Michael N. Romita
Special to the USA TODAY Network
January 22, 2021
For months now, Montefiore Medical Center has been locked in high-stakes contract negotiations with UnitedHealthcare, one of New York’s largest health insurers. At issue is the cost of medical insurance for 60,000 New Yorkers who live New York City, Westchester and the surrounding region. If no agreement is reached, Montefiore patients covered by UnitedHealthcare will be forced out of network. They will need to stop seeing the Montefiore doctors on which they have come to rely.
The sticking point appears to be Montefiore’s request for single digit increases in payments for commercially insured patients. Such increases are necessary to cover ongoing costs incurred since the outset of the COVID-19 pandemic. UnitedHealthcare is balking at the request and is threatening to pass any reimbursement increases on to the consumer.
For New York healthcare providers, COVID-19 has been an economic plague as well as a medical one. The Healthcare Association of New York State estimates that COVID-19 will have a $20 billion to $25 billion negative impact on strained hospital finances which already have the narrowest average operating margin in the United States. Providers such as Montefiore are spending hundreds of millions of dollars on protective gear, expanding bed capacity, and increasing critical care staff. In addition, they are losing money because of interruptions in elective procedures and reduced use of healthcare services generally. Meanwhile, record unemployment and economic instability are expanding Medicaid enrollment which reimburses healthcare providers at lower rates than private coverage.
UnitedHealthcare’s decision to pick a fight could not come at a worse time. Our hospitals and healthcare providers are shouldering an oversized financial burden. State and local budget gaps are causing double-digit Medicaid cuts. Insurers are forcing consumers to swallow premium increases and higher out of pocket costs. Nurses and other essential workers are exhausted. Yet the insurance industry sits on record profits. UnitedHealthcare and other big insurers are enjoying banner years.
The most recent quarterly data from the National Association of Insurance Commissioners, as analyzed by the non-profit Kaiser Family Foundation, shows that margins across the health insurance industry are up more than twenty percent this year while medical loss ratios (the share of premium income that insurers pay out in claims) decreased by an average of four percentage points in the same period. Simply put, the pandemic has made the health insurance industry a lot richer. Even among its peers, UnitedHealthcare is an outlier of profitability. In New York’s darkest days last spring, the insurer saw profits practically double from $3.4 billion to $6.7 billion. Since then, UnitedHealthcare’s earnings have climbed to over $15 billion.
The U.S. Department of Health and Human Services has taken notice, requesting that insurers both reduce premiums and accelerate customer rebates due under the Affordable Care Act. For their part, insurers can easily delay those rebates by squirreling profits into capital reserves.The Westchester County Association, through the work of its Healthcare Consortium and as outlined in its recent strategic report entitled Towards A Stronger Future, is actively working to level the playing field and reign-in the oversized market influence of insurance carriers. At a minimum, insurers doing business in New York should be required to reinvest a portion of their profits back into the community. In addition, they should place fair limits on insurance reimbursement denials, increase insurance plan transparency, reimburse telehealth on par with in-person appointments, and maintain reasonable insurance premiums.More than just an immense benefit to the people who live in the Hudson Valley region, proximity to world-class health facilities is a key business and talent driver. Healthcare is our single largest industry sector, employing more than 70,000 people and bringing in an estimated $16 billion in economic impact.
UnitedHealthcare needs to recognize that Montefiore’s role in our community goes beyond great medical care. As an economic engine its overall health is important to all of us. It’s time for United Healthcare to reach a fair deal that will help Montefiore keep our community healthy and prosperous.
Michael N. Romita is the president and CEO of the Westchester County Association.
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