NU Online News Service, March 17, 3:39 p.m. EDT
The New York Insurance Department reported that state residents insured through health maintenance organizations are seeing their premiums go up an average of 17 percent this year.
Insurance Superintendent James Wrynn said the increases are a reason for the legislature to pass Gov. David Paterson's proposed budget language that would require prior regulatory approval of health insurance rates.
He said such a move could save taxpayers $70 million.
Data released by his department showed that among the state's counties, average increase in base medical plans was highest in Clinton, near the Canadian border, at 51.22 percent and lowest was Allegany, south of Buffalo near the Pennsylvania border, which saw a .73 percent decrease.
"For 10 years, health insurance companies have operated under a system of self-regulation and it simply has not worked. We must have a system in place where insurers must justify proposed increases before raising premiums," said Superintendent Wrynn.
In the governor's proposed budget the insurance department would have the authority to review premiums before they are put into effect and to accept, modify or reject the proposed increases.
Currently, insurers in New York operate under a system of "file and use" in which there is no prior oversight of rate increases. File and use was fully instituted in 2000.
The insurance department said prior to the file-and-use method taking effect, small group premium increases averaged 5.2 percent a year; since then premiums have increased an average of 13.96 percent.
Mr. Wrynn's announcement said insurer profits have increased substantially, while the amount of dollars insurers have spent on health costs has fallen.
Before full deregulation under prior approval, insurer dividends totaled $115 million annually, according to the department figures.
In 2009, four insurers issued dividends totaling $1.2 billion while implementing small group rate increases as high as 33.5 percent. As profits increased, the amount of money insurers spent on claims fell from 89 percent to 81 percent, the department reported.
The data released by the insurance department today showed changes in premiums that affect members of HMOs in each of the state's 62 counties. The data reflects premium increases for people enrolled in small group HMOs, as well as those who buy HMO coverage as individuals.
According to department figures, premium changes varied widely between companies and between counties.
The data, to be posted on the insurance department's Web site, www.ins.state.ny.us, shows the percentage of the change in premiums, as well as enrollment.
The increases illustrated show changes from January 2009 to January 2010. The rates for particular small groups change on the group's anniversary during the course of a year. Increases from April 2009 to April 2010 are expected to be similar to previous increases, the department said.
In the small group market, it found a "wide spectrum of policies with differing benefits and premiums." Benefits are standardized in the individual market, but premiums vary by HMO and county, it was noted.
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