Necash-pile-notes-1792301w York emerged as the second-costliest state for employer-sponsored health insurance after its premiums rose at more than three times the national rate in 2015, according to just-released federal data.

The average single-coverage premium in New York last year was $6,801, second only to Alaska, with its small, thinly spread population, at $7,807, according to survey figures from the Agency for Healthcare Research and Quality. The U.S. average was $5,963.

While nationwide single premiums grew by a modest 2.2 percent for the year, New York’s jumped by 7.8 percent.

The average family premium in New York was $19,630, compared to a national average of $17,322, the data show.

Premiums have long been high in New York, but the problem shows signs of getting worse. The affordability gap between New York’s single coverage prices and the national norm surged to 14 percent in 2015, the highest in at least two decades. The Empire State’s No. 2 ranking is up from 10th in 2010 and 18th in 2003.

The trend comes in spite of aggressive price regulation by the state Department of Financial Services, under a so-called prior approval law that was reinstated in 2010. In each year since, regulators have cut nearly every rate increase requested by health plans, sometimes by more than half. Among the companies affected was Health Republic Insurance of New York, a startup that was sustaining heavy losses. Its rate request for 2016 was trimmed just weeks before it was declared insolvent and shut down by the state.

Industry officials charge that the department’s decisions have been driven more by a political desire to suppress consumer costs than good actuarial practice.

The prior approval law applies to only a portion of the market: policies purchased by individuals and small businesses, including everyone buying coverage through the state exchange established under President Obama’s Affordable Care Act. Most large employers’ health benefits are exempt from state oversight under federal law.

Yet the affordability gap for New York’s small businesses stood at 16 percent in 2015 (see chart), which is two points higher than it is for employers as a whole. While the gap fluctuates considerably year to year, 16 percent is its highest point since 2006.

affordability-gap-2835189

The ineffectiveness of prior approval suggests that what’s driving the state’s unusually high premiums is not health plans’ pricing decisions in a competitive marketplace, but the costs they face. These include New York’s steepest-in-the-nation taxes on health insurance and Albany-imposed coverage mandates that add an estimated 12 percent to the typical premium.

Politico reported this week that most New York health plans, like many nationwide, are losing money on the individual and small group policies sold through Obamacare exchanges, a trend that the news site called a “structural threat” to the national health reform law.

State regulators face a dilemma: If they approve steep rate hikes requested by insurers, coverage will become even less affordable for small businesses and individuals shopping on the ACA exchanges (especially for those whose incomes are too high to qualify for ACA tax credits).

But if regulators continue suppressing premiums, plans could choose to walk away from New  York’s small business and individual markets, reducing choice for consumers and potentially pushing more people back into the ranks of the uninsured.

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 Looming Collapse of a Long-Term Care Insurer Raises Questions for DFS

As the Hochul administration presses for the creation of a "guaranty fund" to bail out failed health insurers, the state is quietly moving to seize a small company that could be the fund's first target. Read More

While pleading for money in Albany, hospitals and nursing homes spend at the bargaining table

Friday's announcement of an amended labor contract for New York City-area hospitals and nursing homes sends a contradictory message about the financial condition of the state's health-care industry. Read More

The Essential Plan’s accumulated surplus will soon break $10 billion

The accumulated surplus of the state-run Essential Plan had ballooned to $9.9 billion as of the end of December, putting it on track to break $10 billion by the close of the fiscal year on March 31, according to newly obtained records from the comptroller's office. Read More

The Hochul administration seeks more federal money for its overfunded Essential Plan

In a move that ought to raise eyebrows in Washington, the Hochul administration is requesting additional federal money for New York's Essential Plan, which is already sitting on more than $9 billion after years of running a multi-billion-dollar surplus. Read More

Hochul puts Medicaid spending on a steeper slope

Governor Hochul is releasing the brakes on Medicaid, allowing state spending on the safety-net health plan to increase more than twice as fast as it typically did during the Cuomo administration. 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

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!