The state Insurance Department said today that the counties in the Capital Region are facing double-digit HMO premium increases this year, ranging from Albany’s 15 percent increase to Fulton County’s 23 percent increase.
The data, released today, showed premium changes affected each of the state’s 62 counties from January 2009 to January 2010, with increases for people with small group and individual HMO coverage around 17 percent on average, but as high as 51 percent, the state said.
2010 Small Group HMO average premium increases by county
Source: Average increase in base medical plans from New York State Department of Insurance
“The scale of these increases demonstrates why it is so important for the Legislature to approve the prior approval of health insurance rates contained in Governor Paterson’s proposed budget,” Insurance Superintendent James Wrynn said in the announcement. “For 10 years, health insurance companies have operated under a system of self-regulation and it simply has not worked. We must have a system in place where insurers must justify proposed increases before raising premiums.”
Gov. Paterson’s proposal to bring back the system of prior approval includes giving the state Insurance Department the authority to review premiums before they are implemented, as well as reject or modify potential increases the state says could save taxpayers an estimated $70 million.
There is no current oversight of rate increases for insurers, who use a system of “file and use,” which went into effect in 2000.
The state Insurance Department says prior to that, small group premium increases only averaged 5.2 percent annually but have since nearly tripled with an average increase of 13.96 percent.
The state also said insurers are spending less on health care costs even though profits have soared.
“Prior to full deregulation under prior approval, insurer dividends totaled $115 million annually,” the state Insurance Department said. “In 2009, four insurers issued dividends totaling $1.2 billion, while implementing small group rate increases as high as 33.5 percent. As profits increased, the amount of money insurers spent on claims fell from 89 percent to 81 percent.”
But insurers say bringing back prior approval will not fix rising premiums.
Leslie Moran, spokeswoman for the New York Health Plan Association, told The Gazette that New York’s individual market for people who purchase health care on their own should be reevaluated and restructured.
“What we’ve said is that we need to look at market reforms that will make health insurance more affordable and therefore make it accessible,” Moran said. “Price controls don’t work. That won’t address the underlying costs. You can’t regulate the premium without regulating the cost drivers.”
The NYHPA testified to the Senate Finance Committee and the Assembly Ways & Means Committee that the Governor’s budget proposal does several things that would make health insurance less affordable on top of more than $700 million in new taxes on health care included in last year’s budget.
“The prior approval process would enact strict price control of health insurance premiums, thereby undermining the health insurance market in New York. Government price fixing does not work. Price controls will weaken health plan solvency, hurt providers and virtually eliminate innovation and efficiency. At the same time, the proposal ignores the underlying cause of the increase in the cost of health insurance, which is the increase in the actual costs of health care,” said HPA president and CEO Paul Macielak.
In his testimony, Maceliak cited information from a Centers of Medicaid and Medicare Services report that showed rising health care costs are driven by increases in underlying medical costs, not health plan administrative costs, he said.
“If lawmakers want to explore prior approval, it should be done outside the budget process,” Maceliak added.