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N.Y. Insurance Co. Exec: 'Life Will Go On,' Expensively, Without Individual Mandate

Jun 14, 2012

This interview is part of KHN's video series "Supreme Uncertainty: What's Next After The Court Rules," which solicits views from public officials and policy experts about the upcoming Supreme Court ruling on the health law and its implications for the future of health care.

If the Supreme Court strikes down the health law, New York would be in a somewhat unique position, according to David Abernethy, a senior vice president of EmblemHealth. Its companies, Group Health Inc. and HIP Health Plan, insure almost 3 million people in the state. Abernethy says unlike other states, New York already requires insurers to cover all applicants, regardless of health status– that’s known as "guaranteed issue."

Here's an edited transcript of the interview:

MARILYN WERBER SERAFINI:  Does it matter if the Supreme Court strikes down the law or upholds it for what you do as a health plan in New York?

DAVID ABERNETHY:  Well, it matters because life is going to be a lot easier if we have an individual mandate.  Without it, in New York where we already have guaranteed issue, we are having somewhat of a spiraling premium problem in the individual and small-group markets.  But, if the Supreme Court strikes down the individual mandate, for us, in essence, life will go on as it’s already happening. 

We will still have a community-rated, mandatory benefit package in the individual and small-group markets and we will go on.  Obviously, there may need to be efforts to stabilize premiums in that market in the absence of the individual mandate.  But again, without it, we will be where we are, even though it would be preferable for it to continue.

MARILYN WERBER SERAFINI:  And if the law is upheld, at this point everyone’s—not everyone—but certain states are moving forward more quickly than other states. If the law is upheld, where do you go as a health plan?

DAVID ABERNETHY:  We compete in every marketplace:  Medicare, Medicaid, large-group commercial, small-group commercial, individual commercial.  We will move into the new world of exchanges in the individual and small-group markets.  I think it will improve that market.  It will make marketing, I think, somewhat less expensive. 

We expect to be able to compete effectively in an exchange market, as we compete effectively today in a more disorganized marketplace for individual and small group.  So we are moving to improve our direct-to-consumer capabilities, to make sure that we have the kind of consumer-friendly website that attracts people and makes it easy for them to buy individual [policies]. 

Most health plans’ major focus has been on selling to employers.  The world of exchanges is one in which you need to market to individuals, and to do so effectively—a certain level of disintermediation in that market.   And I think that’s a good thing.  Ultimately, maybe that’s where we’re headed generally, is much less group coverage and more individual coverage, if the exchanges actually were to work—but that still remains to be seen.

MARILYN WERBER SERAFINI:  New York is making some changes when it comes to Medicaid.  Can you just briefly describe where New York is headed in Medicaid?

DAVID ABERNETHY:  Sure.  We have a market that is dominated, for the regular Medicaid members, by managed care.  There is virtually no individual fee-for-service, non-managed care Medicaid left.  The state is moving to take even the populations that heretofore were not thought suitable for managed care, such as the behavioral health population and moving them into managed care.  It is creating a new kind of health home for those people particularly:  the most challenging populations to manage. 

It has imposed an overall cap on Medicaid spending and for the most part we have successfully—as health plans in the state and providers together—have been able to stay under that cap.  So the negative consequences of piercing the cap have not actually been felt.  We had a good process called the Medicaid Redesign Team that brought all the stakeholders, providers, health plans, state advocates together to work on redesigning Medicaid in the state, and we’re now busily implementing it.

MARILYN WERBER SERAFINI:  And if the law is upheld and there is an influx of new Medicaid enrollees in New York, is that expected to affect the cap?  Or how will that affect the Medicaid redesign?

DAVID ABERNETHY:  Well, presumably the cap has to be adjusted to take into account new, large numbers of beneficiaries.  But again, EmblemHealth has 250,000 or so Medicaid beneficiaries already. We’ve successfully competed to attract those individuals to our plan. Bby the way, that’s a form of individual sales in both Medicare and Medicaid that gives us a lot of confidence that we can be successful in the new small-group and individual commercial markets of selling to individuals because we have that experience.  For us, we look on it as a good thing, I guess presuming that the rates are sufficient to the task.  But that’s a change that we are working very, very hard on and getting ready for. The expectation [is] that a significant number of those new Medicaid beneficiaries will come to EmblemHealth.

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