Testimony: Combating Rising Health Care Costs

Before the New York City Council Committee on Health

Testimony for Oversight Hearing: Rising Health Care Costs

December 12, 2019

The Community Service Society of New York (CSS) would like to thank the Chair and members of the New York City Council Committee on Health for the opportunity to submit this testimony on rising health care costs. CSS is a 175-year-old 501(c)(3) non-profit dedicated to fighting poverty and strengthening New York. It seeks to address economic disparity through research, advocacy, and innovative programs that strengthen and benefit all New Yorkers. CSS recognizes that access to quality affordable health care is essential to building strong, equitable, and economically secure communities. Annually, its health programs help New Yorkers enroll into health insurance coverage, find healthcare if they are ineligible or cannot afford coverage, and help them use their coverage or otherwise access the healthcare system. We do this through a live-answer helpline and through our partnerships with over 50 community-based organizations throughout New York State. Annually, CSS and its partners serve over 150,000 New Yorkers, saving them over $10 million dollars in health care costs. For more information on CSS, visit us on the web at www.cssny.org.

Under the Affordable Care Act, New York has cut the number of uninsured people in half since 2010. Despite this remarkable feat, there are still over 1 million uninsured New Yorkers. And study after study confirms what New Yorkers experience every day – rising health care costs and the diminishing value of coverage result in profound affordability problems even for consumers with insurance. 

For example, CSS worked with Altarum’s Healthcare Value Hub to do a survey on health care affordability in New York. The results—even after New York’s remarkable implementation of the Affordable Care Act—are sobering. New York City residents experienced even higher health care cost burdens than residents of other regions of the state. More than half (59%) of New York City residents surveyed (nearly all of whom were insured) said they had faced a health care affordability problem, such as cutting pills, not filling prescriptions, skipping care, or not doing what their doctor told them to do because of costs.

• 46% said they were struggling to pay medical bills: using up their savings; skipping meals or paying rent; or reported being in collections or having credit card debt.
• 71% worried about health insurance becoming too expensive.
• 65% worried about the cost of a serious illness or accident.
• 67% worried about health costs when elderly.

In another consumer survey, one-third of respondents said they had paid bills they did not owe. The reasons they gave for paying bills they might not owe included: the bills were too confusing, they did not think they could win against providers, and they were afraid not paying would ruin their credit score.

While national health care spending has slowed down, New Yorkers experience a very different story.  In 2008, New Yorkers were spending 5.5% of their median household income on health care. In 2016, that percentage increased to 7.7%. At the same time, hospital bills are rapidly increasing. One study found that hospital prices grew 42% between 2007 and 2014, while doctor prices grew 18%.[6] While the hospital industry suggests that hospital consolidation will increase efficiency and lower prices, studies show that it actually results in higher prices. Provider price increases are the main driver of growing health care costs in New York – especially inpatient prices, which grew twice as much in New York (32%) than nationally (16%). These price increases occurred during a period when actual inpatient utilization declined by 2 percent. Of all of New York’s health care stakeholders, individual consumers are the least able to accommodate these high prices, but consumers have little to no access to the cost and quality information that would allow them to shop for better deals.

Over time, the value of insurance coverage has declined. In an effort to keep employee contributions steady as premium prices rise, employers have increasingly chosen plans with larger cost-sharing requirements (e.g. deductibles and co-pays). The average annual deductible for consumers with employer-sponsored coverage that included a deductible rose 36% over the last 5 years and 100% over the last 10 years. In New York, the average deductible for an employer-sponsored single-person insurance plan more than doubled between 2008 and 2018 ($732 to $1,554). The average employee cost for premiums and deductibles in New York rose 65% from 2008 to 2018, from $3,935 to $6,471. Despite increases in cost-sharing, the national average premium for employer-sponsored family coverage has risen 22% in the last five years; this increase is significantly higher than the increase in inflation or workers’ wages during this period.

New Yorkers blame the health care industry for the rising and out-of-control costs: 69% said that insurance companies charge too much; 69% said hospitals charge too much; and 68% said that drug companies charge too much. Seventy-two percent of New Yorkers agreed that “the U.S. health care system needs to change.”

New York has taken important steps to protect consumers with considerable success. For example, “surprise” medical bills were a top complaint to New York’s insurance regulators, the Attorney General’s Health Care Bureau, and our CHA Helpline. With the enactment of the 2015 New York Surprise bill law, many of these problems abated, because disputes mostly hold consumers harmless, leaving the providers and carriers to resolve them before an independent dispute resolution process.

The NYS Department of Financial Services, which implements the surprise billing protections, reports that the law “has saved New Yorkers more than $400 million in emergency services alone, reduced out-of-network billing in New York by 34%, and lowered in-network emergency physician payments by 9%.” A CSS analysis of cases in which Community Health Advocates (CHA), New York’s designated health consumer assistance program, helped consumers with surprise bills found that they had favorable outcomes in 68% of cases. New legislation, signed by Governor Cuomo in October, will strengthen the law by subjecting hospital emergency room services, which were left out of the original legislation, to the independent dispute resolution process.

While this an important first step, one loophole in the law remains. Over 30% of our consumers with surprise bills come to us because either the carrier or the provider incorrectly told the consumer that they were in-network, when in fact they were not. This is a serious problem because many hospitals fail to require their “attending” providers to take the same insurance as they do, resulting in consumers being billed for out-of-network providers.

As the surprise billing law example shows, there is much that New York City and New York State can do to protect consumers from the problem of rising health care costs. CSS, and our partners in the Health Care For All New York coalition, support a range of solutions that fit roughly into three buckets: (1) expanding coverage; (2) ending medical billing abuses; and (3) expanding health care consumer assistance and advocacy. CSS urges the Committee members to support these policies.

Expanding coverage

CSS strongly supports the New York Health Act (NYHA) because it would not only cover the remaining 1 million uninsured New Yorkers, but also eliminate the profound affordability problem and medical billing problems that plague nearly everyone else. A single-payer system that covers all residents through taxes, with no payment at point of service, would alleviate both problems.

If the NYHA does not pass or cannot be implemented by 2021, New York should comprehensively expand existing programs to meet New Yorkers’ immediate needs. The vast majority of the remaining uninsured fall into three groups of people: (1) low-income adult immigrants who are ineligible for coverage (250,000 people); (2) moderate-income individuals who find coverage unaffordable despite the available subsidies (310,000 people); and (3) very low-income people who are eligible for Medicaid and/or Child Health Plus, but remain unenrolled (450,000 people). 

To address these three groups of uninsured, CSS urges the enactment of the following measures:

• Adopt S.3900/A.5974, sponsored by Assemblymember Gottfried and Senator Rivera, which creates a state-funded Essential Plan for immigrants who are ineligible for coverage. This program would be offered to the 250,000 unauthorized immigrants below 200% of the federal poverty level and would cost around $300 million in the first year.
   
• Make coverage more affordable for people. New York should establish additional state subsidies for people between 200% and 400% of the federal poverty level. California, Massachusetts and Vermont all have a state premium assistance program. This option would make coverage more affordable for approximately 155,000 New Yorkers and cost anywhere between $270 million and $550 million, depending on the generosity of the subsidies.
   
• Support more community-based enrollment assistance to reach the hard-to-reach eligible but uninsured. New York’s current Navigator program is funded at $27.2 million, but these community-based Navigators have not had a pay raise, or cost-of-living increase, in over six years. The City Council or State Legislature should consider supplementing these funds, with an extra emphasis on communities that have a disproportionate percentage of the remaining uninsured—like New York City.

Ending unfair medical billing

Similarly, there are important measures that can help people address the affordability and medical debt crisis. Assemblymember Gottfried and Senator Rivera, Senator Breslin, and Senator Krueger introduced A.8639/S.6757, the Patient Medical Debt Protection Act, which addresses the medical debt crisis by implementing the following measures.  These measures require all the stakeholders to come together and adopt a patient-centered approach to health care costs and medical billing that address patients’ needs.
 

• Make patient billing simple. Consumers are bombarded by bewildering bills from myriad providers operating out of a hospital. Example: Chandak G. went to the hospital for a kidney stone and got 27 different bills from the emergency room, radiologist, and many others. One hospital visit should result in one NYS-created uniform, standardized, itemized hospital bill that explains each charge and is sent within seven days of discharge.
   
• While medical providers only have two years under state law to submit insurance claims, they can sue patients for up to six years after the service was provided. Example: A patient was sued over five years after his hospital stay: his bill totaled almost $25,000, including nearly $7,000 in interest. That’s not fair.  Fifteen other states have a shorter statute of limitations than New York. For example, Arkansas imposes a statute of limitations of only two years for medical debt. Medical debt should have a two-year statute of limitations and the statutory interest rate should be cut from 9% to 3%.
   
• New York’s 2015 surprise bill law was a landmark consumer protection, but it is missing a key piece: surprise bills caused by provider or plan misinformation. A survey of more than 200 Community Health Advocates’ surprise bill cases found that 35% resulted from misinformation provided by either the plan or the provider. Example: Claudia K. scheduled what she thought was an in-network visit because her provider directory told her the doctor was in-network, and she was stuck with a $101,000 bill. New York’s law leaves consumers on the hook for those bills. Plans are already required to update their provider directories within 15 days of a change but rarely do. Consumers should be held harmless if given false information about their provider network.
   
• Patients are charged for hospital overhead, through charges called “facility fees.” Example: Sintora S. went in for a mammogram, expecting to be charged a co-pay, but then received a surprise $149 facility fee. Connecticut has already banned many facility fees for outpatient services provided off-campus and required robust disclosures to patients about the use of facility fees. Consumers should not be responsible for so-called “facility fees” that are not actual medical services.
   
• There is no uniform hospital financial assistance form, forcing financially needy patients to jump through hoops to get the discounts they need. Each hospital has a different form and process, many of which violate the state law and guidance. New York’s hospital financial assistance law should:
  • Apply to all providers working in a hospital even if not employed by the hospital as well as charges for ambulance and other pre-emergency services.
  • Require one standard application to be used at each hospital.
  • Require one standard appeal process.
     
• Providers ask patients to sign patient financial liability forms that waive patients’ state protections against liability for medical bills, without even knowing what those may be. Example: Susan received a surprise $280 bill from a hospital-based out-of-network lab. The hospital told her that she was responsible for the bill because she signed a waiver. She found the waiver language in fine print on the patient information and medical history form she signed when she went for the blood draw. All hospitals should be required to use one uniform hospital financial form.
   
• New York seeks to establish a consumer-friendly website, the All Payer Database, to control costs and provide patients the cost and quality information they need to make informed choices. Some hospitals claim that insurance companies cannot report their cost data, saying it’s “proprietary.” Licensed providers in New York should be required to provide complete information—regardless of payor or “proprietary pricing contracts” —to the All Payer Database as a condition of operating and in a way that makes the information accessible to consumers.

Health care consumer assistance

Finally, New York State and New York City can expand access to health care consumer assistance and advocacy services. CSS supports Council Member Rivera’s proposal to create an Office of the Patient Advocate. The Office of the Patient Advocate would provide patients with important resources, as well as collecting data that would help New York City and New York State better regulate our City’s non-profit hospitals.

For example, the Patient Advocate could get a better handle on the hospitals’—which receive generous City tax exemptions—debt collection practices, including disclosing:

• the number of patients they have sued;
• the number of patients’ homes they have placed liens on;
• the number of wage garnishments they have executed against patients;
• the amount of interest and fees they have received as a result of these lawsuits; and
• the amount of financial assistance they have actually provided to New York City residents.

CSS also lauds the City Council for its support of the MCCAP and Access NYC programs, which fund outreach, education, and one-on-one consumer assistance to New York City residents who need help enrolling in insurance, using insurance, or finding sources of free or discounted care.

Thank you for the opportunity to submit this testimony.  Should you have any further questions, please do not hesitate to contact Elisabeth Benjamin at ebenamin@cssny.org.

Issues Covered

Access to Health Care