Assembly Targets Skyrocketing Health Insurance Costs

April 9, 2010

(Albany, NY) After years of fighting for health insurance reform, Assemblymember Kevin Cahill (D-Ulster, Dutchess) is pushing to ensure two Assembly budget measures designed to curb spiraling health care costs are enacted this session. He stressed that protections for New York’s policyholders have been inadequate, leading to rapidly rising premium costs year after year for over a decade.

“It is simply unacceptable that many families are just one illness away from bankruptcy. The cost of health insurance is simply out of control,” said Assemblymember Cahill. “I urge my Senate colleagues to join us in enacting these important protections.”

The reforms, which were a part of the budget plan passed by the Assembly, are as follows:

• Requiring insurers to justify further premium increases before they can begin using them, known as “prior approval”. Current law only requires insurers to submit a rate increase before it is applied, giving insurers broad authority to raise premiums with little oversight.
• Requiring insurers to dedicate more premium dollars to medical care--known as the Medical Loss Ratio (MLR)--instead of administrative bureaucracy, advertisements and profits. The measure would raise that share from 75 percent for small group and 80 percent for individuals to 82 percent for all policy holders.

“I have supported these measures for years because many New Yorkers lack basic protections against unjustified rate hikes,” said Assemblymember Cahill. “I am satisfied to see my Assembly colleagues agree that requiring insurers to pay for health care instead of using resources to find ways to deny claims will save money and lives. Raising the medical care ratio assures that New Yorkers are getting better value for their health care dollar.”

Assemblymember Cahill noted the proposals would also produce significant savings for taxpayers. The downward pressure on premiums would help ease the cost incurred by the state, local governments and school districts for providing health benefits for their employees and retirees.

“Health insurance costs are eating up an ever larger portion of government budgets,” said Assemblymember Cahill. “Curbing these costs by enacting sensible reforms in the health insurance industry will ease the burden on policyholders and the taxpaying public.”

New Yorkers pay an average of $6,630 a year for a personal plan and $13,296 for a family policy. Before the year 2000, prior approval was required in New York and helped hold rates down. The health insurance industry’s push for deregulation and ending prior approval has resulted in skyrocketing premiums statewide, 40 percent higher on average than rest of the nation.

“Returning to these reasonable approaches will yield savings when we need it most,” the Assemblymember concluded.

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