 2008 through 2010, according to a Commonwealth Fund study.  For 2014 to 2015, the consulting firm PricewaterhouseCoopers estimates a 7 percent average increase in premiums (across all plan tiers and without accounting for subsidies) in the individual markets of those states for which it has data.  Premiums for the cheapest silver plans will rise an average of 8.4 percent in select states that the McKinsey Center for U.S. Health System Reform reviewed.

Of course, preliminary 2015 premiums vary significantly from state to state and insurer to insurer.  This variation means some consumers could see a higher price tag in 2015 for the plans they have now.  But many will be able to find coverage for the same or a lower price — provided they’re willing to shop around during open enrollment.

The bottom line: widespread rate shock isn’t happening.  Yet another attack on health reform is falling flat.

Big Issue for Insurance Marketplaces Is Enrollees’ Health, Not Age

February 14, 2014 at 1:02 pm

Despite what you may have heard, the share of enrollees in the new insurance marketplaces who are young isn’t the most critical factor in determining whether the marketplaces’ risk pool will be well balanced and whether their premiums may have to increase next year.  Instead, the health status of enrollees is far more important.  That’s the conclusion of a recent Commonwealth Fund-organized gathering of insurers, actuaries, researchers, and federal officials.

The misplaced idea that success hinges on whether enough young people sign up — since young people are generally healthier and thus less costly to cover — has gained undeserved traction in recent months.  And the release of the latest federal data on marketplace enrollment, including a breakdown by age, will likely bring renewed attention to the number of young enrollees.  But, as a Commonwealth report summarizing the meeting concludes, “there is no single right percentage for young adult participation.”

We made the same point a few weeks ago, explaining that the health status of enrollees at all ages is far more important in producing a balanced risk pool and ensuring that the marketplaces will have stable and affordable premiums over time.  Also important is how well each insurer predicted who would sign up for coverage this year.  If an insurer’s enrollees cost far more than it anticipated in setting its 2014 premiums, it might raise premiums in 2015 to better reflect its expected costs.

The Commonwealth Fund report also highlights some factors that could limit any losses that insurers may experience this year, which in turn could tamp down any 2015 premium increases.

For example, health reform’s risk corridors (along with its other risk-mitigation programs) limit insurers’ potential losses as the law’s major reforms take effect in the individual market and the new marketplaces become fully established.  And two health reform requirements — that insurers justify premium increases of 10 percent or more and spend a set percentage of their premiums on medical care rather than administration and profits — are expected to help hold down any rate increases in 2015.

It’s Too Soon to Go Negative on Health Reform’s Marketplaces

February 3, 2014 at 3:46 pm

Moody’s recently changed its outlook for health insurers from stable to negative, based in part on concerns about whether enough young, healthy people are enrolling in plans through the new health insurance marketplaces (also known as exchanges) under health reform.

This announcement by the well-known credit rating agency stoked another round of fretting about the marketplaces’ viability.  But it’s far too early to draw conclusions about the marketplaces.

Moody’s based its industry outlook in part on the mix of the insurance risk pool:  whether enough people with lower health costs will join, balancing out the higher costs of those with greater health needs.  But the data that will answer this question is still being generated, as we have explained — and it’s far more individualized per company than the rating agency’s sweeping, industry-wide generalization.

And although Moody’s cited a concern that that enrollment of younger people is lagging, the health status of enrollees is far more important to the risk pool’s balance than their age.

Risk pooling occurs within each state and on an insurer-by-insurer basis.  How any given insurance company that offers marketplace plans will fare depends substantially on how accurately it predicted who would enroll in its plans and the costs they would incur.  (WellPoint, one of the major Blue Cross and Blue Shield insurers, has highlighted this, saying that its preliminary analysis of who is enrolling in its plans is tracking with its assumptions when it set its marketplace premiums.)

Moody’s said several issues contributed to its negative outlook for the insurance industry.  For example, it said the Obama Administration’s recent decisions to allow people more time to enroll for 2014 and to keep policies that don’t comply with all the 2014 standards may add more risk than it previously expected for insurers this year.  But another factor that Moody’s raised is older news:  the coming announcement of reduced Medicare Advantage payments for 2015, which merely involves implementation of scheduled cuts enacted under health reform.  Moody’s assessment of the health insurance industry should have already factored in those cuts.

Amid the speculation about the impact that health reform will have on private insurance markets, it will take time to understand what is happening in this first year of implementation.  It’s far too early to declare that the news is bad.

Don’t Panic Over Early Health Reform Enrollment Data

January 15, 2014 at 1:57 pm

New federal data show that enrollees in health reform’s new health insurance marketplaces are somewhat older than some expected, spurring talk that premiums could rise and even that the law itself is at risk.

But it’s no time to panic, for several reasons.

  • First, it’s early.  People have until March 31 to enroll in marketplace coverage, and enrollment will likely grow substantially by then.  The new data show a swell of enrollment among younger people in December, and federal officials said they expect that to continue.
  • Enrollees’ health status matters more than their age in determining whether the marketplace has a balanced, stable risk pool.  A 20-year-old with significant health needs costs an insurer more to cover than an older person who doesn’t use many medical services, and insurers need healthy people of all ages to balance out the pool.  (As the Kaiser Family Foundation’s Larry Levitt tweeted:  “Will we get the 60-year-old gym rats?”)  We aren’t likely to know the relative health of marketplace enrollees for some time — until enrollees start using health services and insurers examine their claims data.
  • Whether the pool is balanced is a state- and insurer-specific question.  The new data show national and state-specific enrollment in the insurance marketplaces.  But 2014 risk-pooling occurs within each state and on an insurer-by-insurer basis; it also includes enrollees in the individual market outside of the marketplaces as well as marketplace enrollees.  When thinking about how the 2014 risk pool could affect what premiums insurers charge in 2015, what really counts is how accurately a particular insurer predicted the mix of people it would enroll in its plans in a given state when it set its 2014 premiums (and what it expects for 2015).  If an insurer’s enrollees are in poorer health, on average, than the insurer predicted for 2014 and the insurer expects the trend to continue in 2015, it could raise premiums for 2015.  But if actual enrollment was in line with expectations, there should be no effect on premiums.
  • Even a sicker-than-expected pool of enrollees won’t necessarily translate to significantly higher premiums in 2015.  Insurers will weigh a number of factors when they set their 2015 premiums, such as who they expect to enroll next year and how their prices will stack up next to their competitors.  Some companies will want to keep premiums down to maximize their market share as more people become familiar with health reform’s benefits and enroll in marketplace plans, and as the penalty for not having health insurance further encourages healthy people to obtain insurance.  In addition, health reform already includes several programs to compensate insurers if their costs are higher than expected, and insurers will factor that into their 2015 premium rates.

Why the Obama Approach to Health Policy Cancellations Is Preferable

November 19, 2013 at 3:31 pm

Responding to a wave of insurer letters notifying people that their current individual-market health plans won’t be available next year, Senators Mary Landrieu and Joe Manchin have proposed requiring insurers to permanently continue existing individual-market plans.  Our new report explains why this would likely drive up premiums in the new insurance marketplaces, weakening their chances of survival.  If the marketplaces unravel, millions of uninsured people expected to gain coverage under health reform (the Affordable Care Act or ACA) will lose access to coverage.

The Administration’s alternative proposal — to allow insurers to extend into 2015 any health plans they offer in the individual or small-group market that don’t comply with health reform’s standards and consumer protections — is also flawed but would be less damaging, as our report explains:

In general, both the Administration’s new policy and recent House and Senate proposals would prompt larger numbers of healthier-than-average people to remain in non-ACA-compliant individual-market plans outside the marketplaces; that, in turn, would cause the pool of people in the marketplace plans to be sicker, on average, than it otherwise would be.  This “adverse selection” would produce higher premiums in the marketplaces, particularly for 2015.  Depending on how many healthier people remained outside the marketplaces, the more far-reaching proposals — including the Landrieu-Manchin bill and the bill the House passed on November 15 — could trigger sticker shock when the 2015 premiums for marketplace plans are announced next October, just a few weeks before the congressional mid-term elections.

The Administration’s policy has strong advantages over the Landrieu-Manchin and House bills.

  • It doesn’t allow new people to enroll in non-ACA-compliant plans, as the House bill would.
  • It leaves the decision of whether to extend the non-compliant plans to insurers and states.  This means that fewer people will remain in such plans, and less adverse selection will result, than if the policy required insurers to offer them, as under Landrieu-Manchin.
  • It extends the non-compliant plans through 2015, rather than permanently, as under Landrieu-Manchin.
  • It is an administrative action and thus doesn’t require legislative action that could open up the ACA to even more harmful statutory changes that could push marketplace premiums up markedly, undercut the ACA’s insurance-market reforms, and threaten the long-term viability of the new marketplaces, without which millions of Americans will remain uninsured.

Click here for the full report.

Upton Bill to Allow Insurers to Offer Non-Compliant Plans Would Undermine Health Reform

November 13, 2013 at 2:32 pm

The House is planning to vote this week on a bill allowing insurance companies to continue offering existing individual-market health plans through 2014 — even if the plans do not comply with health reform’s new standards and consumer protections.  The bill, sponsored by House Energy and Commerce Committee Chairman Fred Upton (R-MI), would jeopardize the Affordable Care Act (ACA) in several ways, as we explain in a new paper.

The Upton bill would allow health insurers that had individual-market plans in effect as of January 1, 2013 to continue selling all of those plans throughout 2014.  And, the plans would be available to new enrollees as well as current ones.

Here are some of the major problems it would cause:

It would raise premiums significantly. By encouraging healthier people to remain in non-compliant individual-market plans outside the new insurance marketplaces (also known as exchanges), the bill would make the pool of people enrolled in plans offered through the marketplaces sicker, on average, than under current law.  That would raise marketplace premiums for coverage in 2015 and beyond (and possibly even for 2014), and could trigger sticker shock when the premiums for 2015 are announced next October.

It would threaten the insurance marketplaces’ long-term viability. While the Upton bill would extend the availability of non-ACA-compliant plans only through 2014, there would be pressure next summer and fall to extend their availability through 2015 or (more likely) permanently.  That would permanently raise premiums in marketplace plans, further discouraging healthy people from enrolling and threatening the marketplaces’ long-term viability and, hence, the extension of coverage to millions of uninsured near-poor and middle-income Americans.

It would undermine new insurance market reforms. The Upton bill would likely undermine the ACA’s reforms to the individual market that take effect in 2014, such as the prohibitions against denying coverage for pre-existing conditions, charging higher premiums based on an individual’s health, and offering plans with glaring gaps in coverage, which can leave people subject to catastrophically high costs even though they are insured.  If a large market of non-ACA-compliant plans continues to exist through 2014, as it would if insurers could continue all existing individual-market plans, individuals enrolled in ACA-compliant plans inside and outside the marketplaces would face sharply higher premiums.  This dynamic could eventually make the market reforms unworkable.

It would create new problems for an already troubled open enrollment period. The bill would further disrupt the open enrollment period that started on October 1, and could result in confusion that deters some consumers from enrolling in marketplace plans that offer more comprehensive benefits at lower cost.

Ultimately, the Upton bill would undermine health reform — and hurt the millions of Americans who are expected to benefit from the improved coverage and subsidies available through the new health insurance marketplaces.

Click here to read the full paper.

Health Reform Means Transition to More Secure Coverage in Individual Market

October 30, 2013 at 11:29 am

The fact that insurance companies are discontinuing some plans they offer in the individual market is getting a lot of attention.  Unfortunately, some media reports have confused the issue and blown it out of proportion.  Here are five things to keep in mind:

  • Well over 90 percent of Americans with health coverage get it through an employer or a public program such as Medicare or Medicaid, not through the individual market.  So the changes that insurers make to individual-market plans won’t affect them.
  • Insurance companies change the plans they offer and elements such as benefits and cost-sharing charges all the time, with or without health reform.
  • Thanks to health reform, people buying coverage in the individual market for 2014 will have an array of options for good-quality coverage inside and outside the exchanges (also known as “marketplaces”).  Coverage must meet basic standards related to benefits and cost-sharing charges — standards that many of the plans offered in the individual market before health reform didn’t meet.  Also thanks to health reform, people don’t have to worry anymore that insurers will charge them more or deny them coverage altogether because of their health status.
  • Many people — including people now buying coverage in the individual market — will be eligible for federal premium tax credits starting next year, which will bring down their costs substantially.  Media reports about people reacting to the news that their policies are ending often don’t say whether they might be eligible for these credits to buy a new plan through the exchanges.  With some very basic information, you can estimate a person’s eligibility using the Kaiser Family Foundation’s subsidy calculator.
  • The issue of insurers transitioning to new plan offerings in 2014 isn’t the same as the issue of “grandfathered” plans, though some media reports have confused the two.

    Here’s the background.  To minimize disruptions in the insurance market, health reform allowed insurers to continue to offer plans that existed when the law was enacted in March 2010 even if these plans didn’t meet certain health reform rules, such as covering certain preventive services at no cost to enrollees.  But if insurers changed a “grandfathered” plan significantly, it would lose grandfathered status and would have to meet any applicable health reform standards.  This makes sense, since it would no longer be the same plan that pre-dated health reform.

    No one expected many of these grandfathered plans to stick around for very long.  Insurers in the individual market can’t sell them to new enrollees, and as was widely reported in 2010 —including
    by us — the federal government estimated that 40-67 percent of individual market policies (and about half of all employer plans) could lose grandfathered status by 2013.  Also, turnover is high in the individual market, so many people who initially benefitted from grandfathering have switched to something else.  We don’t know how many of the people affected by plan discontinuations are in grandfathered plans, but this suggests that many of them aren’t.

Let’s Stop Using Bogus Comparisons of Health Insurance Premiums to Throw Darts at Health Reform

September 28, 2013 at 8:30 am

Avik Roy, repeating his claim that health reform will make insurance less affordable, criticizes the Obama administration for announcing various premiums that people will pay next year for coverage in the new insurance exchanges without comparing them to what people now pay.  He quotes the charge by Douglas Holtz-Eakin, head of American Action Forum, that, “Instead they try to distract with a comparison to a hypothetical number that has nothing to do with the actual experience of real people.”

Then Roy proceeds to do just that.

Roy compares premiums for the cheapest individual market plans available in 2013 with the cheapest “Bronze” plans for people ages 27 and 40 available next year in the exchanges.  This comparison isn’t apples-to-apples; it’s more like apples-to-avocados.  It:

  • Downplays the premium tax credits that many people in the individual market, particularly young adults, will receive under health reform. Once you factor in those tax credits, many people who buy their own insurance today will pay less next year.
  • Ignores the fact that many people can’t get coverage in today’s individual market but will be able to under health reform. Many people are denied coverage or quoted unaffordable premium rates because they have a pre-existing health condition.  That means premiums in the individual market are lower than they would be if insurers were barred from excluding people in poorer health, as they will be starting next year.

    Under health reform, people who haven’t had access to the individual market will finally be able to obtain coverage, without being penalized or excluded because of their health problems.

  • Ignores the fact that today’s lowest cost plans often don’t cover essential benefits, but plans offered in the exchanges will. In comparing current premiums for cheap health plans in various states with next year’s premiums under health reform, Roy says little about what people’s actual experience would be if they have one of these cheap plans and get sick or injured.

    Take Nebraska, where Roy says 27-year-olds will face the biggest premium increase under health reform.  We examined the five cheapest plans in October 2013 in one zip code in Nebraska and found that none covered mental health services or substance abuse treatment, and two didn’t even cover prescription drugs, visits to primary-care doctors, or visits to specialists such as oncologists.  Only one provided maternity coverage.  And, two of these plans had a $10,000 deductible, meaning that enrollees must pay that much of their own money on covered benefits before the plan starts contributing.

    In comparison, plans offered in the new exchanges will have to provide a comprehensive array of benefits (including all of those just mentioned) and limit what consumers pay out of pocket.

  • Pretends the plans with cheapest sticker prices in the market today represent what people buying their own insurance are actually purchasing. In fact, we do not know how popular these particular (and often extremely limited) plans are (for example, whether they enroll large numbers of young adults) or how much people actually pay for them once the insurer takes applicants’ health status and other factors into account.

One other point is worth noting:  27-year-olds are not 27 forever.  A healthy 27-year-old with bare-bones coverage may pay more next year for a better plan, but as she gets older or experiences health problems, health reform’s changes to the individual insurance market will mean she won’t have to worry about whether she has access to decent coverage.

Clearing Up Confusion About Health Reform’s Out-of-Pocket Protections

August 13, 2013 at 4:57 pm

Recent media coverage may have sown confusion about health reform’s requirement that health insurance plans cap how much consumers can pay out-of-pocket each year for medical care.  The bottom line: for many plans, the protections will take effect as scheduled in 2014.  Some plans will be able to wait an extra year to fully comply.

The health reform law requires that, starting next year, private insurance plans limit how much in cost-sharing charges — deductibles, copayments, and coinsurance — that people enrolled in a plan must pay each year for covered benefits provided by the plan’s network of health care providers.  (This includes plans offered in the individual market or through employers.  The requirement doesn’t apply to “grandfathered” plans.)  In 2014, this “maximum out-of-pocket limit” will be $6,350 for an individual and $12,700 for a family.

Back in February, the Obama Administration provided an additional year to fully comply with this requirement but only for certain plans offered by employers.

Here are some clarifications about the February policy:

Health insurance plans in the individual market: In 2014, the maximum out-of-pocket limit will apply, as scheduled, to the individual (non-group) health insurance market.  Millions of people are expected to gain coverage in this market in 2014, as health reform’s new improvements and federal subsidies significantly increase access to affordable coverage.

Employer-sponsored health insurance plans: The maximum out-of-pocket limit will also continue to generally apply to non-grandfathered plans offered by employers, including small group, large group, and self-insured plans.  Employer plans that have a single insurer or administrator have to fully comply with the limit next year.

Employer plans that have “separately administered” benefits: The Administration provided the exception in February for these plans, in which an employer has one insurer or administrator for its primary package of health benefits and a different insurer or administrator for discrete benefits, such as prescription drugs.  Because employers and insurers have claimed it will be difficult to coordinate an overall maximum out-of-pocket limit across separately administered benefits, they sought and received the ability to avoid full compliance for one year.

Even those employer plans with “separately administered” benefits that qualify for the delay still must apply some out-of-pocket limits in 2014.  As the February guidance explained, these plans must ensure that their primary package of health benefits has an out-of-pocket limit of no more than $6,350 for individuals and $12,700 for families.  A separately administered benefit, such as prescription drugs, that already has an existing limit on out-of-pocket costs must comply with the limits of $6,350 for individuals and $12,700 for families in 2014.

An employer plan wouldn’t have to add a cap to a separate benefit if the separate benefit currently lacks one.  But this exception shouldn’t be misunderstood as broadly waiving the important out-of-pocket protection that health reform will bring in 2014.

Many Low-Income Floridians Eligible for Help Paying Health Insurance Premiums

August 1, 2013 at 4:24 pm

Florida’s announcement this week of its proposed 2014 health insurance rates for its individual insurance market garnered plenty of attention.  But, it’s also worth noting that, under health reform, many low- and moderate-income Floridians could be eligible for new federal tax credits in 2014 that would help reduce the premiums they would otherwise pay to insurance companies.

Of the roughly 1 million non-elderly people who had coverage in Florida’s individual insurance market in 2011, 45 percent were in the income range eligible for premium subsidies, according to our analysis of Census data.  That includes more than ­­­­200,000 non-elderly Floridians with incomes between the poverty level and two times the poverty level, where the tax credits are the most generous.

The share of premium-eligible Floridians is even greater among those who lack health insurance.  Florida is among the states with the highest rates of uninsured residents, and more than two million non-elderly Floridians who lacked health coverage in 2011 had incomes in the premium tax credit eligibility range (see chart).  And about half of those people — more than 1 million — had incomes that would qualify them for the most generous federal subsidies.

Don’t Be Misled: Indiana’s Consumers Won’t Have to Pay $500 a Month for Health Insurance

July 23, 2013 at 4:46 pm

Anyone who saw Indiana’s release of individual-market health insurance rates for 2014 might now have the misimpression that people there will have to pay an average of more than $500 per month in premiums to get coverage in the individual market in 2014.

But this figure, released by state officials who have been touting “rate shock” and bashing the health reform law, is highly misleading.  It is not the average premium that consumers will actually have to pay.  Here’s why:

The $536 average “base line rate” that Indiana’s Department of Insurance cited represents the average cost of providing covered benefits to people in the state’s individual market across several insurers.  That includes how much the insurer pays and how much the individual will pay in out-of-pocket charges like deductibles and co-payments.  In essence, the $536 figure is what insurers would spend on average to cover individual-market enrollees in Indiana if the insurers were responsible for all costs and enrollees paid nothing under their plans.  But when figuring out the premium for a plan, the greater the enrollees’ share of costs, the lower the actual premium, and vice-versa.  (The $536 figure also does not account for other important factors that affect premiums, including insurer profits, administrative costs, and risk mitigation programs under health reform.)

Filings submitted in Indiana by Anthem Inc. (currently the insurer with the biggest share of the state’s individual market) show an “index rate” (comparable to the Indiana Insurance Department’s “base line rate”) of $541 per member per month.  A deeper look, however, shows how premiums would be calculated for an actual Anthem 2014 plan, which reveals more useful numbers.  It shows that, for a 47-year-old non-smoker in Indiana’s Northwest corner, an Anthem bronze plan (a basic plan under the health law) would cost $307 per month without any federal premium subsidies.  A 20-year-old non-smoker in that same geographic area would pay about $125 per month for the same plan.

Moreover, these premium figures do not reflect the tax credits that health reform provides to make coverage more affordable.  Many people without health coverage as well as those already purchasing insurance in the individual market will qualify for assistance that will cap the maximum contribution they must make toward premiums at no more than a set percentage of their income.

Of the 207,000 people who got coverage in Indiana’s individual insurance market in 2011, 63 percent were in the income range eligible for premium subsidies, according to a CBPP analysis of Census data.  That includes 46,000 Indianans Hoosiers with incomes between the poverty level and two times the poverty level, where the federal subsidies are most generous (see chart).  Among the far larger group of 764,000 Indianans Hoosiers who were uninsured in 2011, 30 percent had incomes between the poverty level and two times the poverty level, which would make them eligible for the most generous federal help with paying their premiums, and 56 percent overall have incomes in the subsidy range.

With just two months left before open enrollment starts for 2014, people who need affordable health insurance also need clear and accurate information about what coverage will actually cost — not anti-health reform rhetoric and arcane industry numbers that are easily misunderstood.  Otherwise, consumers — for whom the health law holds tremendous benefits — may be deterred from enrolling.

Expected Drop in New York Health Insurance Premiums Highlights Importance of Individual Mandate

July 17, 2013 at 2:01 pm

New Yorkers in need of health insurance just got some good news.

New York State announced that people shopping in the state’s individual insurance market will see average premium rates cut by more than half next year.  The actual prices that many people will pay will be even lower, because these rates don’t account for the new federal premium tax credits that will help many low- and moderate-income people afford coverage.

The drop in New York’s rates is no surprise.  The state already requires health insurers to sell coverage to anyone, including those who have pre-existing health conditions, and also prohibits insurers from charging people higher premiums based on their health.  (Most states’ individual markets don’t have those requirements today, but they are part of the health reform law that will take effect nationwide in 2014.)

Currently, New York does not require people to have health insurance or pay a penalty.  This individual mandate, as it is known, is a critical part of national health reform, however, and will take effect in 2014.

Together with the premium tax credits, the mandate will encourage New Yorkers to enroll in health insurance and drive down the cost of individual insurance in that state.  In other states, it will help ensure that that coverage remains affordable even as their individual markets become more accessible to people with health conditions.

New York’s individual insurance market today — pre-2014 — is a window into what would likely happen if health reform’s individual mandate were delayed, a proposal that the House will vote on tonight.  Without an individual mandate, health care coverage would be less affordable because while older and sicker people would be able to buy coverage in 2014 under health reform’s guaranteed availability requirements, healthier people would be more likely to sit out of the market and buy health insurance only if they get sick.  The pool of people in the insurance market would be older and sicker on average, so premiums would go up.

Without a mandate and premium subsidies, the rates in New York’s individual market are among the highest in the nation right now.  As the New York Times reported, despite the state’s size, only 17,000 New Yorkers currently buy coverage on their own.

With the mandate and the subsidies in place, however, states officials estimate that individual market enrollment in New York will rise to 615,000 people during the first few years after health reform takes effect.  Although New York has very different market conditions than most other states, it’s just one among many where health reform will substantially improve a dysfunctional individual market.