Rate increases affecting more than 2 million policyholders are now subject to state approval under a 2010 law. The measure was meant to slow the rapid rise in premiums that are based mainly on insurer projections of rising treatment costs and patient usage.
The Department of Financial Services, successor to the state Insurance Department, said it has approved weighted average increases of 8.2 percent next year, compared with the 12.7 percent requested by a dozen insurance companies and health maintenance organizations. Hundreds of approved rates for individuals, small groups and some large groups are posted online, along with supporting information previously kept confidential.
"The public has a right to know the basis for rising premiums," Superintendent Benjamin Lawsky said. His goal is to keep rates as low as possible but not drive insurance carriers out of the New York market, and the calculations envision insurer profit margins of a few percent, he said.
Before the state's approval was required, health insurance premiums were going up on average 14 percent a year in New York, Lawsky said. The agency held it to 10 percent this year, though medical costs rose 11 percent. With 2012's anticipated 8.2 percent hike, compared with medical costs rising about 9 percent, there's a two-year savings of more than $500 million, he said.
Insurer projections, commonly called the "medical trend," are based on the previous two years' claims.
For example, Aetna Health Inc.'s Healthy New York-Standard and Healthy New York-High Deductible base medical plans for all regions were approved for proposed premium increases of 12 to 12.5 percent starting Jan. 1. In its application, the company cited a 17 percent increase in costs per claim for hospital services, which can reflect changes in contract rates, more intensive services and more expensive technologies, and a 3 percent increase in the use of hospital services.
The company said 90 percent of premiums are used for medical care, more than the 82 percent New York law requires. It projected a 4 percent increase in both doctor services and drugs with no rise in costs per claim.
Empire Health Choice HMO requested a 26.2 percent increase for its small-group base plan and was approved for 16.2 percent. In its application, it projected increases for hospital inpatient and outpatient care, doctor services and prescription drugs.
The department has its own actuaries and does full analyses of proposals, spokesman David Neustadt said.
But the approved rates are still high, more than double the national consumer price index, said Arthur Levin, director of the Center for Medical Consumers, an advocacy group. The federal CPI was 3.5 percent for the past 12 months.
"It's why this stuff is unsustainable," Levin said. Arguments over the root cause vary nationally, though he said a recent study showed U.S. physician fees are higher than elsewhere.
Charging per service gives doctors an incentive to do more, new imaging techniques tend to supplement old ones instead of replacing them, and the high costs of the sickest patients, including those near death, get shifted through insurance among everyone else, Levin said.
"The bulk of the population, they don't use the system much," he said