Note to the Reader: Some of this article draws from the experiences of the authors, all of whom were, and some of whom still are, involved with the New York State of Health (NY State of Health) marketplace. More details about the authors and their roles in relation to the NY State of Health are outlined at the conclusion of this article. The authors would also like to acknowledge the feedback and many contributions of Donna Frescatore, who served as the inaugural executive director of the NY State of Health.
After passage of the Patient Protection and Affordable Care Act, commonly referred to as the ACA, in 2010 under President Obama’s Administration, the federal government gave states the option to set up state-run and administered insurance marketplaces so that consumers could compare and more easily obtain insurance coverage options. At the time, many states chose to have the federal government run their state marketplace. Although it required many resources, New York State chose to design, launch, and administer its own state-run health insurance marketplace.
To launch the marketplace, known as the NY State of Health, important decisions needed to be made, including but not limited to: what benefits and products to include, how to manage insurance risk, how to market the plan to the public, and how to protect consumers. Largely based on the experience of the authors, this article outlines what the insurance marketplace looked like in New York State prior to the launch of the NY State of Health, the process that New York engaged in to launch the marketplace, the critical decisions that were made, and what practices may be instructive for other states. It also shows how the marketplace continues to play a critical role in providing insurance coverage, including through the implementation of the Basic Health Program (known as the “Essential Plan” in New York), its role during COVID, and its potential role going forward.
Background on New York’s Insurance Market, Pre-ACA
New York’s Uninsured Rate and Pre-ACA Market
Prior to the launch of the marketplace in October 2013, New York’s insurance market looked like other states in some ways and different in others. New York’s rate of uninsured was approximately 12 percent. Employer-sponsored insurance covered the largest portion of the population nationally, approximately 58.6 percent of the population in 2010. Similar to other states, New York also had a large portion of the population covered by the public health insurance program known as Medicaid, a means tested program, with nearly 4.7 million, or a quarter of the state’s population, receiving this coverage in 2010. New York also had a Children’s Health Insurance Program (CHIP) to cover children of families with low and moderate incomes1. In 2009 until the time of the passage of the ACA in 2010 and the launch of the insurance marketplace in 2013, New York policymakers were in frequent conversations about how to cover more individuals. The ACA provided a pathway for the state to make significant strides toward that goal and state policymakers seized the opportunity.
Unique Features of NY’s Insurance Market
At the time the Affordable Care Act was being discussed, New York’s individual insurance market had been in decline because fewer and fewer healthy individuals were buying insurance given annually and steeply escalating prices. This resulted in more sick individuals who could not afford to obtain insurance in the high-priced market, which only drove up costs more, making it harder for anyone to afford coverage. Such a phenomenon in insurance is sometimes called a “death spiral.” Another feature of New York’s market was the fact that it used pure community rating. Pure community rating is defined as when everyone in a given geographic area pays the same for health insurance regardless of such factors as age, health status, occupation, etc. This prevented discrimination against individuals for the cost of insurance based on any one of these factors.
Pre-Launch Preparation
Conforming New York to ACA Insurance Changes
Although New York decided to set up its own marketplace, the ACA still had minimum requirements for any state operating a marketplace. Among those minimum requirements were the need for states to set up parameters for what they defined as a “small group” (employers with up to 100 employees) in insurance markets, to help set parameters for how insurance premiums would be calculated. States also had to put in place consumer protections and oversight processes such as annual reviews of insurance rates. Conforming to these requirements was a huge task for state agency personnel and required analysis and constant communication between staff at the New York State Department of Health (DOH) and the Department of Financial Services (DFS).2 New York was also intent on mirroring federal consumer protections, such as requiring that preventive care be a covered service and that people with pre-existing health conditions be allowed to enroll in the marketplace rather than creating a separate high-risk pool, and wanted to make sure these consumer protections conformed with federal law.
Other Keys to Success
From the point of view of state officials and others involved in discussions about the insurance marketplace, some key elements that would be needed for success included the quality of agency staff and collaboration among a large number of stakeholders, including consumers groups, state personnel researchers, providers, insurers, and other interested parties. Examples of entities involved in this collaboration include DOH, DFS, the NYS Executive Chamber, the Rockefeller Institute of Government, Health Care for All New Yorkers, Medicaid Matters, The United Hospital Fund, representatives of large insurance companies, and hospital associations.
New York was also intent on mirroring federal consumer protections, such as requiring that preventive care be a covered service and that people with pre-existing health conditions be allowed to enroll in the marketplace rather than creating a separate high-risk pool, and wanted to make sure these consumer protections conformed with federal law.
Launch and the First 18 Months
The New York State Department of Health secured several federal grants worth hundreds of millions of dollars to support planning New York’s marketplace and its first year of operating costs. This included support for the design and development of information technology (IT) systems, customer service center, marketing, policy research reports, and personnel costs. Also critical to the success of the planning period was that DOH was able to quickly staff the marketplace by leveraging an expedited process that allowed for hiring outside of the traditional Civil Service system.
Infrastructure Build
One of the first tasks for New York State in building an insurance marketplace was creating an online eligibility and enrollment system and website for the public to view products and to enroll in a plan. Selecting a systems integrator to combine hardware, software, networking and data storage through a request for proposal (RFP) process was a critical task. State program staff worked tirelessly on the development of rules that would make the eligibility and enrollment process smoother for consumers. One of the ways that the state made this process smoother was by connecting the eligibility system to the federal data hub to allow states secure access to federal data sources to verify applicants’ eligibility in real-time. This helped make eligibility easier for applicants and faster. More specifically, authors Danielle Holahan and Amir Bassiri (who are both DOH staff), noted that this system enabled New York to move from an application and enrollment process that took, on average, 45 days, to one that now takes 45 minutes; further, at the time of the marketplace implementation, it enabled more than 99 percent of applicants to gain a real-time eligibility determination.
A second critical task for New York was securing a contract to operate the marketplace’s Customer Service Center. The NY State of Health Customer Service Center supports telephone application and renewal processing, provides support to enrollees seeking information about their coverage, processes supporting documentation submitted by consumers to confirm their eligibility, conducts marketplace broker training, and manages the NY State of Health social media accounts. New York also had to create a workforce of “enrollment assistors” that would help individuals navigate the system by providing in-person or phone-enabled application and enrollment assistance. DOH made the decision to have both community-based navigators as well as plan-based facilitated enrollers, building upon a very successful program that predated the ACA.
Finally, New York had to obtain adequate participation from health plans. DOH issued its first invitation to health insurers in the state to participate in New York’s marketplace. The invitation outlined the federal and state-specific requirements that would be a condition of participation in the state’s marketplace and certified all plans that met those requirements.
Design Decisions
The next set of tasks for New York was to make a series of important marketplace design decisions. DOH worked with numerous outside consultants, including many supported by the Robert Wood Johnson Foundation’s “State Network,” to conduct 13 policy studies on key marketplace design decisions. Each study was presented to state officials and discussed with the marketplace’s Regional Advisory Committee, which was comprised of members representing consumers, insurers, providers, insurance brokers, Tribal Nations, and labor.
Perhaps the most critical decision (after opting for a state-operated marketplace instead of a federally-operated one) was the idea to fully integrate the information technology (IT) system that functioned across both public and privately administered programs. This integrated marketplace design allowed for the seamless transition between programs at renewal if a consumer’s circumstances changed. The design also required decisions to be made about such things as the role of navigators and which benchmark plan would be the basis for New York’s “Essential Health Benefits.” New York selected a benchmark plan from 10 options, which was the state’s largest small-group market plan. Some of the required benefits of the plan included coverage for hospitalizations, maternity services, emergency department use, preventive services, prescriptions drugs, and more.
Throughout the planning period, DOH participated in numerous Centers for Medicare and Medicaid Services (CMS) site visits and readiness reviews, and IT system testing. In October 2012, the state submitted its Blueprint application to US Department of Health and Human Services (HHS) demonstrating how it met all federal requirements to operate a state-based marketplace. By December 2012, New York had obtained conditional certification from the federal government to operate its marketplace.
Logo for the New York State of Health
The Launch
Not to be overlooked was the amount and type of marketing required for a successful launch of the new insurance marketplace and its insurance products, particularly because the marketplace required enough customers to participate for it to work. New York worked diligently to establish a brand, which was and remains “The NY State of Health.” The naming exercise also included defining the marketplace’s brand promise—”removing inequities, unleashing potential”—which NY State of Health planning staff, including Danielle Holahan, developed with their ad agency partner. This drew from what was predicted would occur when New Yorkers were given significantly increased access to affordable health insurance coverage—that insurance levels would increase, and a superior “state of health” for New York would be achieved. In addition, leading up to and on the day of the launch, press conferences were held all over the state touting “Today’s the Day,” promoting that everyone who might need health insurance should seek to enroll in the first open enrollment period.
Additional Important Elements
Discussions with staff at the NY State of Health3 indicated that affordability of products on the marketplace was—and remains—a primary reason for its success. Thus, the state has diligently attempted to monitor the cost of products to keep them affordable. To insure as many people as possible and to reach a diversity of consumers, language access and trusted community partners were required. The state has continued to publicly convene stakeholders periodically when input is needed and has also relied on collaboration with groups like the United Hospital Fund and input from its Regional Advisory Committee to improve the experience for consumers. NY State of Health staff indicated that the ability to have flexibility with staffing up for launch was important. Consequently, DOH was authorized to hire staff into ‘project jobs’ under New York’s Civil Service Law 64(3), because the positions were for a special project with a strict time constraint. Finally, NY State of Health staff indicated the value of engaging stakeholders throughout the process and obtaining input from actual enrollees and consumers.
… this system enabled New York to move from an application and enrollment process that took, on average, 45 days, to one that now takes 45 minutes…
The Basic Health Plan/Essential Plan (BHP/EP) as a Key Design Feature Adjustment
Coverage
As noted in a 2023 presentation by current and former state officials at the Rockefeller Institute of Government in Albany, New York, the state’s participation in the Basic Health Program option under Section 1332(a) of the ACA, branded in New York as the Essential Plan, was also a crucial design decision. The plan is available to consumers under 65 who are lawfully present in the United States but do not qualify for Medicaid due to their immigrant status, are not eligible for Medicaid or the Children’s Health Insurance Program, are without access to affordable Minimum Essential Coverage, and who have incomes at or below 200 percent of the Federal Poverty Level (FPL). New York was one of only two states to take the federal option to implement a Basic Health Plan (BHP) option (the other was Minnesota). States that operate BHP receive federal funding equal to 95 percent of the premium tax credit.
New York’s BHP enrollment skews younger than enrollment in regular Qualified Health Plans (QHP) offered through the NY State of Health marketplace. Differences in the BHP and QHP risk pools impact federal funding; specifically, the BHP is funded by payments based on premiums for an older population but provides services to a younger population, resulting in a funding surplus. The program began in 2014 and by January 2024, more than 1.1 million individuals were enrolled in the program. That is more than any other state (since only one other state has such a program) and approximately one in eight of all public insurance enrollees.
The Pandemic and Post-COVID Unwinding and Redeterminations
Pandemic Response
When the COVID pandemic started in 2020, the federal government issued what is known as a public health emergency declaration that, along with the Families First Coronavirus Response Act, allowed for continuous coverage for people enrolled in public health insurance programs of all types (e.g., Medicaid, Essential Plan, Children’s Health Insurance Program). In addition to mandating continuous coverage (meaning those enrolled did not have to reapply for coverage every year) and providing enhanced federal Medicaid funding, increased federal funding was also provided for subsidies for individuals to purchase QHP coverage through the 2021 American Rescue Plan and extended through the Inflation Reduction Act. Keeping New Yorkers insured during the pandemic, and during the “unwind” of continuous coverage was a top priority for state health policymakers. Public health insurance in New York covers approximately 42 percent of New Yorkers, which is a higher percent than most states and an increase from 33 percent in 2010, according to an August 2023 report by the New York State Comptroller.
Public Health Emergency Wind Down and New York’s Efforts for Maintaining Coverage
At the height of the pandemic, nearly 9 million people were covered by a public health insurance program in New York. But as the pandemic slowed—the federal government eventually ended the public health emergency on May 11, 2023—provisions that were meant to protect public health during the pandemic were unwound. Under the Consolidated Appropriations Act of 2023, passed in late 2022, Congress decoupled continuous coverage from the public health emergency declaration, effectively ending insurance coverage provisions as of April 1, 2023. The Centers for Medicare and Medicaid Services provided guidance for how states could unwind the continuous coverage provisions, and each state could decide how it would redetermine eligibility for public health insurance, including the timeframe for doing so. New York chose to use the maximum permissible length of time for these redeterminations to enable people more time to collect the necessary information to retain coverage. New York engaged in a massive public education campaign during this period, and also provided additional training for contacts to provide insurance seekers with assistance in choosing policies and enrolling thought the marketplace. As of April 2024, the unwinding process is still continuing, and the state has routinely been renewing coverage for more than three-fourths of those enrolled in health insurance programs through the exchange. Many individuals who did not renew policies in the marketplace have since become eligible for employer-sponsored insurance. The state tracks all this information about the unwinding and makes it publicly available.
The Future
New York State has continued its efforts to maintain health insurance coverage for those who are eligible. To cover more people, the state sought a section 1332 waiver from the federal government. The request for the waiver was approved on March 1, 2024. It expands upon the existing Essential Plan by providing newly eligible consumers (with incomes between 200 percent and 250 percent of the FPL) health insurance with no deductible and low out-of-pocket costs. In fact, the monthly premium is $0, which is significantly more affordable than what is available today (on average, this results in $4,700 in annual savings compared with QHP coverage). Finally, the waiver extends coverage to the deferred action for childhood arrivals (DACA) population.
Complementing the state’s efforts to ensure access to insurance coverage is the state’s ongoing effort to reduce health disparities. The strategy for reducing such disparities was outlined in the 1115 Medicaid waiver, which includes a request to provide continuous Medicaid coverage for children six years old and younger in Medicaid and Child Health Plus (CHP). In New York’s demonstration, the federal government has authorized several initiatives to address health-related social needs as well as support greater integration between primary care providers, community-based organizations, and health plans to integrate social care services with other Medicaid benefits to improve health and well-being.
Biggest Lesson for Policymakers
During their October 2023 presentation at the Rockefeller Institute’s ten-year ACA anniversary symposium, state officials shared some of the lessons learned from creating, launching, and running the insurance marketplace that could be of benefit to policymakers undertaking similar efforts in the future. First and foremost, state officials conveyed that collaboration among insurers, consumers, policymakers, local governments, and executive leadership was important for success because concerns could be proactively communicated and addressed in a timely manner. Second, there are several infrastructure design decisions that resulted in a smooth launch of the NY State of Health. Two of the most important decisions were the implementation of a common information technology platform for the marketplace that was seamlessly tied to Medicaid and the employment of both assistors and enrollers to help consumers with the eligibility determination, application, and enrollment processes. New York’s thoughtful foresight and design of an integrated marketplace that includes public health insurance programs has been invaluable to mitigating coverage loss for millions of New Yorkers.
Conclusion
Launching a state-run health insurance marketplace in New York State was no small task. Given the number of people who have been able to obtain and retain health insurance coverage who might have otherwise gone uninsured over the past decade, the NY State of Health has largely been a success if measured by total enrollment, affordability, and its ability to keep people enrolled during the recent unwinding. Factors that contributed to this success are important to document so that policymakers can note what elements of the administrative design and operation contributed to the increase in New Yorkers obtaining and staying insured.
ABOUT THE AUTHOR(S)
Courtney Burke currently serves as senior fellow for health policy at the Rockefeller Institute of Government and a principal at Sachs Policy Group. In fall 2023, she moderated a panel with the authors of this document on this subject. She also worked at the Rockefeller Institute in the years leading up to the launch of the NY State of Health and was involved in convening some of the stakeholders and state policymakers involved in the launch. At the time of the launch, she served as New York State’s deputy secretary for health, a position which oversees the New York State Department of Health where the NY State of Health is housed.
Danielle Holahan currently serves as the executive director of the NY State of Health. She was involved in discussions prior to the NY State of Health launch when she served as co-director of United Hospital Fund’s Health Insurance Project. She then worked as deputy director of the NY State of Health from April 2011 until Sept 2021 when she was promoted to executive director.
Amir Bassiri currently serves as New York State’s deputy commissioner for the Office of Health Insurance Programs and Medicaid director. In this position, he oversees all public health insurance programs, including the NY State of Health.
Troy Oechsner currently serves as president of the Medical Society of the State of New York. He previously served as the deputy superintendent for health insurance in what is now called the Department of Financial Services (DFS). He played a critical role prior to the marketplace launch in helping discuss insurance marketplace design for the NY State of Health marketplace.
[1] CHP eligibility extends to 400 percent FPL and offers full-pay buy in above that level.
[2] Two authors of this paper, Danielle Holahan and Troy Oechsner, worked within the two agencies during the time leading up and during the first 18 months of the NY State of Health launch referenced here (Department of Health and the Department of Financial Services) and can attest to the amount of analysis and communication that had to occur while the state was making design decisions for the marketplace.
[3] This information was also obtained through conversations in late 2023 and early 2024 with Danielle Holahan, executive director of NY State of Health.