New York consumers and small businesses face double-digit health insurance rate hikes
Syracuse, NY – Luigi “Lou” Sposito says his small metal fabrication business in Cayuga County will have less money available for employee pay raises next year if his health insurance rates go up 18 %.
Sposito, one of the owners of Stonewell Bodies in Genoa, recently learned that his company’s insurance costs could rise as much in 2023 if the state approves a request for higher rates by Excellus BlueCross BlueShield.
The company and its 28 employees split the cost of health insurance 50-50. Premium increases inevitably force some employees to switch to less expensive, less generous and higher-deductible plans that force them to pay more money out of pocket for health care, he said.
“We want to be good employers,” Sposito said. “But that kind of stuff rips the wind out of your sails.”
New York insurers are asking for rate increases in 2023 for two types of customers.
They want rate increases of up to 46% on small group plans covering companies with 100 or fewer workers, like Sposito’s company. They’re also asking for hikes of up to 35% for consumers who aren’t part of groups and buy individual plans.
More than 1.1 million New Yorkers are enrolled in small group and individual plans.
The proposed rate increases do not affect large employers, many of which are self-funded, meaning they pay employees’ medical claims.
The hikes are not done. Individuals and businesses affected by the proposals have until August to voice their concerns.
The average proposed statewide increase for individual plans is 18.7%, while the average proposed rate increase for small group plans is 16.5%.
The proposed big rate hikes come at a time when consumers are already grappling with soaring prices for gas, food and other items. Those same pressures are also affecting insurance companies, forcing them to raise rates to pay for more expensive drugs and treatments, insurers say.
Excellus, the largest insurer in central New York, is targeting increases of 6.3% to 18.1% on its small group plans.
Excellus is also targeting price increases ranging from 8.3% to 20.1% on its various individual plans. Health plan MVP wants increases ranging from 14.2% to 33.8% on its individual plans. Fidelis wants rate hikes of up to 34% on individual plans.
These changes affect New Yorkers who are enrolled in the state health insurance exchange, which is part of Obamacare.
The monthly cost of Excellus’ standard platinum plan for individuals sold on the state exchange would increase from approximately $1,059 to $1,210, an increase of more than 14%. Platinum plans have the highest monthly premiums, the most generous coverage, and the lowest fees.
About 181,000 people in upstate New York, or 12% of Excellus members, are enrolled in individual or small group plans.
The state Department of Financial Services could approve increases, reject them, or reduce them. It has significantly reduced the average size of rate increases in each of the past four years. The ministry is expected to announce its decision in August.
The approved rate increases will take effect on January 1.
Members of the public can share their views with state regulators on the proposed increases by submitting comments online.
Double-digit increases would weigh on employers and employees at a time when they are pressured by inflation, said Daniel Goetzmann, of Goetzmann & Associates, a Syracuse health insurance brokerage.
He hopes state regulators will reduce the size of increases to single digits.
Excellus says in documents filed with the state that the increases are necessary because the cost of health care, especially prescription drugs, is rising.
Each year, the FDA approves many new, expensive specialty drugs to treat both rare and common diseases.
“Specialty drugs are used by about 2% of our members, but they account for more than 46% of total drug spending,” Excellus said.
These high-priced drugs include drugs widely advertised on television such as Humira, for arthritis, and Ozempic and Trulicity, for diabetes.
Health care utilization plummeted at the start of the pandemic but has since rebounded, according to the New York Health Plan Association, an insurance trade group.
That group said some New York consumers could also see their health insurance costs rise if Congress doesn’t extend a temporary increase in tax credits. These tax credits have helped reduce premiums during the pandemic for New Yorkers who purchase insurance through the state health insurance exchange.
More than 138,000 New Yorkers have benefited from enhanced tax credits allowed under the US federal Rescue Plan Act. When those tax credits expire, premiums could increase by 58% for consumers eligible for the tax credit, according to state data.
Sposito said a big hike in health insurance rates would leave his company with less money to reinvest in his business and give his employees pay raises.
“It’s like that leaky faucet that you can’t fix,” he said.
James T. Mulder covers health and higher education. Do you have a topical tip? Contact him at (315) 470-2245 or [email protected]