ALBANY - New Yorkers will save more than $500 million on health insurance premiums in 2013 because the Department of Financial Services (DFS) cut rate increase requests by insurers. The Governor emphasized that more needs to be done to control the cost of health care, which is the underlying reason premiums continue to rise. Health insurers requested weighted average increases of approximately 12.4 percent, but DFS, under the two-year-old law that gives it the power to review rate requests, cut the average increase to 7.5 percent. That is below the 10 percent increase in health care costs.
The DFS rate actions affect health insurance policies covering about 2.3 million New Yorkers, mostly in small groups, plus people covered by large group HMOs, individual direct-pay plans and Medicare Supplement policies. DFS approved new insurance company rate filings that will be used by insurers to charge premiums beginning in January.
“We have made progress in holding back rates, but we recognize that much more needs to be done”, Governor Andrew Cuomo said. “This Administration is firmly committed to making sure that health insurance is available to all New Yorkers. It must be made affordable by identifying ways that can be used to restrain the rising cost of health care services.”
Benjamin M. Lawsky, Superintendent of Financial Services, said, “Rising health insurance costs are a major burden for businesses and families. The Department of Financial Services will continue to work with consumer groups, insurers, hospitals and other stakeholders to hold down the rate at which insurance premiums are increasing.”
This is the second year the Department has been permitted to review – and potentially reduce – insurer rate requests before consumers see changes in the premiums they pay.
The Department gained the authority to review rates under the Prior Approval Law, which was passed in 2010. Under that law, insurance companies must submit rate increase requests to the Department so the agency can make sure proposed rates are justified. The Prior Approval Law also requires insurers to spend 82 cents of every premium dollar on the health care services used by health insurance consumers. The balance of every premium dollar goes to insurer administrative expenses and profits.
Before the Prior Approval Law, a process called File and Use was in effect. Under that process, insurers had been permitted to impose rate increases on consumers without prior review and potential adjustment by the Department. Premiums went up an average of 14 percent a year during the 10 years File and Use was in effect.
Rates for small group plans will increase an average 9.5 percent, down from the 15.7 percent in average premium increases proposed by insurance companies. The Department also cut proposed increases in HealthyNY premiums by an average of more than 13 percentage points and it reduced by more than 5 percentage points increases insurers had sought in premiums for people who buy coverage as individuals.