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From: UNGVARY, JEFFREY /087369 /GA049 Sent: Thursday, July 18, 2013 5:08 PM Subject: "Health Plan Cost for New

Yorkers Set to Fall 50%” Whether you’re a group with 2 or 2,000 employees, in New York or another state, I’m sure you’ve heard about yesterday’s New York Times article “Health Plan Cost for New Yorkers Set to Fall 50%” (http://nyti.ms/15EsUGU) or may have researched the rate filings announced yesterday. I would like to provide a professional analysis of the announcement to temper any questions and concerns you may have. I aim to be analytical, not political or judgmental in my assessment and appreciate any feedback you’d like to provide. For those of you who like a summary, in just over 140 characters: The title refers to individual plans; group plans will have options in and out of the Exchange at various prices. The group plans we perceive today as “low benefits”, are considered “Platinum” in 2014. If you like details, keep reading…

First, the grabbing headline of 50% reduction in rates refers specifically to the individual marketplace and comes as we predicted in 2010 when the Affordable Care Act was passed. (From the article, “<image002.png>The new premium rates do not affect a majority of New Yorkers, who receive insurance through their employers, only those who must purchase it on their own. Because the cost of individual coverage has soared, only 17,000 New Yorkers currently buy insurance on their own. About 2.6 million are uninsured in New York State”) Currently, for a New York County resident the single rate for the HMO plan offered to individuals is over $1,000 per month regardless of carrier, and are over $8,400 per month for a family that elects the POS plan offered from one carrier. You can refer to this link on the web for information on the individual plans available in New York: http://www.dfs.ny.gov/insurance/ihmoindx.htm. The rates for the carriers differ based on the carrier's own pricing methodology, which often includes consideration of the carrier's network, reputation and desire to write individual coverage. The rates are community rated, so no matter the age, gender, family status or health status of an individual the rate is the same. The new rates will continue to be “pure” community rated, but more plans – with inferior benefits to the current plans – will be offered, along with the expectation that more people will enroll in the individual plans, driving the expected claims/premium ratio down to a more tolerable level. Beyond just reporting the news, several outlets offer analysis pieces looking deeper into the mechanics behind the plummeting rates. For example, the Washington Post 7/18, Kliff) “Wonkblog” reports that while the “unexpected” news is a “rarity,” it “shouldn’t be shocking.” The blog explains that New York has for over twenty years had “the highest individual market premiums in the country,” due to a 1993 law requiring “insurance plans to accept all applicants, regardless of how sick or healthy they were.” And now that the ACA adds in the requirement that all uninsured sign up for coverage, the pool in New York gets a lot less sick. And, the blog concludes, “A less sick population generally means a less expensive population.” Similarly, in a piece going “behind” the falling premiums, Bloomberg BusinessWeek (7/18, Tozzi) calls them “not surprising” because of the way New York’s market was “previously structured.” John Cassidy, in The New Yorker (7/18), and the Atlantic Wire (7/18, Reeve) offer similar analyses. Second, group insurance rates have been filed and approved as well. The article refers to 17 carriers with some new ones entering the market; the majority of the entrants are in the individual market. The only “new” group carriers are MetroPlus and Northshore LU, In fact, some carriers have opted to not file a Platinum level group plan (Empire and GHI to name a few) , or to participate in the small group environment whatsoever (Cigna).

Next, a quick rate comparison from 2013 to 2014. The Oxford Liberty HMO had a single rate of $533.07 in January 2013. Via the Exchange, a similar Oxford HMO is considered a Platinum plan and has a single rate of $807.80 (a 52% increase). A lesser Oxford HMO has a single rate of $697.37 (only a 31% increase from current) Finally, some resources via clickable links for your use:  Governor Cuomo’s press release: http://www.governor.ny.gov/press/07172013-healthbenefit-exchange  The generic plan designs (each carrier can deviate from the stated plans if within +/-2% of the Actuarial Value): http://www.dfs.ny.gov/insurance/health/std-exch-bdesign.pdf  The individual and group rate filings (group filings and carriers begin on page 3): http://www.governor.ny.gov/assets/documents/Approved2014HealthInsuranceRates.pdf  And, if you have a lot of time on your hand, this link has each carrier’s filings, outlining the specific plans and their respective rates: https://myportal.dfs.ny.gov/web/prior-approval/rateapplications-by-company  Finally, the website for New York’s Exchange has many valuable resources, FAQs, etc. and is at this link: http://www.healthbenefitexchange.ny.gov/

I hope that this e-mail has provided you with valuable information regarding the upcoming Exchange environment, and manages your expectations regarding rates that are “set to fall 50%”. We stand at the ready to discuss your options whether in or outside the Exchange, with a “defined contribution” scenario, via a Professional Employment Organization (PEO), or if you want to entertain self-insuring your health plan. We also are happy to help you develop a wellness initiative to incent your employees to engage in their own well-being and become a more active consumer. I look forward to a continued dialogue as the Exchanges are rolled out. Sincerely,

Jeffrey R. Ungvary President Strategic Wellness & Insurance Management Services, Inc. 245 Park Avenue, Suite 1800 New York, NY 10167 (646) 366-6640 phone (212) 869-5913 fax Jeffrey.Ungvary@nmfn.com