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Prior approval results in significant cuts to some rate increase requests

The latest health insurance rate increase requests reviewed were cut up to 22%, the New York State Insurance Department said today as it announced the newest round of rate decisions under the State’s new “prior approval” law. Under prior approval, which came into effect on Oct. 1, the Insurance Department regained the power to review and adjust health insurance rates before they go into effect.

Today’s announcement follows last week’s notification of the first round of decisions under prior approval.

“We very carefully reviewed the increases insurance companies wanted to impose and cut wherever we could to reduce the burden on consumers,” said Troy Oechsner, Deputy Superintendent for Health. “As we’ve said before, we are not happy about any increases in these difficult times, and we lowered increases as much as we prudently could.”

Rates announced today were:

Plan Increase Requested Increase Allowed Consumer Savings Under Prior Approval




Up to 9%

MVP Health Plan - Large Group (All regions but Rochester)



No change

MVP Health Plan -
Large Group (Rochester)

9.5 -20%

7.0% - 19.8%

2.5% on average

MVP Health Plan - Small group (all but Rochester Area)

5.5 - 20%

5.5 - 19.8%


MVP Health Plan -
Small Group  (Rochester Area)

14.5 - 27.8%

11.6 - 19.8%


MVP Health Plan - Healthy NY

7.5 -14.3%

7.5 - 12.5%


MVP Health Plan - Standardized Individual Plans

(4.0) - 1.5%

(4.0) - 1.5%

No change

MVP Insurance -Small Group EPO




MVP Insurance -Small Group PPO




Preferred Assurance Company - EPO and PPO




“We had to balance reducing the requested increases against the need to ensure companies remain solvent, because protecting consumers means making sure their health insurer is able to pay their claims,” Oechsner said. “We lowered rates where we could. For example, MVP Insurance Company said its plan had been severely underpriced and asked for increases of more than 20% for 83% of its subscribers. We reduced their request so now only 35% of subscribers will get an increase of 20% or more.

“We were able to reduce the increases overall by almost 2% at HealthNow to an average of 12%, and by almost 8% at MVP, but we know the pain these increases still mean,” Oechsner continued. “However, the Department is required by law to take into account a company’s solvency – its ability to pay its projected claims – and financial condition when assessing rate requests. MVP Insurance Company, for example, is on pace to lose more than $54 million this year and end up more than $50 million below its required surplus. That can’t continue if the company is to remain a viable competitor. These are the rates these companies need to stay in business and properly serve their customers.”

The rates announced today will go into effect for policyholders with health plans that have requested rate increases beginning on or after January 2011. The rates approved today include the full amounts subject to the new prior approval law, but do not account for any benefit changes, including any insurance reforms contained in the federal health reform law, such as the ban on rescission of coverage, extension of family plan coverage to dependents under age 26, and elimination of annual and lifetime limits on policies. Consumers have the right to shop around if they do not like the final approved rate increase. The new prior approval law increases the time for consumers to shop around to 60 days (up from 30 days under the old law). Consumers and businesses can look on the Insurance Department’s website for health plan information (

Consumers with questions about their health insurance bills should contact their agent or broker, or the Department’s Consumer Services Bureau at 1-800-342-3736.



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