NCPA - National Center for Policy Analysis

New York Regulators Impose Community Rating

July 13, 1999

A new state mandate could kill a thriving market in one type of health insurance in New York state, warn health maintenance organization (HMO) officials.

  • A guideline issues earlier this year by the New York insurance department would require health insurers selling point-of-service health plans to adhere to community rating -- insurance pricing that doesn't charge employers higher or lower premiums based on the health claims experience of their workers.
  • "Point-of-service" plans are managed care plans that offer greater flexibility than HMOs because they allow people to use health providers outside the plan's network.
  • About two million New Yorkers belong to point-of-service plans, and some health plans have been using experience rating to offer employers better rates.
  • If community rating is imposed, insurance brokers say there will be a shift to more expensive "preferred- provider organizations."

Health plans are challenging state regulators' authority to impose community rating without a change in state law. The regulation is set to take effect in February 2000.

Source: Nancy Ann Jeffrey and Ron Winslow, "New York Plan Draws Criticism from HMOs," Wall Street Journal, July 13, 1999.


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