PRESS STATEMENT ON NEW “PRIOR APPROVAL” LAW
with New York State Senator Suzy Oppenheimer

Burke Rehabiliation Hospital
White Plains, NY

 For Immediate Release
July 15, 2010

My name is Mark Hannay, and I am the Director of the Metro New York Health Care for All Campaign, a coalition of community groups and labor unions in the New York City area founded in 1993 to advocate for fundamental health care reform. I also am a member of the Steering Committee of Health Care for All New York, a statewide consumer health advocacy coalition, and I participate in the planning committee of the Westchester-Putnam Access to Health Care Coalition.

We advocates are gathered here today to thank and salute Governor Paterson, State Insurance Superintendent Wrynn, and Senator Oppenheimer and her colleagues in the State Legislature for restoring balance and stability to our state’s health insurance system by restoring “prior approval” of health insurance premiums.  Prior approval was a system New York historically relied upon to moderate health insurance premium increases.  However, it was phased out in the late 1990s as part of a broader policy agenda by the Pataki administration to promote deregulation.  We all know where that kind of thinking has led us today, namely the Great Recession we now face as a state and nation.

By restoring prior approval of health insurance premium rate increases, our state government has taken a major step to make health insurance affordable, and to restore rationality to our state’s health insurance markets, instead of unchecked insurance company profiteering. Those who will directly benefit from this new law will be small businesses and non-profit organizations, individuals and families who buy coverage on their own, and seniors and people with disabilities who buy Medicare supplemental (or “Medigap”) policies.

Insurers in New York will also now have higher requirements of how much of their premium income they must spend on paying claims.  82 cents of every dollar they collect must now go toward paying for care, a level even higher than what the federal government will soon require under the new health care law.  Together, these measures are a tremendous victory for New York’s consumers and small businesses who are struggling to keep their health insurance costs down during these current difficult economic times.

This prior approval bill was fought tooth-and-nail by the insurance industry every step of the way over the past two years.  It was their number one goal to defeat.  When prior approval was phased out at the end of the 1990s and replaced by a system known as “file and use”, insurers then started to charge whatever they wanted, provided they claimed they met certain state standards, and the State Insurance Department could only review premium rates retrospectively well over a year after they went into effect.  The result was a disaster. 

Without prior approval, insurance premiums skyrocketed compared to overall inflation and the growth in wages.  While median incomes rose 11% in New York over the past decade, health insurance premiums rose more than nine times that.  Insurers dramatically increased profits, horded excessive reserves to use for other purposes, and increased the amounts sent off to their out-of-state corporate parents.  In several cases, the State Insurance Dept. ordered refunds to overcharged policyholders.  Our state’s small group and individual insurance markets became unstable and dramatically shrank, leaving tens of thousands more New Yorkers unnecessarily uninsured.  Many of these people eventually ended up on our state’s financially-strained public insurance programs such as Medicaid, Child Health Plus, and Family Health Plus.

 Now that Senator Oppenheimer and her colleagues have restored prior approval, the annual growth in health insurance rates will moderate again, insurance companies will once more be held accountable for how much they charge, and small businesses, people on Medicare, and individuals and families who don’t get health care at work will be able to afford to keep or buy affordable insurance coverage.  We thank all our New York lawmakers in the administration, Senate, and Assembly for standing up for everyday New Yorkers.

Metro New York Health Care for All - 40 Worth Street, Suite 802, New York, NY 10013 - Phone: 212-925-1829