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

The Wacky Math of New York’s Essential Plan

Thanks to an absurdly wasteful federal law, New York's Essential Plan is expected to continue running billion-dollar surpluses even as state officials more than double its spending over the next several years. Read More

In a Tight Budget Year, New York’s Hospital Lobby Shoots for the Moon

As Governor Hochul calls for spending restraint next year, influential hospital lobbyists are pushing what could be the costliest budget request ever floated in Albany. In a , the G Read More

Putting the Mission in Hochul’s Health Commission

Last week Governor Hochul answered one big question about her Commission on the Future of Health Care – the names of its members – but left a fundamental mystery unresolved:  W Read More

Medicaid Drug ‘Carve-Out’ Led to Double Payments

The state's Medicaid program has effectively been double-paying for prescription drugs for the past six months due to a glitch with the roll-out of its pharmacy "carve-out." Since A Read More

DFS Pulls Back Draft Regulations That Would Have Added a Fee for Prescriptions

A package of proposed regulations that included a $10.18 fee for filling most drug prescriptions was withdrawn Tuesday by the Department of Financial Services in the face of broad opposition. Read More

DeRosa Is Still Hiding the Truth About Cuomo’s Pandemic Response

As the long-time top aide to former Governor Andrew Cuomo, Melissa DeRosa ought to have useful information to share about the state's pandemic response – especially about what went wrong and how the state could be better Read More

Hochul’s Promised Health Care Commission Has Yet To Be Appointed

A health-care commission that is supposed to be helping the state control soaring Medicaid costs – which Governor Hochul promised in January and described as "under way" last month – appears not to exist. Thre Read More

New York’s Medicaid Spending Is Running Billions Over Budget

New York's Medicaid program ran billions of dollars over budget during the first half of the fiscal year, adding to signs of a brewing fiscal crisis in Albany. According to the fro 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!