Syracuse, N.Y. -- New York is getting back its power to reject or modify health insurance rate increases under the terms of a bill passed Monday by the state Legislature. The state stopped regulating health insurance rates in 1996. But growing concerns over double-digit increases in premiums prompted legislators to resurrect a system called “prior approval” that would force insurers...
Syracuse, N.Y. -- New York is getting back its power to reject or modify health insurance rate increases under the terms of a bill passed Monday by the state Legislature.
The state stopped regulating health insurance rates in 1996. But growing concerns over double-digit increases in premiums prompted legislators to resurrect a system called “prior approval” that would force insurers to justify proposed increases to the state Insurance Department and get its OK before raising rates.
The measure was passed as part of the latest emergency spending plan the Legislature had to enact to prevent state government from shutting down. Gov. David Paterson, who has pushed for the restoration of prior approval, is expected to sign the bill.
Consumer groups supported the bill and the industry vigorously opposed it.
“It’s an incredible victory of the little guy over the big corporate insurance giants,” said Elisabeth Benjamin, coordinator of Health Care for All New York, a coalition of state consumer groups. “This will stop out-of-whack increases by health insurance plans.”
The New York Health Plan Association, which represents the insurance industry, has said regulation will create a highly politicized system that will ultimately endanger accessibility of health insurance for New Yorkers.
Prior approval applies to rate increases for individuals and small groups with fewer than 50 members. A study issued last year by the state Insurance Department showed individual health insurance premiums increased by an average annual rate of nearly 13 percent since 1996. During that same period, premiums for small group coverage increased by an annual average rate of about 11 percent.
The new regulations will affect rates increases taking effect in 2011. There will not be public hearings, but notices of proposed rate increases will be published on the state Insurance Department’s website.
Under the bill, insurers will be required to spend at least 82 percent of premiums on medical claims.