In the face of a sustained attack by the federal government on the Affordable Care Act (ACA), Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) has reduced health insurers’ 2019 requested rates for New York’s individual market by 64% overall for individuals, saving consumers $314 million. DFS also reduced requested rates for 2019 small group plans by 50%, saving small businesses $279 million. Nearly 1.4 million New Yorkers are enrolled in individual and small group plans. New York was one of the first states in the nation to implement its own health insurance exchange under the ACA. Since then, New York has cut the uninsured rate in half from 10% to 5% and premiums in the individual market have remained more than 55% lower after adjusting for inflation and before the application of federal tax credits.

“New York has been a national leader and steadfast supporter of the Affordable Care Act since the law’s passage and today’s announcement marks the continuation of the state’s efforts to take all actions necessary to protect access to affordable healthcare for all New Yorkers and ensure a stable market in the face of unjustified federal attacks,” said Financial Services Superintendent Maria T. Vullo. “These rate decisions reflect New York’s robust market in the face of federal attacks and increased healthcare and pharmaceutical costs. DFS will not allow the federal government’s wrongful repeal of the individual mandate penalty to become a self-fulfilling prophecy to make health insurance unaffordable in New York. DFS has carefully examined the rates requested by health insurers and scrutinized every factor from an actuarial and market standpoint to ensure that the Trump Administration’s many efforts to sabotage affordable and comprehensive healthcare coverage do not allow insurers to unfairly profit at the expense of consumers.”

Due to the ACA, the impact of the 2019 rate increases will be mitigated by increased federal tax subsidies for some individuals purchasing coverage through the New York State of Health marketplace. Approximately 60% of marketplace enrollees receive the federal Advance Premium Tax Credit (APTC). The APTC amount is on a sliding scale for enrollees with incomes up to 400% of the Federal Poverty Level (FPL), approximately $100,400 for a family of four. The amount of the APTC is set by the second lowest cost silver plan in each county.

The main driver of premium rates, as in prior years, is underlying medical costs. For the 2019 individual rates announced today, drug costs account for the largest share of medical expenses (28%), followed by inpatient hospital costs (19%), specialist physician services (11.3%), diagnostic testing/lab/x-ray (10%) and ambulatory surgery (9%).

The ACA required consumers to purchase insurance or pay a penalty unless they qualify for a limited number of exemptions. While the mandate remains in the ACA, the recent federal 2017 Tax Cut and Reform Bill eliminated the individual mandate penalty for not having health insurance effective January 1, 2019. Given this recent timing, the present impact of the repeal of the individual mandate is uncertain.

Under the leadership of Governor Andrew M. Cuomo, New York has taken aggressive action to protect New Yorkers" access to quality, affordable health care, regardless of federal actions, mandating that insurers cannot discriminate against New Yorkers with preexisting conditions or based on age or gender; mandating that insurance policies cover all 10 essential benefits set out in the Affordable Care Act; and banning all insurers who withdraw from offering Qualified Health Plans on the State Health Marketplace from participation in any state programs. At the Governor’s direction, DFS has also promulgated regulations to ensure that insurers cover over-the-counter emergency contraception in addition to all other contraceptive programs, drugs, devices or other products for women approved by the Federal Food and Drug Administration, as well as the dispensing of 12 months of contraceptives at one time, and all medically necessary abortions, all without co-insurance, co-pays or deductibles.

Governor Cuomo has also directed DFS to review the impact of the Trump Administration's prior suspension of the Affordable Care Act's Risk Adjustment Program. The Risk Adjustment Program is designed to stabilize insurance markets by inhibiting the ability of health plans to seek out only the healthiest members, thereby increasing the cost of insurance for those who need it the most. The Governor directed DFS to review all options and prepare to implement an expanded State Risk Adjustment Program, if necessary, that would protect against discriminatory insurance practices in case the federal program is not reinstated. Previously – and continuing New York’s innovative leadership on healthcare – federal regulators had adopted an important change to the risk adjustment program that New York first instituted in a state market stabilization regulation in 2017 that better reflects the purpose of risk adjustment to reallocate claim expenses among plans, not profit or administrative expenses such as executive compensation and marketing costs. DFS will continue to take all necessary state actions to preserve market stability.

In addition, New York has banned short-term plans, in contrast to a recent Trump administration rule that promotes such plans. Short-term plans do not include crucial consumer protections, and would allow insurers to deny coverage for preexisting conditions, impose annual and lifetime benefit limits even for the seriously ill, and allow insurers to discriminate against the sick by either charging them more or refusing to sell them coverage altogether. New York’s prohibition on short-term plans further ensures that New York’s ACA markets maintain stability. Likewise, New York’s statutes and regulations provide important protections against the federal administration’s recent non-preemptive association health plan rule, ensuring that the rule does not damage New York’s markets and consumers. DFS will continue to be ever-vigilant to ensure that these important New York protections are not evaded by plans or brokers seeking to sell insurance in New York that violates New York law.

Superintendent Maria T. Vullo said, “Due to Governor Cuomo’s unwavering commitment to the ACA since the law’s passage, our healthcare market continues to be the strongest in the nation because of robust protections in New York law and regulations that ensure that consumers have choice in affordable, comprehensive healthcare and do not allow healthcare plans to undermine the ACA with limited coverage, such as association health plans and short-term health plans. Today the state has a healthy market, with New Yorkers in every county having a choice of coverage for essential health benefits.”

Since the beginning of the Affordable Care Act, New York has undertaken several initiatives to support and foster the growth of our own exchange, the New York State of Health. DFS will continue to promote the growth of New York’s healthcare market and help it thrive.

Individual Market

Approximately 330,000 New Yorkers are currently enrolled in an individual commercial plan. DFS reduced insurers’ total weighted average increase requested for individuals by 64%, from 24% to 8.6%. These rates will be further reduced for many consumers due to federal tax credits. For example, overall average 2019 cost of coverage for individuals who purchase the second lowest cost silver plans on the New York State of Health will increase by only about 2.7% compared to 2018 rates for some individuals when federal tax credits are applied.

Rates for individuals are more than 55% lower than prior to the establishment of the NY State of Health in 2014, adjusting for inflation but not counting federal financial assistance that the ACA makes available to many consumers purchasing insurance. Under the ACA, financial assistance through federal tax credits for those who qualify will increase in 2019. Households between 200% of the federal poverty level, which is the highest level to qualify for the Essential Plan, and 400% of the federal poverty level ($48,560 for individuals and $100,400 for a family of four in 2019) qualify for federal tax credits, which will reduce premium costs. In 2018, approximately 60% of individuals who enrolled in a Qualified Health Plan on the Marketplace received financial assistance, which significantly mitigated the impact of premium increases for these individuals.

These rate decisions do not include the Essential Plan, available only through the NY State of Health, which will still have premiums of $20 or less for lower income New Yorkers who qualify. Approximately 740,000 New Yorkers are projected to be enrolled in the Essential Plan in 2018.

INDIVIDUAL MARKET

* Indicates the company offers products on the New York State of Health Marketplace.

Small Group Market

More than one million New Yorkers are enrolled in small group plans, which cover employers with 1-100 employees. Insurers requested an average rate increase of 7.5% in the small group market. DFS cut the weighted average requested rate increases by 50%, from 7.5% to 3.8% for 2019, saving small businesses $279 million. A number of small businesses will also be eligible for tax credits that may lower those premium costs even further.

* Indicates the company offers products on the New York State of Health Marketplace.