Insurance Companies Required to Receive Prior Approval before Raising Premium Rates Senator Suzi Oppenheimer (D-Mamaroneck) joined with healthcare and consumer advocates to announce a new law that will protect New Yorkers from out-of-control health insurance premiums. At a press conference at Burke Rehabilitation Hospital in White Plains, the Senator outlined the new safeguards, which will make health insurance coverage more affordable for individuals, families and small businesses.
Under the law, insurance companies will be required to seek prior approval from the state Department of Insurance before they can raise rates. The Insurance Department then has 60 days to determine whether the rate increase is justified. The law covers small employer and individually purchased plans, which insure approximately three million New Yorkers.
“While wages have been stagnant, insurance premiums have soared,” observed Senator Oppenheimer. “Hardworking individuals and small businesses are being priced out of health care coverage by what are -- in many cases -- exorbitant, profit-enhancing and ultimately arbitrary rate increases.”
Previously, insurance companies were permitted to increase premium rates by simply meeting minimal state filing requirements. The Department of Insurance could review rate increases only after the fact, resulting in consumers paying higher rates improperly for months or years before the rate is found to be unlawful. While insurance companies were supposed to self-regulate, health insurers reported excessive premiums – premiums that brought in more money than allowed by law compared to the money paid out in claims – only 3% of the time.
“Just as President Obama and the Congress stepped forward earlier this year on behalf of insurance consumers by enacting the new health care law, so too have Governor Paterson and the New York Legislature taken a big step by restoring state oversight over health insurance premiums,” said Mark Hannay, Director of the Metro New York Health Care for All Campaign and a leader of Health Care for All New York, a statewide consumer advocacy coalition. “In the current, very difficult economic period that New Yorkers face, millions will now be able to hang onto or purchase more-affordable health insurance instead of profiteering insurance companies continuing to rip us off. This move will also keep more New Yorkers in the private insurance market and off of public safety net programs when our state government needs to control its budget.”
"The passage of Prior Approval legislation builds upon the recent passage of health care reform and ensures that consumers, businesses, and taxpayers are protected from insurers’ outrageous premium increases,” Rachel Estroff, Lead Organizer Westchester for Change.
"For too long, too many New Yorkers have been priced out of the health insurance market by rates that continued to rise as wages remained static, making access to cancer screenings and treatment out of reach for many families," said Lillian Jones, Regional Advocacy Director, American Cancer Society of NY & NJ. "Granting the state insurance department oversight of rate increases guards consumers against excessive rate hikes and helps to ensure that any hikes are in line with the actual cost of care. The American Cancer Society is proud to have worked with the Health Care for All New York coalition and Senator Oppenheimer to make prior approval law."
"Restoring prior approval and requiring insurers to spend more of consumers' premium dollars on care will help keep essential health coverage affordable for people with serious illnesses and disabilities, said Heidi Siegfried, Director of New Yorkers for Accessible Health Coverage and a member of the Health Care for All New York Steering Committee."To fully realize the law's benefits, the Insurance Department must carefully examine all rate filings and must guarantee meaningful consumer participation through timely and generous disclosure of the assumptions used to justify the requested rates."
Mary Gadomski, Director of Community Education for Visiting Nurse Services in Westchester (VNSW) said: “Managed Care companies inflated cash reserve and payouts to stockholders have led to outrageous premium increases to beneficiaries and ridiculously low reimbursement increases to healthcare providers. VNSW applauds the new law enacted, with Suzi Oppenheimer’s support and leadership, that requires health insurance companies to obtain prior approval of the State Department of Insurance before they can raise insurance premiums and add to their profits.”
“The prior approval law will end inappropriately excessive rate increases, afford consumers and employers the opportunity to plan ahead for their health care needs and protect taxpayers,” concluded Senator Oppenheimer. Currently, nearly half of all states have some form of prior approval for health insurance rates.
