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N.Y. May Eye Health Rates

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Empire State lawmakers are considering a bill that could restore the ability of the state insurance commissioner to review and reject health insurance rate increases.

If passed, the bill, A. 8280, also would increase the minimum medical loss ratio to 85%, from 75% for individuals and 80% for small groups.

The bill was proposed by Gov. David Paterson, D, and introduced by Assemblyman Joseph Morelle, D-Rochester, N.Y.

Morelle is chairman of the New York Assembly Insurance Committee and an active member of the National Conference of Insurance Legislators, Troy, N.Y.

Before 1996, all New York individual and small group health rates were subject to a prior approval process.

Between 1996 and 2000, health insurers needed insurance regulator approval before increasing rates more than 10% in a single year due to factors such as medical care inflation, increases in taxes and fees, administrative costs and reserve requirements, Morelle says.

A. 8280 would reinstate the prior-approval process for individual and small group premium increases

“Since becoming free from regulatory oversight, health plans have routinely implemented double-digit rate increases,” bill supporters say in a statement about the bill.

Enforcing the current medical loss ratio requirements is slow and difficult, and there is no mechanism for providing refunds for enrollees who have lost their coverage due to excessive rate increases, bill supporters say.

Increasing the minimum loss ratio to 85% would provide “insurers with an objective standard, subject to and balanced against regulatory oversight, and [ensure] that a greater percentage of premiums are returned to consumers in the form of benefits,” bill supporters contend.

Steven Spiro, past president of the Independent Insurance Agents & Brokers of New York, DeWitt, N.Y., testified today at an Assembly Insurance Committee hearing on the bill that it would jeopardize the solvency of New York health carriers.

The old prior-approval rules artificially suppressed rates and nearly destroyed one of New York’s largest health carriers, Spiro testified, according to a written version of his remarks.

Even if the New York State Insurance Department could avoid letting political pressure affect health rate decisions, “the department simply does not have a sufficient number of staff to review rate submissions from all of the state’s health plans,” Spiro said.

In addition, the proposed 85% minimum medical loss ratio would be the highest minimum medical loss ratio in the country, Spiro said.

Meanwhile, he said, the state is expecting health insurers to help the state cope with the budget crisis by paying $850 million in additional taxes.


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