December 26, 2007

Konst Urges NYS Assembly and Senate to Pass Bill to End "File and Use"

The Erie County Legislature unanimously passed a resolution that urges the New York State Assembly and Senate to pass bills that would end the practice of "File and Use" when increasing rates for Heath Insurance Providers.

Erie County Legislator Kathy Konst (D-Lancaster, Elma), sponsor of the resolution, said, "Health insurance costs have far outpaced increases in income in New York State resulting in health insurance coverage becoming a heavy burden for many Western New York families."

Assembly Bill No. A. 07485 and Senate Bill No. S. 02740 would restore the New York State Insurance Department's authority to review rate increases in excess of five percent for individuals and small groups. The State Insurance Department would also be required to hold public hearings on Heath Insurance Providers' requests prior to ruling on the increase requested by them. Currently, HMO's and non-profit insurers may file and use increased rates for any magnitude without approval by the State Insurance Department. Konst stated, "Heath Insurance Providers should be required to justify every penny of the rate increase that they request."

The State Insurance Department, prior to 1996, conducted public hearings on all rate increases requested by non-profit and HMOs. The Pataki Administration allowed HMOs and non-profit insures to increase rates up to 10% automatically, so long as certain minimum loss ratios were met. Because the New York State Assembly and the Senate did not agree to extend these provisions, the law expired on December 31, 1999. Between 2001 and 2005, HMO profits have increased by 93 percent, almost equally premium rate increases.

Konst stated, "This legislation would restore for individuals and small business the same cost-containment procedures which NYS currently uses to restrain the growth of premiums it pays." Family Health Plus, Child Health Plus and the Medicaid Managed Care program all require participating Heath Plans to justify their rates before raising them, as does the New York State Health Insurance Plan, which covers state workers.

Konst concluded by saying, "We need to eliminate discrepancies in the regulatory treatment of commercial and non-profit health plans and HMOs. We need all health plans to play by the same rules."

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