New Yorkers Prepare For Health Insurance Costs Increase

This Year, residents are facing a New York health insurance  costs increase averaging over eight percent. According to state data, that more than doubles the inflation rate, and double-digit raises are set to be paid by many policyholders.

Increases in premiums are based on insurer projections of rising treatment costs and patient usage. Under a 2010 law, rate increases, concerning more than 2 million policyholders, are now subject to state approval. This measure was designed to curb the rapid rise in premiums.

A dozen health insurance companies and HMOs requested a 12.7 increase in premiums for the year 2012. However, the Department of Financial Services announced it has approved weighted average increases of 8.2 percent. The approved rates for individuals, small groups and some large groups are available online, along with some supporting information.

According to Superintendent Benjamin Lawsky “The public has the right to know the basis for rising premiums.” His goal is to find a balance between keeping the rates as low as possible and not driving the insurance carriers out of the state, and the calculations envision insurer profit margins of a few percent, he said.

In the past, when state approval was not a requirement, health insurance coverage premiums were rising with an average of 14 percent annually in New York, Lawsky said. The agency kept the increase to 10 percent, even as medical costs rose 11 percent. Next year’s anticipated 8.2 percent increase and 9 percent medical costs will result to a two-year savings of about $500 million dollars, he added.

Insurer projections or medical trend are based on the claims of the previous two years.

For example, Aetna Health Inc.’s Healthy New York medical plans were approved for proposed premium increases of 12 to 12.5 percent starting January 1. The company applied for a 17 percent increase in costs per claim for hospital services, which is based on changes in contract rates, more expensive technologies, more intensive services, and a 3 percent increase in hospital services used.

According to the company, 90 percent of premiums are allocated for medical care. New York laws require 82 percent allocation. They projected a 4 percent rise in doctor services and drugs with no increase in costs per claim.

Meanwhile, Empire Health Choice HMO requested a 26.2 percent increase for its small-group base plan and was approved for 16.2 percent. The company based its figures on increases for hospital inpatient and outpatient care, physician services, and prescription drugs.

According to spokesperson David Neustadt, the department has its own actuaries and conducts full analyses of proposals.

Arthur Levin, director of the Center for Medical Consumers, an advocacy group, claims that the approved rates are still high, more than double the national consumer price index (CPI). For the past 12 months, federal CPI was at 3.5 percent. He argued that the unsustainable nature of the program, citing the root cause, varies nationally, but he pointed out that U.S. physician rates are among the highest in the world.