Goodbye Easy Choice Health Insurance. What does it mean for New York State Health Insurance?

Credit: Peter Kaminski via Flickr under Creative Commons

Easy Choice Health Plan of New York is done. The HMO provider announced last week that effective immediately it was discontinuing all health insurance sales. The discontinuation includes individual, association health insurance plans, as well as small and large group health insurance plans.

For many New Yorkers familiar with Easy Choice Health Insurance and their reputation, perhaps this news does not come as much of a surprise. Easy Choice had been notorious for failing to reimburse the few doctors and hospitals still left in its provider network on time, or sometimes even the correct amount.

Of course this behaviour by the now former private health insurance company is not new. Easy Choice Health Insurance was excluded by the New York State of Health from selling their private health insurance policies on the New York State Health Insurance Exchange during this past open enrollment period. New York State of Health Officials cited these behaviors when making the decision to exclude the company.

An inevitable outcome?

So was it only a matter of time for Easy Choice Health Insurance? Over the years Easy Choice’s provider network was shrinking along with its book of business, that is people who were enrolling in their health insurance plans. The result was a health insurance company losing more money than they were earning. In the for-profit world of American health care that is not something that’s sustainable for very long.

A few months prior, In what should have been a telling sign of the company’s financial distress, Easy Choice Health Insurance eliminated their entire sales team. The reason given at the time was that they were not selling enough polices.

Good for New York State Health Insurance?

Is the folding of Easy Choice Health Insurance ultimately a good thing for the New York State of Health Exchange? That really depends on who you ask. On the one hand, the argument can be made that the reforms of the Affordable Care Act (ACA) in the State of New York are having some of their desired effects. That is, “bad” or ineffectual health insurance companies are being forced out of the marketplace and better more effective health insurance companies are naturally rising to the top.

It is survival of the fittest in health insurance terms. The compliance requirements for the ACA are a substantial burden for many health insurance companies. They make it difficult for them to be both compliant and competitive. The downside of these extra regulations is that in addition to pruning the stock of low-quality health insurance providers in New York State (and the country for that matter), ACA compliance burdens could possibly put an end to many of the smaller, regional health insurance companies.

These are the local health insurance companies that have networks in areas of New York State that not many of the major companies do. Or they operate in areas where there would only be one or two health insurance companies providing coverage. It would not be surprising to see more companies go the way of Easy Choice in New York State over the coming years, maybe even again this year.

Paying to Play: The New York State Health Insurance Exchange

Likely the death knell was Easy Choice Health Insurance being denied access to sell their health insurance policies at the New York State Health Insurance Exchange. But even those smaller companies selling at the New York State Health Insurance Exchange could face the same fate as Easy Choice, eventually deciding to close up shop because of the money lost.

To sell your health insurance plans at the New York State Health Insurance Exchange you must pay the state for the privilege. Health Insurance Companies also need to have their health insurance plans structured in certain ways per the ACA regulations.

The upside to complying with these regulations is that health insurance companies supposedly get access to a huge customer pool. The customer benefits from the company “paying to play” in that they can be sure they’re buying from serious companies. A company is expected to recoup the money it paid to sell on the exchange through the sheer quantity of policies sold.

It doesn’t always work out this way of course.

Conclusions for New York State from Easy Choice Health Insurance?

All in all, it will take some time to know the full impact of this decision by Easy Choice Health Insurance. On a more practical note, all private Easy Choice Health Insurance customers can continue on their current plans until the end of the year when they can pick a new carrier.