New Law Will Require Broader Disclosures From Insurance Companies

Purchasers of health coverage in New York who want to know why their premiums are skyrocketing will soon get an explanation.

A new rule takes effect next year requiring broader disclosures by insurance companies. For the last several years, these companies have needed to file a request to state regulators for premium hikes. The state Department of Financial Services announced last month that it will make public the companies' memos arguing for those increases.

A dozen companies announced they would mount legal challenges to the disclosure. Over the last week, all but two of them reversed their position and have said they will accept the new rule without further challenge.

The New York State Health Plan Association, which represents insurance companies, said one of their main objections was that the state "changed the rules in the middle of the game," because health plans had make premium hike requests in August, only to learn in September about the new disclosure requirement. Companies also complained that they were being forced to release "proprietary information" about how they do business.

With most of the challenges now dropped, insurance companies are saying they, too, share regulators' and consumer advocates' interest in greater transparency.

"We certainly support consumers having access to information that will enable them to make informed decisions about their health care purchases," said Leslie Moran, of the NYSHPA. "What consumers will see, when they look at this information, is what's really driving increasing premiums: rising doctor and hospital costs, increased spending on drugs, increased utilization, and things like that, and not administrative costs and profits."

Advocates are hoping the new information will allow them to mount stronger challenges than ever before to premium hikes in the future.

It's too late for the 2012 rates that take effect in January. Regulators have already ruled on those premium requests. Insurance companies, on average, requested 12.7 percent increases. The state granted increases of 8.2 percent.

Ben Lawsky, Superintendent of the Department of Financial Services, said that's lower than the projected medical cost trend, which reflects both the prices health care providers charge and the amount of services and medications consumers are expected to use.

"Our job is to protect consumers by keeping rates from spiralling out of control. At the same time we need to make sure there is product availability for consumers and that insurers have enough money to pay their claims." Lawsky said.