New York’s health benefit costs increased faster than the national average in 2020, leaving it with the second-least affordable coverage in the U.S.

The state’s average total cost for employer-sponsored individual coverage was $8,177 and for family coverage was $23,381, according to an annual survey by the federal Agency for Healthcare Research and Quality. 

Those rates each ranked second, behind Alaska and New Hampshire respectively (see first chart).

Source: Agency for Healthcare Research and Quality

 

New York’s single-coverage cost increased 3.6 percent compared to a national average of 2.5 percent. Its family coverage cost rose 2.2 percent when the national average was 1.3 percent.

The price for single coverage in New York was $1,028 or 14 percent higher than the U.S. average. On a percentage basis, that gap was 2.5 times larger than it was a decade ago (see second chart). 

Source: Agency for Healthcare Research and Quality

 

The disparity is driven in part by policy choices made in Albany, including heavy taxation of health benefits and a roster of coverage mandates and other regulations that gets longer every year.

The 2021 legislative session was no exception. Lawmakers introduced at least 100 bills that would increase taxes or tighten regulation of health insurance, seven of which were approved by both houses. They included a tax hike and six regulatory changes, most of which would limit insurers’ ability to control spending on prescription drugs. Each of the bills is likely to push premiums still higher.

One regulatory measure – requiring insurers to cover addiction treatment at newly established “crisis stabilization centers” – was signed into law by former Governor Cuomo as part of the state budget. The other bills await review by Governor Hochul.

The proposed tax hike would increase a levy known as the “covered lives assessment” by $40 million or 4 percent. Because of the unusual way the assessment is collected, residents of New York City pay the most of any region, at a rate 19 times higher than the lowest-paying region of Utica-Watertown.

The $40 million is to flow to county governments, nominally to finance “early intervention services” for preschoolers with disabilities. However, the bill does not restrict how counties use the money, so it could be used to offset existing expenses – and provide general fiscal relief – rather than to improve or expand services for children.

The covered lives assessment is one of two taxes on health benefits levied under the state’s 25-year-old Health Care Reform Act. Together they collect almost $5 billion, making them the state’s third-largest source of revenue after income and sales taxes.

As of 2020, HCRA taxes added approximately $440 per person to the cost of coverage, or $1,760 for a family of four.

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

Emails show Cuomo’s staff working on his memoir at the peak of New York’s pandemic

Newly available records shed further light on the origins of former Gov. Andrew Cuomo's pandemic memoir, which won him a $5.1 million publishing contract before contributing to his political downfall. The records reveal that his government staff were a Read More

Hochul’s agenda mostly sidesteps health care

Governor Hochul gave health care surprisingly little attention in her State of the State speech on Tuesday – a sign that taking on dysfunction in one-sixth of the state's economy ranks low on her list of priorities. Read More

Federal omnibus deal has big implications for New York Medicaid

The big spending bill heading for a vote in Washington this week would scramble the outlook for Medicaid in next year's state budget, mostly for the better. The $1.7 trillion federa Read More

Another Reason to Lift the Charter Cap

A staff shortage in upstate hospitals prompted , where hospital officials and state lawmakers asked that more funding to train medical professionals be included in January’s state bu Read More

The AG’s Nursing Home Lawsuit Scratches the Surface of Widespread Issues

The attorney general's just-filed lawsuit against the Villages of Orleans nursing home has implications that reach far beyond a single facility in western New York. In addition to c Read More

Hochul’s Pandemic Study Is Off to an Underwhelming Start

Although Governor Hochul's long-promised review of New York's COVID response hasn't formally started yet, it has already exposed important information about the state's pandemic preparedness – much of which is unflattering. Read More

The state puts a pricey condition on its approval of a heart transplant center

In a provocative flex of executive power, the state Health Department is requiring a hospital system to spend $50 million on health care in Brooklyn and Queens if it wants to open an $8.4 million heart transplant center in Manhattan. Read More

The Essential Plan’s accumulated surplus balloons to $8 billion, with no fix in sight

The state's Essential Plan has generated billions in surpluses as the program automatically drew pandemic relief money that it did not need Read More

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!