New York Small Group Insurance Market Showing Signs of Distress; Trump Proposals Could Make Things Worse

NEW YORK, NEW YORK, December 7, 2017—Enrollment in New York State's small group insurance market has declined sharply since 2007, average premiums were the second highest in the nation in 2016, and New York's small group risk pool was the “sickest” among all states that year, according to a HealthWatch report from United Hospital Fund (UHF) released today.

The report, New York's Small Group Market Isn't Feeling Well – and a Trump Administration Proposal May Make Things Worse, also found that upcoming federal regulations expected from the Trump administration could undermine longstanding state efforts to preserve the stability of the small group market. The regulations are expected to make it easier for entities to form Association Health Plans (AHPs), under which multiple small groups would be bundled together and issued cheaper out-of-state or self-funded coverage exempt from New York oversight, benefit requirements, consumer protections, and rating rules.

According to the report, enrollment in New York's small group market dropped from 1.7 million enrollees in 2007 to 1.1 million in 2016, in part because of declining offer rates by small employers, likely fueled by rising premiums. Based on data collected as part of the federal risk adjustment program, average monthly small group premiums in New York for 2016 ($600) rose 39 percent over 2014 levels, and were 35 percent higher than the national average—making New York the second costliest state after Alaska.

One factor that could be driving those higher premiums is the declining health status of the small group market risk pool; New York's risk score of 1.774 was the highest in the nation in 2016, and well above the national average of 1.324.

“New York's rating rules and strong benefit standards make it a target-rich environment for entrepreneurs looking to cherry-pick younger, healthier groups in out-of-state or self-funded coverage,” said Peter Newell, director of UHF's Health Insurance Project and author of the report. “All eyes will be on upcoming Trump administration regulations, which could come by mid-December. Loosening current association health plan standards would exacerbate New York's small group market problems. ”

“New York's Small Group Market Isn't Feeling Well—and a Trump Administration Proposal May Make Things Worse” can be downloaded at UHF's website.

About United Hospital Fund

United Hospital Fund works to build a more effective health care system for every New Yorker. An independent, nonprofit organization, we analyze public policy to inform decision-makers, find common ground among diverse stakeholders, and develop and support innovative programs that improve the quality, accessibility, affordability, and experience of patient care. For more on our initiatives and programs please visit our website at and follow us on Twitter.

Dec. 7, 2017
Focus Area
Coverage and Access
Health Insurance Project