As the 2015 state legislative session draws to a close this week, a troublesome “rate review”/”prior approval” bill has come up last minute and appears to be moving. The bill would weaken New York’s landmark prior approval system where state regulators review and revise health insurance annual premium rate increases. See HCFANY’s statement of opposition to S.4540/A.7439 here.
S.4540/A.7439 would change the process by which DFS makes rate determinations in the prior approval process. Principally, it compels DFS to issue initial determinations of rates thirty days after applications have been submitted by insurance companies. The current law allows a thirty day period for public comment, but that public comment opportunity would be rendered largely meaningless under S.4540/A.7439, as the decision on the rate would be issued simultaneously with the receipt of public comments. DFS would have no opportunity to consider the public comments submitted before deciding on the rate. HCFANY strongly objects to any legislation that effectively silences consumer voices.
Secondly, the bill places the burdensome requirement on DFS that the rates be determined by “generally accepted actuarial principles” above all other requirements. This it is an unwarranted intrusion on DFS’s administrative discretion. Products may be priced according to statutory loss ratios, but may be structured in discriminatory ways to favor some populations over others for competitive purposes. Insurers may have excessive reserves that can be employed to avoid rate increases that are actuarially justified but would have a severe adverse impact on the public. All of these factors, and numerous others, should be considered by DFS in approving rates.
This proposed law would move New York back in the direction of the unsatisfactory “file and use” system that the current statute replaced. It would severely limit the benefits of the prior approval process and give leeway to insurance companies who seek to increase their profits and executive salaries at the expense of premium-paying consumers. For these reasons, HCFANY urges the legislature to oppose such a measure.
What you can do NOW:
Call Assembly Health Committee chair Kevin Cahill (518-455-4436) and tell him you oppose any rollback of the state’s “prior approval” health insurance rate review system. Ask him to stand on the side of consumers over the industry.