Big health insurance rate increases sought for WNY small group, individual plans [The Buffalo News, N.Y.]

Jun. 3—The cost of small group and individual health insurance plans across Western New York could increase by double-digit percentages next year, under rate hike applications submitted to the state in recent days.

The three dominant health plans in Western New York all requested substantial rate bumps for 2025 because of rising costs, particularly for hospital care and for pharmaceuticals.

Highmark Western and Northeastern New York, which includes Highmark Blue Cross Blue Shield of Western New York, is requesting an average increase of 30.9% for individuals, a market in which it has almost 4,100 members. For small group plans, in which Highmark has about 36,000 members, the insurer seeks an average increase of 19%.

Independent Health is requesting an average rate increase of 27.7% in the individual market, where it has roughly 11,500 members. On the small groups, in which Independent Health lists about 52,500 members, the insurer requested an increase of 28.1%.

Excellus Health Plan, which includes Univera Healthcare, seeks an average increase of 19.5% in both the individual and small groups market. Excellus, based in Rochester, has more than 28,500 members in its individual plans and almost 139,000 small group members.

These rate adjustments submitted to the state, and posted online Friday, affect people who buy individual commercial health insurance and small employers with 100 or fewer full-time workers. Together, they comprise a small slice of members for most insurers.

The rate increases, which do not affect large employers with more than 100 workers, highlight the upward pressure on premiums.

Other insurers with a presence in Western New York also requested increases.

That includes Fidelis, which is requesting a 9.8% increase in the individual market; MVP Health Plan, which asks for an individual market bump of 19.2% and a small group increase of 9.5%; and United Healthcare, which wants an 8.8% increase for individuals and an 11% bump for small groups.

The average increase requested by health plans in the state was 16.6% in the individual market and 18.6% for small groups.

From here, the state will evaluate the requests, gather public feedback and, most likely, adjust the increases downward.

Rates are typically finalized by late August.

What the insurers say

While the rate requests affect a relatively small slice of each health plan's membership, the proposed increases still put a spotlight on the rising cost of health care.

In a statement, Highmark Western and Northeastern New York — the Buffalo affiliate of Pittsburgh-based Highmark Health — said its proposed rates for individual and small group products next year are driven by escalating pharmaceutical and hospital prices as well as regulatory mandates, taxes and fees. The rate requests submitted to the state affect about 10% of Highmark's members.

"We recognize the ever-rising medical costs are a major burden on small businesses and individuals," said Highmark, noting that it has seen more than $250 million in losses in the individual and small group sectors over the last five years. The company said it spends more than 89 cents of every dollar of revenue for its members' medical care.

Rich Argentieri, chief sales and marketing officer at Independent Health, said the insurer's rate adjustments "reflect the continuation of the post-pandemic challenges that are impacting health care costs across our industry." Individual commercial plans represent 3% of Independent Health's membership, while small groups are about 15%.

Specifically, he pointed out the average median price for new prescription drugs has surged by 67% over the past three years, a trend that is expected to continue as emerging cell and gene therapies hit the market. Independent Health has seen rising prescription drug costs in high-cost categories such as diabetes and weight loss, oncology, immunotherapy and rare disease.

"Since 90 cents of every premium dollar is used to pay for members' medical and prescription costs, rate adjustments are a direct result of these increases: It's the cause-and-effect principle," Argentieri said.

Univera also said its premium rates are a result of the cost of medical care and prescription drugs, noting 93 cents of every premium dollar collected last year went to member medical care. Its rate adjustments submitted to the state would affect about 11% of its members.

The health plan said more than half of its rate increase request is due to hospital costs, with more upstate New Yorkers going to the hospital for severe and high-cost procedures such as cancer care and transplants.

"Prices overall continue to climb," Univera officials said. "The rising costs of prescription drugs and increases in outpatient services such as hip and knee surgeries are also impacting rates."

All three of the major local health plans reported financial losses last year.

The local Highmark affiliate reported a net loss of $21 million on revenues of $3.1 billion last year, while Independent Health recorded a net loss of about $193 million on revenues of $2.3 billion. Excellus, which includes Univera, reported a net loss of $23 million on revenues of $6.6 billion.

The health plans have hundreds of millions of dollars in state-mandated reserves, which helps to absorb the losses and maintain financial stability even in down years.

Want to comment?

Insurers must send affected customers a notice about a proposed premium rate increase filed with the state, alerting consumers that an application has been submitted and that they can send comments in about the planned adjustment.

Those wishing to comment during a 30-day window can submit their comments online through the state Department of Financial Services portal or by mail to: New York State Department of Financial Services, Health Bureau-Premium Rate Adjustments, One Commerce Plaza, Albany, N.Y. 12257.

Comments from the public can factor into the state's review of each rate request. In that review, the Department of Financial Services evaluates the applications and the insurer's underlying calculations to "make sure that rate increases are justified and not excessive," according to its website.

By late summer, the department will approve or lower each insurer's proposed rates for 2025 — a process that almost always results in adjustments downward.

For example, last Aug. 31, the department announced it reduced insurers' requested rates for 2024 by 44% in the individual market and by 52% for small groups, collectively saving the more than 1 million New Yorkers enrolled in those plans almost $732 million. Even after those adjustments, however, many health plans — including the three dominant local insurers — landed double-digit percentage increases.

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