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Recently the newly created Office of Healthcare Accountability within the Department of Health and Mental Hygiene released its first report on healthcare pricing transparency but it lacked critical information.
In 2023, our City finally made it easier for New Yorkers to understand their health care costs after our bipartisan City Council unanimously passed my legislation to create the nation’s first municipal Office of Healthcare Accountability to examine health care costs and hospital pricing practices. By utilizing federal hospital pricing regulations, this law will revolutionize health care in New York City by bringing transparency to prices and empowering New Yorkers with the information they deserve to finally uncover the hidden costs and expose the price gouging that has plagued our health care system for far too long.
Our city simply cannot manage the health care spending that has risen to over 10 percent of our annual city budget. In 2000, the City spent over $1.6 billion on health insurance for its employees, dependents, and retirees.
By 2017, this cost had risen to over $6.3 billion and continued to skyrocket to an estimated $11 billion in 2023. Health care costs are astronomical with the price of childbirth alone in New York City ranging from $17,000 to $55,000.
With inflation and potential draconian federal budget cuts, it is irresponsible to not utilize federal rules that require hospitals to post their prices, which is proven to save vital taxpayer funds.
Due to the explosive growth of hospital costs that have risen over 100% since 2009, we now have the second-highest overall health care spending per person in the nation. This is the biggest driver of the budgetary quagmire we are in, and New York City won’t have true budget stability until hospital pricing transparency is utilized.
Last summer, I fought alongside a labor coalition comprising 32BJ, DC37, and others to allocate $2 million in our City budget to have a fully staffed Office of Healthcare Accountability that will comprise annual reports detailing the pricing practices of hospital systems and be a game- changer for New Yorkers struggling to keep up with the escalating costs of quality health care.
One of the obstacles to having full transparency is that New York City’s largest public employee insurance provider Anthem, the parent company for Empire BlueCross BlueShield that New York City pays an astronomical and eye popping $3 billion a year to, is refusing to provide the Office of Health care Accountability with the data that it needs.
The report is filled with gaping holes because Anthem will not allow New York City to share certain pricing data due to fears that this will violate the contract language Anthem has negotiated with its hospitals (in other words, gag clauses). It is appreciated that the administration is calling out this injustice by including in the report that “The city’s claims data posed the greatest challenge… Anthem Blue Cross would not agree to release City claims data benchmarked to Medicare rates for publication, on the basis that it is not “publicly available.”
It’s a slap in the face to the City of New York when federal rules require hospital pricing be made public but Anthem won’t comply with City law due to so called “preexisting agreements”. This health care industry cat and mouse game is costing the City billions and we need full transparency now.
The City is being left in the dark by Anthem on pricing transparency related to Medicare benchmarks and case mix adjustments. For example, hospital prices are often adjusted up or down based on the complexity of the services provided and severity of the case.
Without knowing the case mix adjustment, how can the public understand when higher prices are truly warranted or not? Benchmarking hospital prices to Medicare is sorely needed because it allows the public to use a consistent point of comparison. Since Medicare rates are calculated to cover a hospital’s costs, this can show us where price markups may have more to do with a hospital’s market power than the underlying cost of services.
The positive impact of price transparency measures in other states such as California, New Hampshire, Massachusetts, and Rhode Island have saved taxpayer dollars and reduced costs for consumers. In California, the California Public Employees’ Retirement System used a price transparency system that ended up reducing spending by 20 percent for joint replacement, 21 percent for colonoscopy, and 17 percent for arthroscopy.
That is why a study by 32BJ estimated that this new office could save the City upwards of $2 billion per year by harnessing our purchasing power to drive down costs.
Later this year, the Administration in cooperation with the Municipal Labor Committee, plans to award new contracts to insurance providers that can provide a comprehensive, cost-effective employee health benefit program without a diminution in the quality of care. As the second-biggest purchaser of health insurance in New York State, New York City has an opportunity to drive down costs by harnessing the city’s purchasing power to deliver a new contract for an insurance provider that will not be bullied by unwarranted gag clauses and can deliver transparent pricing for New Yorkers.
When it’s clear that we could save upwards of $2 billion per year, it is unconscionable that these roadblocks are being put up to achieve cost savings for New Yorkers. The time is now for New York City to ensure that the next contracted health insurance provider can disclose long-overdue transparent pricing data to alleviate unnecessary burdens on New Yorkers.
Julie Menin is a member of the City Council representing the East Side of Manhattan and Chair of the Council’s Consumer and Worker Protection Committee. She previously served as Commissioner of Consumer Affairs for the City of New York.