State: Insurance rate denials will save policyholders $430M

MVP headquarters in Schenectady is pictured.

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Health insurance premiums will rise next year, but not as much as Capital Region insurers would have liked.

The state Department of Financial Services is charged with approving annual rate requests by health insurance companies, and on Friday announced that insurers wouldn’t be getting the double-digit hikes many had been hoping for. Instead, the department cut insurers’ requested rates by more than 30 percent in the individual and small group markets in a move it says will save policyholders more than $430 million.

For people purchasing health insurance on their own, rates will rise about 7.1 percent next year instead of the 10.4 percent insurers had been seeking. For anyone receiving insurance through the small group market, rates will rise about 9.8 percent instead of the 14.41 percent insurers wanted.

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A full list of rate requests and approvals

“We closely analyzed each insurer’s request and cut rates that were excessive or unreasonable,” said Anthony Albanese, acting superintendent of the department. “The influx of new consumers into the health insurance market in recent years means that rates for individuals will continue to be nearly 50 percent lower than before the creation of New York’s health exchange. However, underlying increases in medical costs continue to be the primary factor contributing to the cost of insurance.”

Capital Region insurers were again denied the full rate hikes they had requested.

MVP Health Care, a Schenectady-based insurer that’s been particularly outspoken about the state’s rate cuts in recent years, requested a hike of about 13.48 percent for individuals and 16.71 percent for small groups. The state will only allow increases of 10.24 percent and 15.9 percent, respectively.

Those cuts are a lot less severe than last year, when MVP CEO Denise Gonick said state regulators had gone too far in slashing rates and showed a “regrettable lack of understanding” about the actual costs of health care. This year’s rate requests, the company said, would have to reflect inadequate premiums of years past, as well as current trends such as higher hospital and physician rates, new and expensive drugs, provider consolidations and an aging population in need of acute care.

“Our first priority is to provide quality health coverage to our members who depend on us for the care they need,” the company said Monday in a statement. “In calculating rates, we consider both price and availability of quality medical services in our markets throughout New York state. MVP continues to take steps to manage costs that we can control by streamlining administrative expenses; working with providers to deliver high-quality, high-value care; and implementing evidenced-based worksite wellness programs to reduce health care utilization.”

Albany-based CDPHP requested a hike of about 5.69 percent for individuals and 16.56 percent for small groups. The state is giving them the latter, but is cutting the hike on individuals to just 2.52 percent.

“We appreciate that state regulators have appropriately evaluated our rate submission for our small group book of business,” said CDPHP President and CEO Dr. John Bennett in a statement. “Our team is in the process of analyzing the impact of the changes to the individual product rates. We look forward to upholding our commitment of providing high-quality, affordable health care to residents across New York state.”

One way CDPHP is trying to keep premiums down is through a new primary care initiative that rewards doctors for keeping patients healthy. If that sounds like a goal doctors should always have, it is. But the system has historically rewarded them for the number of patients seen in a day, not for the quality of care delivered.

That’s changed in recent years, since CDPHP launched its new Enhanced Primary Care initiative, a patient-centered medical home that saved the insurer $20.7 million last year.

“One thing a lot of people might wonder is if we had all these savings, why are their premiums still increasing? And the thing we want them to realize is, these savings are why their premiums aren’t increasing more,” said spokeswoman Ali Skinner. “After last year’s big cuts, we spent a lot of time educating state regulators as to why we need the rates we do. They’re based on sound actuarial analysis. So the rates this year are a big victory for us.”

HealthNow New York had requested a rate hike of about 6.68 percent for the individual market, but the state is instead making the parent company of BlueShield of Northeastern New York cut its rates by about 1.32 percent. For the small group market, it had requested a rate hike of about 8.06 percent, but the state approved a hike of only 0.66 percent. Company officials did not respond to requests for comment Monday.