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ACTION ALERT: April 14, 2010
Restore Government Oversight of Health Insurance Premium Rates in New York
For over a decade now, thanks to deregulation by the former Pataki administration, health insurers in New York have been able to raise their premium rates annually as much as they like under a system called "file-and-use." The state has only been able to review rate increases retrospectively to determine if they were excessive, but only after more than a year and a half later. As a consequence, premium rates here in New York have increased more than 100% since 2000, while median family incomes have only increased 11%. Individual policies now run around $10,000/year for an individual, and over $24,000 for family coverage -- these rates are frankly just plain unaffordable and so people are dropping or foregoing coverage, and the number of uninsured has risen substantially Meanwhile, insurers profits have increased dramatically, they have greatly increased the percentage of their profits they have funneled back to their national corporate entities, and New York has proven to be a very profitable market for health insurance companies.
Prior to this "file-and-use" system, New York operated for many years under a system of "prior approval", whereby the state had to review and approve all rate increases BEFORE they go into effect, and could roll-back amounts proposed if deemed excessive. In addition, the state could hold public hearings on proposed rate increases over 10%.
Governor Paterson has proposed to restore "prior approval" and public hearings within his budget proposals for this year, currently being debated by the state legislature. This restoration would apply to the small group, individual, and Medicare supplemental markets. In addition, the Governor proposes to raise insurers' "medical-loss ratios" (the amount of premium income insurers are required to spend on paying claims) up to 85% for these same markets, meaning insurers could only keep 15% for overhead and profits. The new federal health care reform law contemplates and supports states moving to systems of prior approval and medical-loss ratios. More than two dozen states already require prior approval.
Consumer advocates, small businesses and senior groups are enthusiastically supporting these proposals from Governor Paterson. However, as I'm sure is no surprise to anyone, the insurance industry is dead set against them, and defeating them is their number one priority here in New York this year. They are pulling out all the stops and doing everything they can to stop prior approval from being restored.
The good news is that the Assembly is supporting the Governor in its budget. The challenging news is that the State Senate has yet to embrace the Governor's proposals in its initial resolution. Because the Senate majority is only held by 2 seats, the insurance industry needs to, and so far has been able to, pick-off or neutralize a couple of members of the majority (currently Democrats.) Senate Majority Conference Chair John Sampson (D-central Brooklyn) is pivotal to breaking the grid-lock on prior approval and get positive action on it.
WHAT YOU CAN DO:
Contact your own State Senator (518-455-2800) and Senator Sampson (518-455-2788) to urge they support Governor Paterson's budget proposals to "restore prior approval of health insurance rate increases" -- side with everyday New Yorkers, small businesses, and people on Medicare, and NOT the insurance industry. Stop the insurance industry rip-off here in New York.
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