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November 09, 2011 at 08:42 AM
Eleven insurance companies doing business in New York have been ordered by the governor there to refund $114.5 million to policyholders who were overcharged for health insurance premiums in 2010, with more than half of the refunds due coming from Empire, the New York Department of Financial Services (DFS) announced today.
Empire’s refund payment to consumers was tallied at a little over $61 million. The other big New York player, UnitedHealthcare, has an affiliate (Oxford) involved in the refund.
Empire BlueCross BlueShield is New York’s largest insurer. In terms of overall membership, across business lines, the for-profit plan insures nearly 6 million New Yorkers. It is New York’s second largest insurer in the Small Group market, with about a 15% market share.
Insurers pointed to medical loss ratio requirements changed retroactively, while the state touted it efforts for consumers.
“In this economic climate, every penny counts and in this case, insurance companies were overcharging New Yorkers to the tune of millions of dollars,” Gov. Andrew Cuomo stated. The governor’s office made the announcement, as a pro-consumer move.
”This should serve as a message to companies that we are watching, and we will not tolerate any action that wrongly hurts the finances of the people of New York.”
Under state law, insurers are required to spend 82 cents of every dollar collected in premiums on providing medical care. If the amount spent on care, known as a medical loss ratio (MLR) is less than the 82%, insurers are required to refund the difference to policyholders.
“While it is a positive that consumers are getting these payments, retroactive refunds are simply not good enough. It is likely that some people dropped their insurance coverage because of premium increases,” stated Superintendent of Financial Services Benjamin Lawsky. The DFS chief has not let too much in the way of health insurer behavior he doesn’t like slip through his fingers. Recently, he won the battle with New York insurers to make rate filings public in the face of public outcry about premium hikes. See: http://www.lifehealthpro.com/2011/10/23/new-york-health-rate-filings-are-public-documents
Governor Cuomo and Superintendent Lawsky also today announced the completion of a successful effort to ensure that health insurer rate filings will be made public. All insurers have now withdrawn their objections to the public release of this information.
Through the prior approval law, the DFS is working to keep rates from “spiraling out of control” while also ensuring consumers get refunds when insurance companies don’t spend enough of premiums on medical care.
