On June 7, the New York State Legislature passed a bill that grants the superintendent of insurance authority to render a final approval on a plan’s proposed premium rate.

Gov. David A. Paterson claims this provision will achieve $70 million in savings in 2010-11 by controlling inappropriate health insurance premium increases and reducing the number of uninsured individuals who would migrate to public health insurance programs. As experience has proven, prior approval does not control health care costs. It simply disregards the reality of costs and leads to artificial pricing of health insurance.

It’s easy to point to premium increases as the reason for rising costs because premiums are the most visible reflection of health care costs. The fact is, premium rates are based on the costs of claims that plans receive from hospitals, doctors, pharmacists and other health providers for services that patients receive. At Independent Health, about 90 cents of every premium dollar is paid out in claims for health care services its members receive. Requiring prior approval for premiums is akin to capping the price of gas without recognizing the rising costs of oil.

Addressing increasing costs, therefore, requires a collective effort, where each one of us—including health plans, employers, providers, government and individuals—has a role to play. This effort requires employers to engage and reward employees who make changes toward healthier lifestyles. It means payers changing the reimbursement system to reward physicians and hospitals for quality outcomes, not for volume of services provided.

It involves active participation by community organizations in initiatives such as the P2 Collaborative of Western New York. It depends on unprecedented collaboration among key stakeholders and the sharing of clinical information, and the adoption of health information technology and electronic medical records through organizations such as HEALTHeLINK.

It means strong partnerships between government and the private sector and recognition by elected officials of the impact of legislation, such as mandates, on costs. It also requires each one of us taking greater responsibility for our own health.

As with the rest of the nation, Independent Health and the Amherst Chamber of Commerce agree that health insurance must be made more affordable, especially to individuals and small businesses. But prior approval of health insurance premiums is not a healthy, sustainable solution. To control costs, we must focus on efforts to improve the quality and efficiency of care. If we improve the quality of care, lower cost trends will follow. Conversely, if we simply focus on lowering costs, quality will suffer.

John Rodgers is the chief marketing officer for Independent Health. Colleen C. DiPirro is president and CEO for the Amherst Chamber of Commerce.

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