May 16, 2018
Contact: Richard Loconte, 212-709-1691
ICYMI: Superintendent Vullo"s Op-Ed in Crain’s New York Business On Protecting New York"s Health Insurance Marketplace from Trump - Washington"s Fear-Mongering Does Not Justify Excessive Rate Increases
Today, Crain"s New York Business published an op-ed by Superintendent Maria T. Vullo. The full op-ed can also be viewed online here.
Each year, my agency, the New York State Department of Financial Services, uses its authority to review and approve health insurers" rate requests for the individual and small-employer group markets to ensure premiums are justified. DFS has regularly reduced requested increases, saving consumers and businesses approximately $2 billion over the past four years. Far more than in other states, New York’s health insurance markets remain competitive and robust, with 15 insurers offering coverage in our individual market and 19 in our small-group market.
Indeed, New York"s embrace of the Affordable Care Act has helped cut the state"s uninsured rate in half, to 5%—among the lowest in the nation—since 2010. Moreover, commercial health insurance premiums for individuals cost less than half of what they would have without our full implementation of the ACA.
Unfortunately, despite all this progress, the Trump administration has relentlessly attacked the ACA and the basic premise that every person has the right to affordable, quality health care. Although Washington failed to repeal the law, the attacks have continued, including recent actions that will drive up rates nationally and create unstable markets, particularly in the ACA"s signature individual market.
First, the Republican tax bill repealed the penalty for individuals" not having coverage. Insurers fear that makes young, healthy individuals less likely to purchase coverage, so they are raising premiums to offset the loss of those customers. The Congressional Budget Office has projected that premium increases resulting from the penalty repeal will leave 13 million more Americans uninsured. Even former Health and Human Services Secretary Tom Price, previously an outspoken critic of the ACA, recently stated: "There are many, and I"m one of them, who believe that [repealing the mandate] will harm the pool in the exchange market, because you"ll likely have individuals who are younger and healthier not participating in that market, and consequently that drives up the cost for the other folks within that market."
Second, the Trump administration stopped funding cost share–reduction payments, which reduce copays and deductibles for lower-income individuals. This adds costs for insurers, who in turn will seek to raise rates.
Third, the Trump administration shortened the open-enrollment period by a full month for individuals to sign up for coverage. While this will likely increase premiums in other states, in New York we rejected this action and under our authority we maintained the same longer enrollment period, from this past November to January. This helped keep healthier lives covered, lowering costs for all.
Early indications are that the Trump administration"s attacks on the ACA will lead to large double-digit increases nationally for health insurance policies next year. Elimination of the individual mandate alone will increase health insurance rates by 10%, the CBO forecast. Maryland, one of the first states to report 2019 rate requests, said insurers are seeking 33% more on average, with one insurer requesting a 91% increase in premiums.
Rather than attack the ACA, we should be discussing ways to bring down rates, including by reducing medical costs. Drugs now account for approximately one-quarter of medical costs and were the single largest cause for rate increases this year, with specialty drug costs increasing approximately 23%. Gov. Andrew Cuomo has been outspoken on the impact of pharmaceutical prices, and last year established a first-in-the-nation program to lower the cost of high-price drugs for the Medicaid system. In 2017 he proposed this same program for the commercial market.
As DFS begins reviewing insurer rate requests for 2019 policies this week, we will once again scrutinize submissions to ensure that consumers continue to have access to affordable health insurance plans in every corner of the state. We will be particularly focused on making sure that insurers do not use the chaos and fear-mongering from Washington over the last 18 months as a cover for excessive increases.
Despite the noise and rhetoric from President Donald Trump and his administration, the ACA is still the law of the land. And New York is still the beacon of consumer protection and believes health care is a right, not a privilege. DFS will continue fighting efforts to undermine the act, such as the Trump administration’s proposed regulations to allow expanded association health plans or so-called short-term or skimpy health plans.
And we will not allow insurers that earn hundreds of millions of dollars annually selling health insurance in New York to take advantage of the uncertainty at the federal level.
New York will continue to use every tool at its disposal, including enforcing an executive order by the governor banning any insurer who withdraws from offering Qualified Health Plans on the state health marketplace from future participation in state health programs.
DFS will ensure that requested increases are fully justified by appropriate medical cost increases and are not excessive, and New York will persist in examining every regulatory, administrative and legislative avenue available to preserve our robust market and protect consumers for 2019 and beyond.