Last week a federal appeals court in Atlanta issued the first appellate ruling on Obama care, declaring unconstitutional the individual mandate that is at the heart of Obama’s plan. While we can assume this will go to the next level and be taken up by the Supreme Court, New Yorkers should still rejoice over this ruling.
New York makes many top ten lists, but one of the more unfortunate is top ten in cost for health insurance premiums. That is indirect relation to the degree to which the state regulates health insurance policies, making them an all-inclusive one size fits all, no options proposition. You buy exactly what the state thinks you should have, an inflexible Rolls Royce plan, high cost be damned.
These same mandates apply to healthcare for government workers, and this is one of the main reasons that the cost of benefits for public employees has exploded in the last 15 years – roughly about the time these regulations reached fruition.
But overall cost is only part of the problem. The share of the premium paid by the workers is substantially less than that of their counterparts in the private sector (15 percent on average for public employees and 25 percent for private sector workers), and in many cases public employees don’t pay anything toward their premium. The result is that, when given the option to participate, public employees are more likely to take the benefits, 84 percent to 74 percent in the private sector, even if they receive coverage elsewhere.
Indiana is a state with very similar problems to those here in New York. Plagued by high costs and expensive public sector plans, in 2006 Governor Daniels tried to find a way to reduce the cost to the taxpayers without hurting public employees. Initially, Indiana offered four managed care plans for their employees, much like what N.Y. offers now. Daniels offered new consumer directed plans. One included a high deductible, linked to a health savings account with matched contributions.
Another included a lower deductible and a higher employee premium contribution. The four managed care plans were merged into one, with a similarly higher premium share. By 2010, 70 percent of the participants had opted into one of the two consumer directed plans, at a savings of about 15 percent for taxpayers. Employees also saw a substantial personal savings since their plans were more consumer oriented and therefore they made wiser, less frivolous decisions.
Should N.Y. adopt similar reforms, the savings could be hundreds of millions of dollars for taxpayers and help offset some of the budget problems Governor Cuomo is currently attempting to address. Creating options in healthcare, in both the public and private sectors, should be priority one.
Robert Hornak is a Queens-based political consultant, blogger, and an active member of the Queens Republican Party.
