The Erie County Legislature unanimously passed a resolution that urges the New York State Assembly and Senate to pass bills that would end the practice of “File and Use” when increasing rates for Heath Insurance Providers.
Erie County Legislator Kathy Konst, sponsor of the resolution said, “Health insurance costs have far outpaced increases in income in New York State resulting in health insurance coverage becoming a heavy burden for many Western New York families.”
Assembly bill No. A. 07485 and Senate Bill No. S. 02740 would restore the New York State Insurance Department’s authority to review rate increases in excess of five percent for individuals and small groups.
The State Insurance Department would also be required to hold public hearings on Heath Insurance Providers’ requests prior to ruling on the increase requested by them.
Currently, HMO’s and non-profit insurers may file and use increased rates for any magnitude without approval by the State Insurance Department.
Konst stated, “Heath Insurance Providers should be required to justify every penny of the rate increase that they request.”
The State Insurance Department prior to 1996, conducted public hearings on all rate increases requested by non-profit and HMOs. The Pataki Administration allowed HMOs and non-profit insures to increase rates up to 10% automatically, so long as certain minimum loss ratios were met.
Because, the New York State Assembly and the Senate did not agree to extend these provisions the law expired on December 31, 1999. Between 2001 and 2005 HMO profits have increased by 93 percent almost equally premium rate increases.
Konst stated, “This legislation would restore for individuals and small business the same cost-containment procedures which NYS currently uses to restrain the growth of premiums it pays.” Family Health Plus, Child Health Plus and the Medicaid Managed Care program all require participating Heath Plans to justify their rates before raising them. So does the New York State Health Insurance Plan which covers state workers.
Konst concluded by saying, “We need to eliminate discrepancies in the regulatory treatment of commercial and non-profit health plans and HMOs. We need all health plans to play by the same rules.”
RESOLUTION SUBMITTED BY LEGISLATOR KONST
RE: END THE PRATICE OF “FILE AND USE” TO INCREASE RATES FOR HEALTH INSURANCE PROVIDERS
WHEREAS, increases in health insurance costs have outpaced increases in incomes in New York State resulting in health coverage becoming a heavier burden for Western New Yorkers, and
WHEREAS, this year marked another year of double-digit rate increases – adding over 20% to many health care plans, and
WHEREAS, The State of the Region Project, which monitors Buffalo Niagara's regional performance in 11 key topic areas through more than 100 outcomes-based indicators, reports that in April of 2006, the least expensive HMO option in the WNY area rose 71% percent from August of 2002 for an individual’s plan, and
WHEREAS, this same report shows that in August of 2002 the least costly family plan in our area was $9,885 annually today for families, the least expensive HMO option costs $15,415 annually, which is a 56% rise in costs, and
WHEREAS, it has been reported that premiums have increased as much as 40% for some HMO plans between 2007 and 2008, and
WHEREAS, data provided by insurers to the State Department of Insurance (SID) has revealed that HMO profits have seen a 93% percent increase between 2001 and 2005, and
WHEREAS, Health plans in 2005 have reported $5 billion more in reserves than is statutorily required and approximately $700 million of the $5 billion was used to pay dividends to their shareholders, and
WHEREAS, HMOs claim that the rising premiums are a reflection of increased costs for prescription drugs and specialty providers, but the percent of funds used by insurers on these expenses has actually dropped, and
WHEREAS, Currently HMOs and non-profit insurance providers only need to submit to the State Department of Insurance a “file and use” to increase rates, and
WHEREAS, prior to 1996 the State Department of Insurance held public hearings on all requests for rate increase from HMOs and nonprofit insurers, and
WHEREAS, New York Assembly 07485 and Senate 02740 bills would re-establish for individuals and small businesses the same cost containment measures which NYS relies to control the growth of the premiums it pays for Family Health Plus, Child Health Plus and Medicaid Managed Care Programs, and
WHEREAS, this legislation would restore the public hearing requirements for rate increases which are in excess of 5%, and
WHEREAS, it is important for all health insurance plans to be governed by the same rules and A07485 and S02740 would eliminate many of discrepancies in the regulatory treatment of commercial and non-profit health plans and HMO, and
WHEREAS, A.07485 and S02740 are simply a first step towards addressing the underlying problems associated with the rising costs of healthcare in New York State, i.e. Prescription Drug costs, hospital costs related to contractual agreements and new technology developments
NOW, THEREFORE, BE IT
RESOLVED, that the members of the Erie County Legislature support amendments to the Insurance Law that require commercial insurers to seek the prior approval of the SID for rate increases that exceed 5 percent and that the SID is also required to hold public hearings on all rate increase requests by health insurance providers, and be it further
RESOLVED, that this honorable body urges the State Legislature and Governor Spitzer to adopt A07495 and S02740, during the current Legislative sessions, and be it further
RESOLVED, that certified copies of this resolution be distributed to all members of the W.N.Y. Delegation and Governor Spitzer.
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