Health-insurance premiums in the Empire State’s small-group market will rise by an average 8.3 percent in 2017, the New York State Department of Financial Services (DFS), which regulates the state’s insurance market, announced Aug. 5. Health insurers had requested an average rate increase of 12.3 percent, DFS said in a news release. Premium rates for […]
Health-insurance premiums in the Empire State’s small-group market will rise by an average 8.3 percent in 2017, the New York State Department of Financial Services (DFS), which regulates the state’s insurance market, announced Aug. 5.
Health insurers had requested an average rate increase of 12.3 percent, DFS said in a news release.
Premium rates for Excellus BlueCross BlueShield’s small-group health plans in the state will rise by 10.7 percent in 2017. Excellus had requested an average increase of 12.3 percent, according to DFS data. Rochester–based Excellus is the largest health insurer in Central New York.
More than one million New Yorkers are enrolled in small-group plans.
The coming premium increases will be much higher in New York’s individual health-insurance market.
State insurance regulators approved a 16.6 percent average hike in premiums, below the 19.3 percent average increase that insurers had sought, DFS said.
“Like other states throughout the nation,” the 2017 rate of increase for individuals in New York is higher than in past years “partly due” to the termination of the federal-reinsurance program which accounts for 5.5 percent of the rate increase, the department said.
More than 350,000 New Yorkers are enrolled in an individual plan on NY State of Health, New York’s official health-plan marketplace. Many of those customers qualify for tax credits that reduce their coverage costs.
Drivers
The main drivers of premium-rate increases are rising underlying medical costs, which according to DFS, is “reflecting a nationwide trend.”
For the announced 2017 rates, DFS estimated that insurers’ average increase in expected insurance claims paid was about 7 percent for the individual market and 8.5 percent for the small-group market.
Inpatient hospital and drug costs account for the largest share of medical expenses (more than 40 percent), followed by ambulatory surgery (12 percent) and diagnostic testing/lab/x-ray (11 percent).
The largest growth in spending occurred in drugs, with “very large” increases attributable to Hepatitis C drugs (54 percent unit-cost increase and 14 percent more use of the drug), DFS said.
Minimum-loss ratio
Under New York law, insurers must spend a “specific minimum” percentage of premium dollars on health-care costs, according to DFS.
The balance goes to paying for insurer administrative costs and profit.
For individual and small-group policies, that minimum requirement, called the minimum-loss ratio, is 82 percent.
The 2017 rates that DFS approved estimate that insurers will spend “even higher” percentages on health-care costs, an 85.5 percent overall average for small-group plans and an 87.2 percent overall average for individual plans, the department said.
Contact Reinhardt at ereinhardt@cnybj.com