NY Health Insurance Rates Increase By Just 1.8%, Lowest In Years

Health insurance rates in New York will increase by an average of just 1.8% in 2021, the lowest increase in a decade.

The state Department of Financial Services announced the rates Thursday, coming in far below the 11.7% average rate increases sought by health insurers as consumers continue to struggle financially due to the COVID-19 pandemic.

Each year, insurers must seek approval for their rates from the state agency, with the health plan proposals coming in far above what the state ultimately approves.

For small-group insurance, the average rate increase will be 4.2% in 2021, which was reduced from the 11.4% increase sought by health plans.

"New York stepped up and flattened the curve, but consumers are still feeling the economic effects of the pandemic," DFS Superintendent Linda Lacewell said in a statement.

"Our number one job is consumer protection and ensuring that quality, affordable health care is available to everyone in the state," she added, referring to the final rates for 2021.

The New York Health Plan Association, which represents insurers, described the 2021 rates as unrealistic and a threat to the "long-term stability of the marketplace."

It said the rates failed to address increases in health care costs, as well as the expenses connected to COVID-19, the respiratory disease that has killed more than 25,200 New Yorkers, the most in the nation.

"Since the outset of the national coronavirus crisis, health plans have worked closely with the state and the department to protect the health of New Yorkers, combat the spread of the virus, and address the economic impact of the pandemic," said Eric Linzer, president and CEO of the group.

"This has included eliminating cost-sharing for COVID-19 testing and treatment and for telehealth services, providing financial support to hospitals and others in the delivery system, and extending grace periods to individuals and small business, all of which have fiscal implications for health plans," he added.

The group representing Blue Cross and Blue Shield Plans in New York raised similar concerns in a statement, citing the potential financial fallout if a second wave of COVID-19 infections hits the state.

"The approved rates have the real potential for creating financial losses that would weaken the solvency of some health plans, especially those not-for-profit plans," the group said.

What state officials say

The Department of Financial Services, however, asserted some health plans reaped record profits for the first half of 2020.

That windfall stemmed from the postponement of elective and non-emergency services during the COVID-19 pandemic, which resulted in lower claim payouts than expected, the state agency said in a statement.

Further, the agency noted some health plans could be required to refund consumers some money in 2021 due to the Affordable Care Act, or ACA, the federal health care law passed in 2010.

Any excess premiums that insurers collected must be returned to policyholders under the ACA, the state agency said, adding federal regulators will determine any rebates that may be owed to consumers based on a review of all 2020 claims.

State regulators, however, noted future claims remain uncertain and could impact any potential rebates. Profits reported so far this year could be offset by higher than expected claim pay outs in the second half of 2020 and in 2021 as elective and non-emergency services resume, the agency said.

About 1.3 million New Yorkers last year got their health care from private insurers, while nearly 5 million people get their insurance through the NY State of Health, the state's public health exchange set up under Obamacare in 2010.

Most of the insurers offer plans under the exchange, and Gov. Andrew Cuomo earlier this year announced a special enrollment period through June 15 for anyone who lost their job due to the virus.

DFS said it reduced the requested rates for New York's individual market by 85% overall, saving consumers over $221 million.

It reduced 2021 requested rates for small group plans by 63%, saving small businesses more than $565 million.

The full list of health plan rates for 2021 is available at the Department of Financial services website, dfs.ny.gov.

Joseph Spector of USA TODAY Network contributed to this report.