New York Insurance Companies Propose Significant Premium Increases

Health insurers in New York, including Capital District Physicians' Health Plan (CDPHP) and MVP Health Care, have submitted proposals for premium increases to the state's Department of Financial Services. These increases are largely driven by climbing hospital and prescription drug costs, coupled with stringent state regulations. The proposed average rate hike stands at 20.7% for individual plans and 25.7% for small group plans, impacting companies with up to 100 employees.

The Department of Financial Services is currently reviewing these requests during the public comment period ending on July 22, with final rate decisions expected later this summer. Both CDPHP and Schenectady-based MVP Health Care are proposing below-average increases for their individual and small group plans, aiming to mitigate impacts on consumers in the Capital Region.

CDPHP has proposed the lowest requested increase for individual market plans at 1.4%, affecting 1,881 policyholders, or 2,729 consumers. In contrast, MVP Health Care's request is for a 10.7% increase for individual plans, which is significantly lower than the average industry request. MVP covers 11,979 policyholders and 17,683 individuals under these plans.

Rising costs of medical services and prescriptions are key drivers behind these rate proposals. CDPHP also faces financial challenges due to Medicare Wage Index adjustments in 2023, which increased hospital reimbursements without corresponding rate adjustments for supplemental Medicare Advantage plans. This resulted in considerable financial losses. According to Natalia Burkart of CDPHP, 'rising prescription drug costs, hospital expenses, and the compounding burden of taxes, fees, and government mandates continue to pressure affordability.'

The Department has a history of approving lower-than-requested hikes, ensuring premiums remain fair. Last year, approved increases averaged 7.1% for individual plans and 13% for small group markets, compared to higher initial requests. MVP Health Care is seeking a 19.6% increase for small group plans, while its subsidiary, MVP Health Service Corp., proposes a 12% rise. Michelle Golden of MVP noted that as a not-for-profit health plan, the organization strives to balance affordability with access to quality healthcare.

The Health Care Cost Institute reports New York's healthcare expenses far exceed national averages. Regulatory compliance and required services contribute to these high costs. Eric Linzer of the New York Health Plan Association emphasized the additional $7 billion in taxes and assessments insurers face annually, complicating risk management efforts. CDPHP is requesting a 14.1% and 10.1% increase for its general and high-deductible small group plans, respectively, and is partnering to enhance operational efficiency amid growing administrative costs.