Every year, commercial health insurers and Health Maintenance Organizations (HMOs) in New York submit requests to New York State, detailing the percentage they would like to increase their premiums by for the upcoming plan year. These requested rates are reviewed by the Department of Financial Services (DFS), and either approved, modified, or denied. This process is referred to as prior approval or rate review, a process meant to regulate premiums and an opportunity for the State to keep premiums low for New Yorkers. When reviewing requested rates, DFS takes a few things into account:
- Medical Loss Ratio (MLR), a measure of the portion of premium dollars that go toward patient care, versus administrative costs and profits for insurers. In New York, insurers are required to meet a minimum MLR of 82 percent, meaning that at least 82 percent of total premiums paid to an insurer are used to pay for patient care.
- Medical Cost Trend, the percentage of the rate increase that an insurer attributes to increases in the cost of medical and pharmaceutical services.
- An estimate of medical and pharmaceutical service usage for the population covered by the health insurer for the upcoming plan year.
- Past trends of an insurer’s MLR, enrollment, premium rates, and profit, among other indictors.
There is an open comment period between the public release of these initial rate requests and the final rate decisions made by DFS, where consumers and organizations have 30 days to weigh in on this process. HCFANY annually comments on rate review—the most recent comments can be found here, and consumers have the opportunity to make their voices heard by submitting a comment on the DFS website. Ultimately, the DFS determines the approved rate increase each insurer is allowed.
Below is a graphic showing different insurers, and their requested and approved rates for the past eight years.