Setting the Agenda: Insurance

The Affordable Care Act, President Barack Obama’s landmark healthcare reform law, is shaping up to be a top political target in Washington next year, with another major challenge heading to the Supreme Court and the new Republican majority in the U.S. Senate uniting both houses of Congress in opposition to the law.

The potential for repeal, severe funding cuts or other repercussions has state lawmakers in New York already watching closely to monitor the impact on health insurance coverage in the state.

“It’s not a question of my priorities but what will be forced upon us as priorities, and certainly that’s the issue about the Affordable Care Act implementation and whether this new Republican Congress, which is antagonistic toward the Affordable Care Act, will create hurdles,” said Assemblyman Kevin Cahill, a Democrat who chairs the Assembly Insurance Committee. “And not just Congress but the courts have been causing some concern for all of us as we watch what they’re doing in terms of the implementation of the Act.”

New York opted to set up its own health insurance exchange to comply with the law, while a number of other states left it to the federal government to run their exchanges. If the latest Supreme Court challenge is successful, the federally run exchanges could be shut down—and that could further erode support for the law, threatening its future even in New York.

In the meantime, lawmakers are reviewing other aspects of the Affordable Care Act.

State Sen. James Seward, the Republican chairing the Senate Insurance Committee, questioned the benefits for middle class residents and small business owners, but said there were some steps the state could take to improve the law’s effectiveness.

He noted that in 2016, the federal definition of a small business will rise to the level of 100 employees, up from 50 or fewer employees today. State law only allows small businesses with up to 50 employees to purchase stop-loss coverage for larger claims, however.

“Unless we make a change here, they can no longer self-insure, because they’ll be prohibited from having stop-loss provisions as part of their coverage,” Seward said. “That’s fine for 50 or fewer employees, because they’re too small to self-insure. When it goes up to 100 because of Obamacare, we need to do something to maintain coverage for those businesses that are 51 to 100 employees.”

Cahill said he also wants to assess the first year of the state’s exchange, NY State of Health, including affinity group plans, the implementation of out-of-network reforms and the challenges posed by the essential benefits cap, which makes it difficult to update coverage based on pharmacological developments or other changes.

The cap “says that if it wasn’t covered in 2012, you can’t make an insurance company cover it unless you’re prepared to use state resources to pay for the increased cost of that benefit,” Cahill said. “And it freezes healthcare into 2012. … There are recognitions, such as what we did last year in recognizing substance abuse as its own disease state, that we’re not equipped to operate because of the essential benefits cap.”

Medical malpractice is another insurance-related issue that comes up every year in Albany. “One of the new issues are those matters surrounding the legalization of medical marijuana and how that’s impacted by insurance, not just in terms of coverage but exclusions and so on and so forth,” Cahill said.

One of Seward’s top priorities will be to address insurance coverage gaps created by the rapid rise of ride-sharing companies Lyft and Uber, as well as car-sharing services like RelayRides and Getaround. When car owners rent out their cars or offer rides for a fee, a personal auto insurance policy is insufficient, he said, and failing to address the issue could raise rates for others.

“This cries out for some legislation,” Seward said. “I think it’s important that there is a very clear distinction, and boundaries set up between someone’s personal auto policy and the coverage [that] may either be secured by the car-sharing or ride-sharing company. Right now it’s a very blurred situation. It’s a way for car owners to make some additional income, and it seems to be popular from a consumer point of view, but we need to address these insurance [issues] without damaging the future of the business model, because it seems to be popular.”

Auto insurance coverage will remain a focus in 2015 as well, particularly no-fault coverage, which pays for damages regardless of who is at fault. Seward said that fraudulent behavior taking advantage of the state’s no-fault system is a key reason why auto insurance premiums are so high in New York.

Life insurance will also be a focus in 2015. One target for reform is Regulation 60, which requires consumers to obtain an analysis of an existing life insurance policy when switching to a new one. “This Reg 60 has long been considered one of the most burdensome New York regulations that life insurers must comply with, and it’s become an impediment for consumers who wish to make a replacement of their policies in a timely manner,” Seward said.

Among the other top priorities are preparing for the state’s next natural disaster, including the creation of a public consumer insurance advocate.

“There does not necessarily appear to be a level playing field for consumers when it comes to insurance regulation,” Cahill said. “That’s not to disparage in any way the Department of Financial Services; it’s just to say that the coalescing of resources on behalf of consumers doesn’t have a means of getting before the department right now, and we’re hoping to change that.”