Hearing examines problems of insuring local government employees

Insurance Committee Chair Kevin Cahill, D-Kingston. Photo courtesy of the New York State Assembly.

A recent Assembly hearing examined health insurance options for municipal employees across New York state.

Assemblymen Kevin Cahill, Fred Thiele, and Philip Steck heard testimony on the rising costs of health care in New York and the challenges of providing affordable health insurance for employees of local governments and school districts.

Testimony from stakeholders will be used to draft future legislation and will help inform the Assembly’s interactions with the state Department of Financial Services, which regulates the insurance industry in New York, said Insurance Committee Chair Kevin Cahill.

One problem raised at the hearing concerns smaller governments that can’t keep up with the rising cost of premiums, yet whose circumstances prevent them from either self insuring their workers or joining a cooperative.

Assemblyman Steck, D-Colonie, requested that the Insurance and Local Governments committees investigate this issue. He has previously sponsored legislation that allows cities, towns, villages, school districts and public authorities to join county self-insured health plans in order to reduce costs.

“Our purpose here today is to discuss the increasingly perplexing problems of providing affordable health insurance for municipal employees, particularly at the local level, and even more particularly as it applies to the smaller municipalities, where the economies of scale may not permit them to self insure, and the barrier to entry into the co-op market may be too great for them to participate,” said Cahill, D-Kingston.

There are several ways that local governments and school districts can purchase health insurance for their employees, most commonly self-insuring, purchasing a policy from a licensed insurance company, or joining with other nearby districts and governments to form municipal health insurance cooperatives.

One such cooperative is the Greater Tompkins County Municipal Health Insurance Consortium, which allows local governments to band together and offer comprehensive coverage to employees of multiple local governments.

But recently the cost of health insurance premiums for New Yorkers have been going up 8 percent annually, while salaries have gone down statewide. Because of the rising cost, governments are choosing to self insure and form cooperatives instead of purchasing a policy outright.

Panelists expressed concerns for the future of the health care system in New York if the trend continues.

“The key drivers are drugs and inpatient hospital costs; those are the two biggest factors really propelling rates to go up,” said Troy Oechsner, deputy superintendent for health insurance at the Department of Financial Services.

Others who testified included representatives of Empire Blue Cross/Blue Shield, the New York Health Plan Association, the New York Underwriters Association, the New York State Association of Counties, and the New York Association of Towns.

“Drug Prices continue to rise year after year, manufacturers can and do increase their prices, even mid-year. And while health insurance premiums are closely reviewed and tightly regulated, the same cannot be said about pharmaceutical costs,” said Leslie Moran, senior vice president for the New York State Health Plan Association. “Hospital and physician costs are continuing to rise as well, and those costs continue to go up even though utilization is going down.”

New York state faces a number of challenges in the coming years mitigating the costs of health premiums, while simultaneously finding a way to ensure those in remote areas receive adequate coverage. Most concerning to local government leaders is the difficulty in attracting and retaining quality employees who may seek other jobs that provide better or cheaper health care.

“Providing quality health insurance is crucial for attracting and retaining valuable municipal employees and is a responsibility that our local governments take very seriously,” said Assemblyman Thiele, who chairs the Committee on Local Governments. “At the same time, it is one of the largest cost-drivers that municipalities have to face, particularly in the wake of property tax caps and other financial limitations.

“It is imperative that our local governments are able to provide their employees with quality insurance in the most cost-effective manner possible, and the informative discussion … will aid us in our responsibility to help alleviate some of that burden,” Thiele said.