Governor Directs Department of Financial Services to Publish Guidance and Provide Technical Assistance to Local Governments to Ease the Process of Creating Health Consortia
DFS Will Dedicate Expert Staff to Help Municipalities Explore Consortium Arrangements
The Guidance Issued By DFS Can Be Found Here
Governor Andrew M. Cuomo today directed the Department of Financial Services to publish guidance and provide technical assistance to local governments to ease the process of creating health consortia called Muni Coops. Muni Coops are health risk-sharing agreements that permit municipal corporations to help share costs of health benefits for their collective employees. This guidance, specifically for smaller municipalities, will help local governments improve their health insurance options while addressing rising health costs in New York State.
"While the federal government continues to make ill-conceived decisions that further increase health care costs and taxes for residents, New York is identifying and investing in ways to reduce the impact of these unreasonable actions," Governor Cuomo said. "We are working with our partners in local government to provide assistance and leverage the buying power of many municipalities to lower costs for all."
Sharing Health Care Costs
Many municipalities have considered forming a Muni Coop but have raised concerns that some of the statutory requirements act as a barrier to that objective. The guidance published by DFS today seeks to clarify some of the key statutory requirements governing Muni Coops to make Muni Coops more accessible for local governments.
Municipalities may consider using Muni Coops to:
- Help share the costs of employee health benefit plans;
- Provide an alternative approach to stabilize health claim costs;
- Lower per-unit administration costs; and
- Enhance negotiating power with health providers by spreading such costs among a larger pool of risks.
Guidance issued by DFS aims to provide accurate information, counter misconceptions about requirements, and clarify what is needed to establish and maintain a Muni Coop under Article 47 of the Insurance Law. This guidance addresses stop-loss flexibility, as well as geographic boundaries, size and other issues.
DFS will dedicate expert staff to help local governments explore consortium arrangements that could help address rising health costs, and has already begun working with a number of municipalities around the state, including Otsego, Saratoga, and Suffolk counties. The Department approved a new Muni Coop in Rochester that started last month.
Actions to Address Rising Costs
The rapid and escalating costs of underlying medical care is the main driver of increasing health insurance costs. Governor Cuomo has launched a number of initiatives to help lower health care costs by improving access to better quality care. New York's successful implementation of the Affordable Care Act has added more than one million newly insured, reducing the uninsured from approximately 10 percent to 5 percent of New Yorkers.
Additionally, the State Health Innovation Plan is working to pay doctors, hospitals and other providers to keep patients healthy, rather than paying these providers a fee for each service. This prevents the financial incentive to provide more expensive care even if that care is not the best choice to keep patients as healthy as possible. Governor Cuomo also passed a landmark initiative to help reduce drug costs through a Drug Utilization Review Board that sets a benchmark price for certain exorbitantly priced drugs.
DFS has also posted a 2011 report on its website entitled "Municipal Cooperative Health Benefit Plans - Impact of Claim Reserve Requirements," to help municipal corporations investigating whether to form a cooperative.
Financial Services Superintendent Maria T. Vullo said, "DFS is proud to work with local governments in supporting Governor Cuomo's continuing and innovative efforts to lower health care costs for communities across the state. By clarifying the requirements for establishing Muni Coops and providing technical assistance, we are empowering local governments to better serve their employees and more efficiently provide vital health care insurance coverage."
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