June 10
Law Limits Rise in Health Insurance Rates
Gov. David A. Paterson has signed legislation that gives the state the authority to block what it deems unreasonably high Group health insurance quality increases for millions of New Yorkers.
The new law, which covers about three million people enrolled in small-employer or individually purchased plans, requires insurance companies to affect to the state Insurance Department before they can elevate premiums. The state then has 60 days to conclude whether the rates are defensible.
The governor and consumer advocates said the law would slow down unbridled premium increases, which they said had forced countless small businesses and individual policyholders to crash their insurance, driving prices higher as costs were stretch over a smaller pool of customers who tended to have high health care needs. New York has the utmost average premiums for individually bought policies â?? $6,630 for single people and $13,296 for families in 2009, more than double the nationwide average, according to industry figures.
Advocates said that the law could turn out to be a model for other states as they observe rates in the new insurance exchanges, or controlled marketplaces, required under the federal health care overhaul.
Over the last decade, â??New York H.M.O.â??s made outlandish profits,â? Mark P. Scherzer, an insurance lawyer and consumer advocate, said on Wednesday. â??What this is really going to do is save customers money.â?
The new law also requires insurance companies to expend 82 percent of premiums on medical care, rather than on administrative costs and proceeds, up from 75 percent for small-business policies and 80 percent for personage ones.
The law reinstates a system of prior endorsement that New York phased out between 1996 and 2000. Under the system in place for a decade, New York reviewed increases retroactively and issued refunds. The insurance industry contended that giving the state prior support over rate increases would make the process more political.
Mark L. Wagar, president of Empire BlueCross BlueShield, said the legislation addressed that anxiety by giving automatic endorsement to a proposed rate increase if the state did not do something within 60 days, and by requiring the state to provide an actuarial basis for denying a rate increase.