The Issue is the Cost of Care
In the next few weeks, the state’s Department of Financial Services will announce the final approved 2026 health insurance premiums for individuals and small businesses. New York’s health care costs are among the highest in the country and national forecasts project costs continuing to climb.
Affordability is the most pressing health care issue for individuals, families and employers, and the continued growth in costs exacerbates the challenge they face. Premiums are a direct reflection of the cost of care and it’s important to understand the factors contributing to premium increases. Among them:
- Hospital Prices: Hospitals and other providers continue to demand significant price increases at a time when New York’s inpatient hospital prices are the third highest in the country, with hospital prices expected to rise by twice the rate of inflation according to the Centers for Medicare and Medicaid Services.
- Prescription Drug Costs: The high and ever escalating price increases that pharmaceutical companies charge. In what has become an annual tradition, this past January, Big Pharma raised the prices on nearly 600 drugs, most above the rate of inflation, and year after year routinely hiking the prices on existing and unchanged medications without any substantial new evidence to support the price increases.
- Mandated Benefits: New York currently requires coverage of nearly four dozen specific treatments or services, many of which are for treatments or screenings that go beyond nationally recognized evidence-based guidelines. In isolation, the cost of individual mandates may be relatively small, the collective impact adds to the cost of coverage that falls disproportionately on small and medium-sized employers.
- Health Insurance Taxes: New York currently collects nearly $6.6 billion annually in taxes, assessments and surcharges on health plans. This adds more than $1,000 to the premium annually for the average family policy.
- Loss of Federal Funding: The American Rescue Plan Act included enhanced federal tax credits to assist low- and moderate-income individuals with their premiums. Unless Congress extends them, this funding will expire this year, increasing premiums for more than 140,000 New Yorkers who receive them. State estimates project average monthly costs to rise $114 per month for an individual and $228 per month for a couple.
In announcing the approved rates in 2023 and 2024, the Department of Financial Services has cited the rising cost of medical care, including inpatient hospital stays and rapid increases in drug prices, as the main drivers of premium increases. Greater scrutiny and transparency of hospital and drug companies’ costs and pricing practices, including prohibiting outlandish mark-ups on medications and excessive charges for services, is needed to make health care more affordable in the state.
In the absence of policy efforts to rein in these costs, it is critical that the premium rates the state will approve for 2026 fully recognize these elements as they reflect the cost of care in New York.
Eric Linzer, President and CEO, New York Health Plan Association
The New York Health Plan Association represents 20 managed care health plans that provide comprehensive health care services to more than 8 million New Yorkers.
