Health Insurers in New York Seek Double Digit Increases

07.04.14 | Sarah Harnisch

New York insurance companies are seeking to raise premiums 13 percent next year.

The proposed rates from roughly 40 insurers to the state Department of Financial Services this week comes in the second year of the state's health exchange. Insurers said growing costs to provide coverage as the reason why customers would have to pay more.

Excellus Health Plan, based in Rochester, proposed a 19.7 percent increase; Empire BlueCross, based in Albany, is seeking a rate increase of 18 percent; and MVP Health Care, based in Schenectady, wants a 19 percent increase.

Leslie Moran, executive vice president of the state Health Plan Association, which represents insurers, said the health exchange hasn't lowered expenses, such as the costs for drugs, hospital stays and doctors. She said the higher costs are similar for plans both in and out of the health exchange, which registered nearly 1 million in New York since Oct. 1.

"While premiums are regulated, those underlying costs are not," she said. "So until we really start to get at what the cost drivers are, we lose the focus on affordability."

The state Department of Financial Services stressed that the proposals from insurers are now subject to review by the agency, and the agency has taken steps in recent years to lower the final tab to consumers. There are some companies seeking a decrease in rates.

"These are the proposed rates that the insurance companies have requested, which are still subject to review and modification by the Department of Financial Services," agency spokesman Matt Anderson said. "Very often, the rates that insurers put forward are reduced as a result of that review process."

In 2012, insurers sought an increase of 12.4 percent, but the department was able to cut the increase to 7.5 percent. The agency will decide next year's rates in August.

The health exchange in New York, which started Jan. 1, has led to a 53 percent average reduction in health-care premiums, the Department of Financial Services said. So any increase in 2015 would be based on that lower initial cost.

Insurers cited a number of reasons for the proposed rate hikes, including state and federal taxes.

Under the Excellus Health Plan for its 24,000 individual members, the monthly rate would increase from $659 a month to $785 a month for a platinum plan in the health exchange. The increases would vary by plan.

"The requested rate increases are due primarily to the annual increases in the cost of medical care," the company said in its application.

Health Republic, a New York City-based insurer launched this year, had the largest percentage of customers in the health exchange, roughly 19 percent of all enrollees in private insurance or about 68,000 people.

Health Republic proposed an increased of 15.2 percent in its individual health exchange plans, according to the company's filings.

"As a member-run, not-for-profit plan, we want coverage for our members to be as affordable as possible and we must be sustainable," the company said.

Some insurers are seeking a decrease in rates. Healthfirst PHSP, Inc., based in Manhattan, proposed a 9.8 percent decrease for its roughly 7,400 members; Affinity Health Plan, a small New York City-based insurer, proposed a 12.6 percent decrease for individuals.