Six health insurance companies have agreed to end the secrecy over their requests for rate increases, according to Benjamin M. Lawsky, superintendent of New York’s new Department of Financial Services.
UnitedHealth Group‘s agreement was announced Oct. 25, while the other five – Aetna Health, EmblemHealth, Empire HealthChoice, Excellus Health Plan and HealthNow – agreed two days later, officials said. The companies represent about 85% of the prior-approval segment of the state’s insurance market, covering 2.4 million New York residents.
When officials notified health insurers that it planned to make the rate increase filings public, 10 health insurers and an industry trade group, the New York Health Plan Association, filed formal legal objections.
Following the lead of UnitedHealth, Aetna, EmblemHealth, which also does business in New York as GHI and HIP, Empire HealthChoice, which does business as Empire Blue Cross, Excellus and HealthNow formally withdrew their objections and agreed with the superintendent that rate filings should be made public.
All parts of applications, including all required information and exhibits, now will be made available to the public. Only certain details of specific contracts between an insurer and hospitals or other health care providers will be considered for exclusion because other providers can use that information to demand higher payments and such information little value for consumers to be able to make informed comments on the rate requests. The six insurers’ actions terminate their challenges to the Superintendent’s decision.
“This is a great day for transparency and the public’s right to know how their health insurance premiums are set,” Lawsky said in a statement. “Transparency will promote competition and allow the public to make effective comments as part of the rate review process. I applaud these companies for their decision and hope the remainder of the industry will soon see the light.”
Under a law passed in 2010, insurers are now required to seek the prior approval of the Department of Financial Services for certain health insurance rate increases for individuals, small groups and some large groups.
For contracts that start on or after Jan. 1, 2012, health insurers requested weighted average increases of 12.7% and the Department granted increases of only 8.2% below the expected increase in medical costs. The lower increase will save consumers more than $400 million in 2012, officials said.
The insurers support their rate requests with substantial detailed supporting data, which previously was kept confidential.
In September, Lawsky determined that the filings should be disclosed so that the public can comment as part of the ratemaking process. The department sent a letter to all of the health insurers informing them of this decision. Ten insurers and the industry trade group, the New York Health Plan Association, responded with formal objections, which are permitted by law.
On Oct. 19, the department issued a legal decision rejecting the insurers’ arguments for secrecy. The insurers have the right to an administrative appeal of that decision and, if their appeal is rejected, the right to challenge the decision in court.
The insurers continuing to object to the superintendent’s decision are Capital District Physicians’ Health Plan, Connecticut General Life Insurance Co., Independent Health and MVP Health Care.
The 2010 prior approval law, which went into effect in 2011, was passed in response to the continuing rapid rise of health insurance premiums and in the hope that transparency and review would help slow that rise, according to Lawsky. The Cuomo Administration’s position with respect to rate increase transparency is based on the need for the public’s comments on rate increases to be relevant and meaningful and thus informed by the detailed information in the rate increase filings, Lawsky said.
Elisabeth Benjamin, Vice President of Health Initiatives at the Community Service Society and co-founder of Health Care For All New York, said, “It’s gratifying to see the domino effect actually playing out in favor of New York’s consumers and small businesses. The past decade’s secret system of hidden rate filings is a thing of the past-now New York’s consumers and small businesses finally have the opportunity to understand why insurance costs are so steep, and as a result, now will be able make well informed decisions about which carrier they trust to provide their coverage.”