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NY Ponders Return to "Prior Approval" for Insurance Rate Increases

April 26, 2010

NEW YORK - Gov. Paterson estimates New York would trim the budget deficit by $70 million next year if the state returns to the practice of requiring health insurance companies to get prior approval before raising rates. Paterson's budget says containing premium hikes will mean fewer people being forced off private insurance rolls and onto state-subsidized plans.

Mark Scherzer, legislative counsel to New Yorkers for Accessible Health Coverage, says the Assembly has adopted a version of the plan, but the Senate is still undecided. He says New York already has the highest rates in the nation for personal policies, and he adds that the time to act is now.

"Do it. Get prior approval back in place, because without that, people will be losing coverage unnecessarily through overcharges, and it will make the market situation worse."

Some insurance companies oppose the measure, in part because they say the state is not likely to save as much as the governor's budget predicts. Scherzer says saving money for the state is icing on the cake. In his view, the bigger benefit is that thousands of New Yorkers will be able to keep health coverage.

Jim Shea cannot work because of a disability, but he still has insurance. His premium jumped 20 percent last year and he is struggling to make his payments of more than $1,000 per month.

"I've gone from having my own apartment in Manhattan to sharing an apartment in Brooklyn. I don't take vacations any more. It's like, every year, you cut back more and more things in your life. So, basically you don't do very much except sit home."

Under the current system, Scherzer says, audits have discovered tens of millions of dollars in overcharges. He says some consumers get paid back eventually, but many people see their health worsen as the high rates force them to drop coverage.

"When they get back on coverage, then they may be stuck with a limitation on their coverage for their preexisting condition for a year. It's not just that people are paying more, it's sometimes that they are having to drop coverage."

Mike Clifford, Public News Service - NY