Every year the average monthly premium New Yorkers pay for health insurance increases. But next year, premiums in New York’s individual insurance market will be increasing by the smallest amount in a decade, following efforts by the state Department of Financial Services to keep health insurance costs down during the pandemic.
In the individual market, which serves people who are not purchasing a group health plan through an employer, premiums will go up by an average 1.8%, when New Yorkers enroll in health insurance coverage for 2021. That’s a lot less than the 11.7% average increase health insurers sought when they submitted proposed rate adjustments to DFS for approval in June. The adjustments DFS announced Thursday are final.
“New York stepped up and flattened the curve, but consumers are still feeling the economic effects of the pandemic,” said Linda Lacewell, the superintendent of DFS, in a statement. “Our number one job is consumer protection and ensuring that quality, affordable health care is available to everyone in the state.”
The plans that wanted the biggest rate hikes were also the ones reined in the most by DFS. Oscar, a health insurer that wanted to raise its premiums on the individual market by a whopping 19.1% for 2021 will only be allowed to raise them 4.9%. Fidelis Care, which covers the biggest share of New Yorkers in the individual market, sought to raise premiums by 18.8%, but only had a 1.6% bump approved.
Some carriers are being forced to lower premiums, including Healthfirst, which only sought a small increase to begin with. DFS reviews the financial rationale and calculations insurers provide to justify their requested rates and then makes a determination as to what they can actually charge. The biggest rate increase allowed in the state’s individual market will be a 5% boost for MetroPlus Health Plan, which is owned by NYC Health + Hospitals.
Although insurers always seek to raise premium rates, with DFS tempering their requests somewhat, this year’s rate request process was particularly fraught. The insurers seeking the biggest rate increases in New York cited potential costs linked to coronavirus among the reasons for wanting to charge customers more next year, even though health insurance companies have generally been doing well financially during the pandemic. Some, such as UnitedHealthcare, have even posted record profits. UnitedHealthcare will be allowed to increase premiums for its individual market plans by 4.8% next year, down from the 13.8% boost it originally requested.
At the same time, many people have lost their jobs, along with employer-sponsored insurance, potentially leaving more people to look for plans on the Affordable Care Act marketplace. Those who were already on the marketplace may have also lost some of their household income.
New York’s health plans are more affordable than other states, according to the Kaiser Family Foundation. But while many New Yorkers qualify for either a public health plan like Medicaid or income-based subsidies for private plans, there are also residents who have fallen off the “subsidy cliff”--earning too much for government assistance and too little to comfortably afford premiums on even the cheapest plans with the highest deductibles. For example, a 60-year-old earning $50,000 a year in New York City would have had to spend 10% of their income on premiums for the cheapest plan under the Affordable Care Act in 2019.
Eric Linzer, president of the New York Health Plan Association, which represents insurers, said in a statement that insurers’ initial rate requests for 2021 were reasonable and “reflect the continued increases in the cost of prescription drugs, rising prices charged by [health care] providers, and the impact of the pandemic. We do not believe that the rates the Department of Financial Services approved fully account for these factors, particularly the costs associated with COVID-19.”
So far, health insurers have been spending less on patient care in 2020 because people have largely avoided medical care during the pandemic. Still, some predict their spending will rise in the coming months because of the potential costs of “pent-up demand” for procedures people delayed, COVID-19 testing, ongoing treatment for COVID-19, its long-term consequences, and, if it becomes available, vaccination against the virus.
Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York, which submitted a public statement on the rate requests on behalf of consumers during the comment period, praised the state for not allowing health insurers to raise members’ costs based on this logic. She noted that it was only a couple of outliers within the state’s insurance market that tried to justify massive rate hikes by speculating on the future costs associated with COVID-19.
“The basis for these rate increases for the outliers was misguided to begin with,” Benjamin said in a call with Gothamist. “There’s nothing to say that just because someone skipped a physical in 2020, they will go out and get four of them in 2021.”
In the small group market, which serves small businesses with 100 employees or fewer, the state decreased the average premium rate from a requested 11.4% to 4.2%.
This story is part of PriceCheckNYC, a collaborative project promoting transparency in health care from Gothamist, WNYC and ClearHealthCosts. We want to hear from you! Email us at [email protected] to share your stories about accessing--and paying for--health care during the pandemic. Or tell us about the personal costs of avoiding it. You can also submit your recent health care bills to our interactive health cost database below.
