In a sharply worded rebuke, New York State Insurance Commissioner Salvatore R. Curiale has challenged an international actuarial firm's analysis of the state's community-rating and open-enrollment law.
In a Sept. 15 letter, Mr. Curiale claimed that the analysis, by Seattle-based Milliman & Robertson, contains "misleading and incorrect information" and "blatantly ignores the substantial benefits gained by individuals and small groups in New York." The letter was addressed to the firm's chairman, Daniel J. McCarthy.
Effective April 1, 1993, any insurer who writes small-group and individual healthcare coverage in New York must practice "open enrollment" and "community rating." That means insurers must accept anyone who applies for coverage, and calculate the premiums without adjustments for age, sex, health status or occupation.
The analysis, by Milliman & Robertson actuaries Mark E. Litow and Drew S. Davidoff, supports arguments by opponents of New York's law that the measure is ineffective. In the 11/2 years since the law's implementation, the debate has grown more fractious (Sept. 12, p. 92). Many healthcare reform advocates have backed open enrollment and community rating as part of both comprehensive and incremental national overhaul plans.
Milliman & Robertson's original analysis found that 500,000 fewer people have insurance since the law's enactment. However, in a clarification letter dated Oct. 11, the report's authors lowered their estimate to 405,000 more uninsured people.
Average claim costs increased an estimated 6% for the small-group market and 46% for the individual market, presumably because some younger, healthier people are leaving the market, the authors said.
"This study indicates that affordability is a more important consideration at this juncture in New York than availability of coverage," the authors concluded.
But Mr. Curiale said the estimated loss of covered lives in New York is incorrect and is based on a flawed methodology. He cited a new U.S. Bureau of the Census survey that shows New York state's 1993 uninsured rate remained unchanged from the 1992 rate of 13.9%. Meanwhile, the nationwide average rose to 15.3% in 1993 from 15% in 1992, according to the survey.
Milliman & Robertson's analysis starts with 1992 census data, said John Calagna, an insurance department spokesman. If the actuaries had waited for the 1993 data, they would have seen that their numbers are "way off," he said.
The department doesn't have an estimate of the overall market effect of community rating, Mr. Calagna said. From March 31, 1993-before the law's enactment-through Jan. 1, 1994, 1.2% fewer people, or 25,000, were covered under individual, small group or Medicare supplemental policies, he said. But the department isn't attributing the decline to community rating because a majority of those people were members of Blue Cross, which has used community rating for years. In addition, the number doesn't measure the potential movement into self-insured and larger group plans.
"Your misleading report has done a great disservice by unfairly branding New York's open-enrollment and community-rating law a failure," Mr. Curiale said.
Mr. McCarthy recently met with the state insurance commissioner and agreed to issue a clarification of his firm's original report. However, he doesn't believe the insurance department's analysis of census data provides an accurate picture of community rating's impact in the state.
He said the firm may revise its numbers based on a more detailed analysis of census data by the Employee Benefits Research Institute.