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’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards

New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More

New York’s ‘Bluest’ Counties Have the Lowest COVID Vaccination Rates for Older Residents

New York's bluest counties are posting the lowest coronavirus vaccination rates for older residents, a striking contrast with the pattern in the U.S. as a whole. The disparity appea Read More

New York’s ‘Single Payer’ Health Plan Would Disrupt Coverage for Out-of-State Commuters, Too

Under the latest version of the single-payer bill – which has broad support on Democrats in the Legislature – hundreds of thousands of commuters from other states would face the replacement of their current health insurance with a Medicaid-like plan funded with tax dollars and managed by Albany. Read More

The Public Can Now See the Vaccine Task Force Recommendations that the Cuomo Administration Held Back

Even as Governor Cuomo touted vaccine approvals by a state-appointed panel of experts, his office was withholding the group's detailed findings from public view. The governor's six- Read More

New York’s Medicaid and Public Health Crises Get Short Shrift in the New State Budget

In spite of an ongoing pandemic and spiraling Medicaid costs, New York's health-care system received surprisingly little attention in the new state budget. On issue after issue, law Read More

Empire State’s new budget is a bridge to nowhere

Looking ahead to an uncertain post-pandemic recovery, New York’s newly enacted state budget for fiscal year 2022 raises spending by staggering amounts that—barring an unlikely rapid return to peak 2019 economic activity in New York City—can't possibly be sustained for more than a few years. The budget is a mid-2020s fiscal disaster in the making: an incomplete bridge over a deepening river of red ink. Read More

New York Lags in COVID-19 Vaccinations for Older Residents

In the race to vaccinate its oldest and most vulnerable residents, New York has fallen behind. Although the state's overall COVID-19 vaccination rate is somewhat higher than the nat Read More

Lawmakers Mull Medicaid Proposals That Would Speed New York Toward a Fiscal Cliff

As a budget deal nears in Albany, reining in spiraling Medicaid costs seems to be the last thing on anyone's mind. Governor Cuomo is advancing only 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.

Empire Center Logo "...the Empire Center is the think tank that spent months trying to pry Covid data out of Mr. Cuomo's government, which offered a series of unbelievable excuses for its refusal to disclose...five months after it (the Empire Center) sued, Team Cuomo finally started coughing up some of the records." -Wall Street Journal, February 19, 2021

SIGN UP TO READ ABOUT THE ISSUES IMPACTING NEW YORKERS.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research. Together, we can make New York a better place to live and work!

  • For targeting local content