Pheffer: Stave Off HMO Cost Increases
As many New Yorkers brace for potential hikes in their health insurance plans, Assemblywoman Audrey I. Pheffer, Chair of the Consumer Affairs and Protection Committee, said New York needs greater oversight and accountability of Health Maintenance Organization premium costs.
“Insurance companies and HMOs continue to report record profits while our families and small-business owners struggle with skyrocketing insurance premiums,” Assemblywoman Pheffer said. “According to the state Insurance Department, HMO profits nearly doubled from 2000 to 2002, yet enrollment actually declined over the same period. In order to end this trend of abuse, we clearly need a watchdog to review if any new premium increases are justified.”
Assemblywoman Pheffer sponsored a measure that would restore the state Insurance Department’s authority to conduct public hearings and review proposed premium increases submitted by HMOs (A.2518). Based on its findings, the Insurance Department could grant, reduce or reject any premium increases in excess of 5 percent.
Assemblywoman Pheffer noted that prior to 1996; a law did in fact give the state Insurance Department the ability to make HMOs obtain state approval before raising premiums. But in his second year in office, Governor Pataki diluted the law by creating a provision allowing HMOs to increase rates up to 10 percent automatically, as long as certain minimum loss ratios were met. Then on New Year’s Eve of 1999, HMOs gained total autonomy to set policy rates when inaction by the governor and Senate caused the law to expire.
The bill would help restore cost containment, provide consumers with an opportunity to challenge rates, and educate policymakers of the impact of rate increases.
“Prior approval of rate hikes is among the most basic of consumer protections. Huge insurance premiums are hurting too many New Yorkers,” Pheffer said.