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NYS Reduces Premium Rate Requests for 2021

The New York State Department of Financial Services (DFS) recently posted a press release, “DFS ANNOUNCES 2021 HEALTH INSURANCE PREMIUM RATES, PROTECTING CONSUMERS DURING COVID-19 PANDEMIC,” in which it makes some rather interesting “savings” comments associated with next years approved rates, as well as what can only be described as “politicized” commentary. Local news outlets, like Syracuse.com, are reporting statements like, “New York slashes health insurance rate hikes by 85%,” repeating much of the information. Our intent is not to spoil good news, but the information in the press release has to be taken with a grain of salt.

The rates presented by DFS are a blend of all the plans/rates a carrier files across all the regions they serve in the State. While the average increase has been lowered, some plans will experience increases, while others decreases. The swing is dependent on the claims associated with each plan.

The insurance carrier rate increases initially requested, but recently altered by DFS, include plans with significant enrollment, as well as those with limited enrollment. For example, if a carrier’s Plan “A” has a 6% increase and Plan “B” has a 0% increase the State is now describing the overall increase as “3%.” But, if Plan “A” has 90% of the carriers subscribers enrolled while Plan “B” has only 10%, it can’t really be said that the carriers plans are experiencing an overall 3% increase.

The same logic seems to apply when the State claims to reduce rate hikes by 85%. Technically this may be true but reducing the rates of insurance carriers that have little to no enrollment does little to impact the actual cost to New York constituents.

What the public should really want to know is what are the long-term effects of reducing insurance carrier rate requests? The DFS press release claims some insurance carriers saw “record profits in the first half of 2020;” they correctly point out that this coincides with the start of the pandemic when no one wanted to go near a Doctor or Hospital. Will subscribers postpone those elective surgeries and other services indefinitely, though? (we discussed this recently in The Lasting Effects of COVID-19). If medical usage rebounds quickly in the fall of 2020 or early 2021, insurance carriers will pass those increased costs on to consumers through steeper rate hikes in the future. 

Most large, experience rated groups have already received their January 2021 renewals, and small groups (<100 eligible employees) will be seeing theirs soon. Once those arrive we’ll see how you, along with help from your KBM representative, can make the best benefit decision for your employees in 2021.

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