health-ins-300x225-9563457New York’s employer-sponsored health insurance premiums – which were already among the steepest in the mainland United States – rose faster than the national average in 2018, pushing the state’s affordability gap to new heights.

The state’s average single-coverage premium in 2018 surged by almost 6 percent to $7,741 – second only to Alaska (see chart). The rate is 15 percent higher than the national average, New York’s widest gap since the federal survey began in 1996.

The average premium for family coverage grew 3 percent to $21,904. That also ranks second, behind New Jersey, and stands 12 percent higher than the national norm.

premiums-by-state-2018-7363408
Source: Agency for Healthcare Research and Quality (click to enlarge)

 

The results, from a recently published federal survey, are the latest symptom of an unusual cost spiral in New York’s health-care system.

Earlier this month, a study from the New York State Health Foundation and the Health Care Cost Institute found that the state’s employer-sponsored insurance spending per person rose twice as fast as the national average from 2013 to 2017, outpacing every other state but North Dakota.

Meanwhile, Medicaid spending has been spiking so dramatically that the Cuomo administration resorted to postponing $1.7 billion in payments from the end of fiscal year 2019 to the beginning of fiscal 2020 to stay in technical compliance with a budget cap. If not for that gimmick, state expenditures would have exceeded budgeted amount by almost 8 percent.

Why are New York’s cost pressures especially severe? Contributing factors include the state’s generally high cost of living, especially downstate, along with rapid consolidation in the health-care industry and a high rate of unionization among health workers.

State policies also play a part, including heavy state taxes levied directly on health insurance – which add $5 billion a year to premiums – and an ever-growing list of coverage mandates that Albany routinely enacts without careful cost-benefit analysis.

Far from acting to control health spending, Governor Cuomo and the Legislature keep doing things that will push it higher.

On Aug. 2, for example, Governor Cuomo signed a bill mandating insurers to cover annual mammography screenings for breast cancer starting at age 35 instead of 40, which is the existing policy. The U.S. Preventive Services Task Force does not recommend routine screening until age 50, and says it should be done every other year.

That was one of 10 eight mandates passed by the Legislature this year, three of which have been signed by the governor so far. The most significant was a requirement that large-group plans cover in vitro fertilization, which by itself is projected to increase premiums by 1 percent, or more than $200 for a family of four. 

When Medicaid spending first showed signs of running over budget last summer, the Cuomo administration refrained from developing a cost-control plan as the “global cap” law provides. Instead, the governor quietly approved a major rate increase for hospitals and nursing homes – a top priority of industry lobbying groups that were backing his reelection campaign.

premiums-by-group-size-2018-4315407
Source: Agency for Healthcare Research and Quality (click to enlarge)

 

More evidence of the harm done by state policy is found in the federal premium data.

Large employers – most of which escape the state’s heavy-handed regulations by becoming “self-insured” – paid average single-coverage premiums that ran 7 percent higher than the national norm in 2018 (see chart).

By contrast, employers with fewer than 50 workers – which are fully exposed to Albany’s policy regime – paid premiums that were 30 percent higher than the U.S. average.

It’s clear that excessive health costs are a growing burden on New Yorkers – and that decisions made in Albany are part of the problem. The question is whether state lawmakers will start trying to make things better rather than worse.

 

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

You may also like

New York Has Widened Its Lead in Per-Capita Spending on Medicaid

New York's per-capita Medicaid spending soared to more than double the nationwide rate in 2018, widening its gap with the other 49 states. Read More

New York’s Medicaid Enrollment Surges to an All-Time High

New York's Medicaid program is growing at its fastest rate in six years, with a quarter-million additional enrollees landing in the safety-net health plan during the first three months of the coronavirus pandemic.  Read More

New York’s Health Premiums Remain Among the Highest in the U.S.

The average cost of New Yorkers' health benefits increased by less than the national average in 2019 but remained among the highest in the U.S., according to recently published federal data. Read More

New York’s Medicaid Roller Coaster Takes an Unusual Turn

The state's Medicaid spending was significantly lower than projected in the first quarter, but that's not necessarily a positive sign for state finances. As shown the chart below, t Read More

Filling in the Blanks of New York’s Coronavirus Pandemic

Because New York was hit with the coronavirus early, before testing was widely available, its official count of infections – at just over 400,000 – vastly understates the scale of its outbreak. Read More

Cuomo Administration Ducks Important Questions on Nursing Homes

A new report from the state Health Department tries to deflect blame for thousands of coronavirus deaths in the state's nursing homes—but undermines its own case by withholding data and engaging in tendentious analysis. Read More

Nursing Home Vacancy Rate Soars, Hinting at a Higher Coronavirus Toll

The vacancy rate in New York's nursing homes has more than doubled since the start of the coronavirus pandemic, suggesting that the death toll among residents may be thousands higher than officially reported. Read More

Unsure of COVID Impact, NY Insurers Roll Dice on Rate Hikes

The health insurance industry's rate applications for 2021, , reveal deep uncertainty about the long-term impact of the coronavirus pandemic on medical costs. Some companies anticip Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.