New York City
- New Yorkers insured through health maintenance organizations (HMOs) are seeing their premiums go up an average of 17 percent this year, with some people seeing spikes averaging as high as 51 percent. The increases are shown in data released today by the New York State Insurance Department.
"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. 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," Insurance Superintendent James Wrynn
Governor Paterson has proposed in the budget that the Insurance Department have the authority to review premiums before they are put into effect - and accept, modify or reject the proposed increases. This will result in approximately $70 million in savings for New York taxpayers.
Currently, insurers operate under a system of "file and use" in which there is no prior oversight of rate increases. File and use was fully instituted in 2000. Prior to that time small group premium increases averaged 5.2 percent a year; since then premiums have increased an average of 13.96 percent.
At the time insurer profits have increased substantially, while the amount of dollars insurers have spent on health costs has fallen. Prior to full deregulation under prior approval, insurer dividends totaled $115 million annually. 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.
The data released by the Insurance Department shows changes in premiums that affect members of HMOs in each of the state's 62 counties. The data reflects premium increases for people enrolled in small group HMOs, as well as those who buy HMO coverage as individuals.
The data showed that premium changes varied widely between companies and between counties. The data shows the percentage of the change in premiums, as well as enrollment. The increases illustrated show changes from January 2009 to January 2010. The rates for particular small groups change on the group's anniversary during the course of a year. Increases from April 2009 to April 2010 are expected to be similar to previous increases.
In the small group market, there is wide spectrum of policies with differing benefits and premiums. Benefits are standardized in the individual market, but premiums vary by HMO and county.
For more information go to www.ins.state.ny.us