Rising Health Insurance Premiums in New York: What to Expect Next Year

Premium rates for health insurance in New York are projected to rise next year, coinciding with the scheduled end of enhanced subsidies that previously mitigated costs for many enrollees. This development is poised to significantly impact the insurance coverage landscape, according to industry experts. The changes bring about challenges in regulatory compliance and call for strategic risk management among providers and carriers.

Approved Rate Increases and Regulatory Compliance

In August, the New York Department of Financial Services sanctioned several rate increases for both individual and small group market plans. These hikes, differing among providers, include notable increments exceeding 20% for specific carriers such as MVP Health Care and the Capital District Physicians Health Plan (CDPHP). The department cites escalating medical costs, such as inpatient services and rising prescription drug expenses, as reasons, resulting in an average increase of 7% for individual plans and 13% for small group policies catering to employers with up to 100 employees.

Approximately 930,000 individuals in New York subscribe to individual and small group plans. Although significant, approved rate changes were reduced from original requests averaging 13.5% and 24% for individual and small group plans, respectively. The Department of Financial Services estimates that these reductions could lead to consumer and business savings of $959 million by 2026. Additionally, profit margins for companies have been capped at 1%, reflecting ongoing efforts in regulatory compliance amid rising healthcare and consumer goods costs.

Impact of Premium Increases and Subsidy Reductions

The anticipated cessation of enhanced COVID-era subsidies affects an estimated 140,000 New Yorkers. Without Congressional intervention to extend these subsidies, affected individuals may face increased premiums starting next year. The New York Health Plan Association advocates for subsidy continuation, emphasizing the need to address core cost drivers in healthcare. This situation presents challenges for insurers such as MVP Health Care, which adjusts premiums responding to industry costs and shifting market conditions. State-approved increases include 7.4% for its individual plan and 17.9% for its small group plan, demonstrating a strategic underwriting approach.

Across a broader timespan, medical care costs—which encompass services, insurance, medications, and equipment—have surged by 121% from 2000 to 2024, outpacing the 86% growth in other consumer goods. Initially part of the Affordable Care Act, subsidies were enhanced in 2021 to provide greater financial assistance, significantly boosting marketplace enrollments from 11.4 million in 2020 to over 24 million projected by 2025.

Future Challenges for Insurers and Policymakers

If these enhanced tax credits expire, many marketplace participants might remain eligible for reduced credits, but others could lose support entirely, leading to increased premiums. State estimates suggest average premiums might surge by 38% without subsidies, with monthly costs reaching $414 for individuals and $828 for couples. Without subsidies, approximately 80,000 New Yorkers risk losing insurance coverage, potentially elevating the uninsured rate and altering the healthcare insurance industry landscape. This development presents both complex challenges and opportunities for insurers, carriers, and policymakers in New York.