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

Hochul’s Emergency Order Imposes Insurer Restrictions Sought by Hospital Group

Buried in Governor Hochul's emergency order on health-care staffing is a temporary bar against insurance companies challenging claims submitted by hospitals–and an influential hospital association is taking credit. Read More

Home Care Agencies Project Widespread Staffing Shortages in the Next Phase of New York’s Vaccine Mandate

Agencies providing home-based care to elderly and disabled New Yorkers face a large-scale loss of employees when the next phase of the state's vaccine mandate takes effect on Oct. 7, according to a newly released industry s Read More

New York’s health benefits remain the second-costliest in the U.S.

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 f Read More

The Health Department’s FOIL Responses Signal an Indefinite Wait for Pandemic Data

The quest for comprehensive data on New York's coronavirus pandemic hit a bureaucratic roadblock this week Read More

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s State Share of Medicaid Spending is Due to Jump 22 Percent This Fiscal Year

The state share of Medicaid spending is projected to jump 22 percent under the recently approved state budget, an unusually steep one-year jump for what is already one of New York's biggest expenditures. Read More

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

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

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@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 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!