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Are New Yorkers the Dumbest Shoppers in the World or Did They Discover a Cure for Cancer?

Healthcare Lunchbox128When I read the article, “Health Plan Cost for New Yorkers Set to Fall 50%”, I immediately wondered how did they do that? That is a pretty dramatic drop in insurance premiums. Did they discover a cure for cancer and forgot to tell the rest of us? Here is what  Roni Caryn Rabin and Reed Abelson wrote:

State insurance regulators say they have approved rates for 2014 that are at least 50 percent lower on average than those currently available in New York. Beginning in October, individuals in New York City who now pay $1,000 a month or more for coverage will be able to shop for health insurance for as little as $308 monthly. With federal subsidies, the cost will be even lower.

So I decided to enter some data into the ehealthinsurance.com website and see what they would recommend for a healthy young male born in 1991 and living in lower Manhattan(zip code 10004). Here is what I got:

eHealth_2013-07-19 10_42_20

We can see that most of the plans are less than $1,000 per month with the lowest cost plan, $184.70,  being the most attractive to a healthy young man. In the ehealthinsurance.com November 2012 report, The Cost and Benefits of Individual & Family Health Insurance Plans, they said that the average cost for an individual policy in the state of New York was $357 per month. It is disappointing that only sixteen plans are offered. If I enter the same data but use a location in Ohio(Clermont county, zip code 45122) we see that he could get health insurance for a low price of $42.60 per month and have over 77 different plans to choose from. In fact 75 of those plans have a monthly premium that is less than $200. So I am confronted with a couple of problems with the New York Times report.

  1. What is the actual price for health insurance for a healthy individual in 2013? Is it the $1,000 per month as reported by the New York Times or is it closer to the prices quoted at eHealthInsurance.com? If it is closer to the rates available on eHealthInsurance.com then the rates are likely to go up in 2014.
  2. Assuming that New Yorkers have not discovered a cure for cancer or obesity in 2013, why are the insurance premiums going down in 2014? Is this a bet that the amount of medical care that is not covered by health insurance, Medicaid, or Medicare will go down dramatically in 2014 or an admission that New York City health insurance numbers are “funny” numbers? When you look at insurance rates in other states a 50% drop in insurance premiums for New York screams that someone is using “funny” numbers.
  3. Are we to believe that some of the most incredibly savvy business men and women in the country really paying over $1,000 a month for health insurance when they could be paying less than $700? If these guys and gals are really that savvy, why can’t they get a rate like they have in Ohio?
  4. With the obvious problems that an unexplained 50% drop in insurance premiums bring to the table, you would think the New York Times would not want to bring more attention to the fact that the idiosyncrasies of the New York insurance market are not duplicated elsewhere. In this case I would have thought it would be better to be thought a fool than to open your mouth and remove all doubt.