Press Release
New CSS Report: New York’s Unaffordable Health Care System
The report explains the implications of hospital spending rising twice as fast as wages and five times as fast as inflation in the past decade
Unaffordability, lack of access, and mediocre quality have come to define New York’s health care system. In the mid-1990s, State policymakers jettisoned the regulation of hospital prices, insurance rates, and health planning systems, in favor of a market-driven model, leaving a regulatory vacuum. Three decades later, health care spending has more than tripled. But it doesn’t have to be this way—other states are moving forward on health care costs and New York can do so too, according to a new Community Service Society of New York (CSS) report.
The report, “Why is Health Care in New York So Unaffordable and What Can be Done to Fix It?” examines the drivers of the State’s high-priced health system and offers solutions to address high costs, uneven quality of care, and lack of transparency around how health care resources are allocated.
One significant source of higher health care spending is the increase in hospital prices, which is driven partly by mergers and acquisitions among health care facilities. While consolidation in the hospital industry does not always correlate with better quality of care, it does result in higher prices, driven by demands for higher provider reimbursement rates from payers. As the State’s larger hospital systems have grown, smaller hospitals have struggled to survive. According to the report, 53 short-term acute care hospitals out of more than 200 in the State closed from 1997 through 2024, removing 8,000 beds from the health care system. These hospital closures typically occurred in counties with large concentrations of residents of color, worsening disparities in access to care for these communities.
“New York’s health care environment has become increasingly expensive and inequitable following deregulatory efforts of the State government,” said David R. Jones, CSS President and CEO. “The current market-driven model is ill-equipped to control costs, safeguard access and quality of care, and meet national quality benchmarks. State regulators lack sufficient independence from the hospital and insurance industries, which have benefited under the current framework while patients, employers, and unions see their health care costs rise.”
“New York has the unenviable distinction of having the second highest overall health care spending per person ($14,000) in the nation, and the second highest health care premiums for family coverage in the nation, with an average annual insurance premium of $26,400,” said Elisabeth Benjamin, CSS Vice President of Health Initiatives and co-author of the report. “Despite hospitals being the biggest driver of this spending, their quality rankings are mediocre according to federal measures, and inequities persist in New York’s allocation of health care resources. It’s time for New York to follow the lead of other states that are actively regulating the health care industry by improving data transparency, setting limits on health care spending, and ensuring health care resources are allocated equitably.”
The CSS report, which was co-authored by CSS Health Policy Analyst Bailey Hu, CSS Senior Health Policy Analyst Mia Wagner, and Senior Director of Health Initiatives Carrie Tracy, lays out specific policy measures to help redress the State’s health affordability quagmire:
- Create an independent Office of Health Care Affordability (like California) to replace the State’s industry-dominated Public Health and Health Planning Council;
- Immediately launch the All Payer Claims Database, which is still not operational 14 years after a State law authorized its launch, so policymakers will have concrete information about pricing and quality for decision-making (like 28 other states have);
- Enact the Fair Pricing Act (S.705/A.2140) to impose price caps on hospital outpatient departments and ensure that the same price is charged for the same routine services across different sites of care;
- Create a State Hospital Cost Review Board that sets limits on cost growth specifically for hospitals (like Delaware);
- Enact the Primary Care Investment Act (S.1634/A.1915A) to improve patient outcomes and reduce preventable hospitalizations by increasing primary care investment (like Connecticut, Delaware, Hawaii, Oklahoma, Oregon and Rhode Island).