NEW YORK: Moves To Halt Individual Market Rate Hikes

      Gov. George Pataki's (R) administration "announced yesterday that it would bar health insurance companies from raising rates this year for tens of thousands of New Yorkers who buy their own health insurance," the New York Times reports. State officials further said they will "turn over $110 million to the companies to offset costs" of covering persons in the individual market. The announcement means that New York is effectively denying substantial rate increases proposed by Oxford Health Plans and Empire Blue Cross and Blue Shield. The Times notes that the two companies "had asked for up to 69% increases" for individual policyholders, "meaning that people paying $300 a month might have seen their premiums rise to $500 or more."

Releasing Available Funds
      To offset the insurers' costs for covering the "costlier and sicker than average" individual policyholders, State Superintendent of Insurance Neil Levin said "the administration would use $110 million in money already collected during the last several years from insurers." The Times notes that "[a]side from the $27.4 million" that will be paid "to Oxford and Empire, the state will pay a total of $56.6 million to virtually every other insurer in New York, directing them to use it mostly to offset future increases for individual premiums." The money comes from pools "established five years ago as a means of reimbursing insurers that covered a higher-than-average number of sick people." The Times reports that the money has "been the subject of much contention in Albany during the last two years," largely because it "was not being paid out as fast as it was collected, and the Department of Insurance and the State Comptroller became embroiled in an argument over payment of a consultant hired to rewrite the rules to make more money flow back to the insurers that were entitled to it."

Democratic Criticism
      Democrats criticized Pataki, arguing "that the money should have been paid out to insurers long ago." Others said the move amounted to "a one-time fix, faulting the governor for not devising, as he promised two months ago, a long-term solution to the rising costs of insurance purchased by individuals." Assemblyman Alexander Grannis (D) said, "Here is the governor on a white horse riding to the rescue to address a problem that his administration was singularly responsible for creating in the first place." However, the Times notes that for "the people with individual coverage ... the vagaries of politics seemed secondary to the relief that the huge increases would not go through" (Fisher, 4/22).