NEW YORK, NY (11/09/2011)(readMedia)-- Governor Andrew M. Cuomo today announced that 11 insurance companies have been ordered to refund $114.5 million to holders of policies that cover 573,748 people who were overcharged for health insurance premiums in 2010.
"In this economic climate, every penny counts and in this case, insurance companies were overcharging New Yorkers to the tune of millions of dollars," Governor Cuomo said. "This should serve as a message to companies that we are watching, and we will not tolerate any action that wrongly hurts the finances of the people of New York."
Under New York State law, insurers are required to spend 82 cents of every dollar collected in premiums on providing medical care. If the amount spent on care, known as a "medical loss ratio" or "MLR," is less than the 82 percent requirement, insurers are required to refund the difference to policyholders. The purpose of this requirement is to encourage health insurers to operate as efficiently as possible so that most premium dollars go to providing medical care. The amount of premium over the 82 percent mark goes to insurer overhead, administrative expenses, and profit.
"While it is a positive that consumers are getting these payments, retroactive refunds are simply not good enough. It is likely that some people dropped their insurance coverage because of premium increases. Through the prior approval law, the Department of Financial Services is working to keep rates from spiraling out of control while also ensuring consumers get refunds when insurance companies don't spend enough of premiums on medical care," said Superintendent of Financial Services Benjamin M. Lawsky.
According to Department of Financial Services (DFS) information, plans offered by 11 health insurance companies failed to meet the 82 percent requirement.
Refunds have already been made to policyholders in the small group and individual, direct-pay market. DFS has instructed insurers to make refunds to affected policyholders in the large group market by December 15.
Governor Cuomo and Superintendent Lawsky also today announced the completion of a successful effort to ensure that health insurer rate filings will be made public. All insurers have now withdrawn their objections to the public release of this information by the Department of Financial Services. The public release of these filings will help protect consumers and promote competition.
These are the insurers required to make the refunds:
Company Total Refunds
Aetna Health Inc -- $11,495,614
CDPHP Health Plan -- $487,768
ConnectiCare of NY -- $15,462
Empire -- $61,080,867
Excellus -- $21,426,603
GHI -- $4,168,935
Health Net of New York -- $5,052,467
HealthNow -- $4,492,327
HIP Health Plan of Greater New York -- $182,194
MVP Health Plan -- $1,319,640
Oxford Health Insurance Co -- $4,838,675
TOTAL -- $114,560,552