New York insurers asked for large premium increases as a way to counteract rising costs, and in some cases, gargantuan losses.
Insurers selling plans to individuals requested a 17.3% average increase and those selling small-group plans asked for an average 12% rate hike.
The state insurance marketplace, known as New York State of Health, has seemed to be more stable than other markets nationally, but insurers here haven't been immune to national trends that are driving up health care spending and increasing the costs of providing health insurance.
In a statement Wednesday afternoon, the New York Health Plan Association said the hikes are necessary. "The 2017 rate submissions reflect increases that are the direct result of the underlying cost of care and marketplace changes that continue to impact health plans' operations," Paul Macielak, HPA's president and chief executive, said in a statement.
Several notable insurers requested large increases for 2017. UnitedHealthcare, which has pulled out of insurance marketplaces in many other states, asked for a 45.6% increase to premiums. Though UnitedHealthcare is the largest U.S. insurer, it signed up just 2% of individuals who purchased insurance through New York State of Health last year.
Oscar, the venture-capital darling that recently raised $400 million in a financing round from Fidelity, asked for an 18.4% average increase. In a letter to insurance brokers, the Manhattan company said its rate hikes ranged from 8% to 30% around the state. Though the insurer is valued at $2.7 billion, based on the money it has raised, it lost $120 million last year.
Oscar sought to explain the planned rate hikes to insurance brokers in an email sent Wednesday morning.
"There are three main reasons for higher premiums: Medical costs have gone up, government programs that helped cover our costs are ending and our members needed more care than we expected," the company wrote. "We don't like raising premiums for our members, but the economics of this market demand as much."
CareConnect, the insurance arm of Northwell Health, requested a 29.2% increase on average while MetroPlus, the health plan of NYC Health & Hospitals, sought a 20.3% average increase.
Though the rate requests serve as an early indicator of what consumers might expect to pay in 2017, their bills will still likely be lower. The state Department of Financial Services must approve all rate requests, and it has wielded that power since the New York State of Health began serving customers in 2013. Last year, insurers requested an average increase of 10.4%, which DFS slashed to 7.1%.
DFS' decision on the current rate hikes will be closely watched. The agency was blamed, in part, by the insurance industry for the collapse of Health Republic Insurance of New York, which was shut down by regulators last year. It is also the first rate hike that will be decided under Maria Vullo, who was appointed acting DFS superintendent in January.
In general, consumers have a propensity to seek out lower-cost plans, so during the New York State of Health open-enrollment period, they will have the option to pick a different health plan if their current insurer raised prices too high.
Medical costs have gone up, government programs that helped cover our costs are ending, and our members needed more care than we expected,” Oscar said in a letter to the state explaining its request.
New York's Department of Financial Services can review the rates and force insurers to lower them. Last year, insurers in the state requested a 10.4% increase for individual policies on average, and were allowed to boost rates by about 7.1%.
Small group insurers are asking for an increase of 12%, the department said. Oxford Health, a unit of UnitedHealth, is seeking a boost of 12.9% in the small group market.
"New York Obamacare insurers ask for big rate hikes" originally appeared in Crain's New York Business.