New York Shown To Lead Way in Health Care Spending

The average New York City family spends far more on health care than families in other parts of the country, a recent national study of medical costs shows.

Annual health care spending for a typical family of four in New York enrolled in an employer-sponsored health plan is $16,542, according to the Milliman Medical Index 2007. The national average is $14,500.

Nationwide, spending has increased 8.4% versus a year ago.

According to a co-author of the study, the average New York family pays $2,715 in out of pocket health care expenses, compared with the national average of $2,420. "We did see that more of the increase was passed onto employees this year than in previous years," a co-author of the study, Lorraine Mayne, said.

The study found that among seven major cities nationwide, costs were lowest in Seattle, where the annual health spending per family is $13,206.

Analysts said the high cost of living in New York and the state's regulatory environment likely drove up costs.

"The cost of living in New York City is much higher than a lot of those cities profiled, so it's not that surprising," a health policy analyst at the Empire Center for New York State Policy, Tarren Bragdon, said.

Mr. Bragdon speculated that a confluence of factors — facility costs, rent, physician salaries, and higher utilization rates — also were contributing factors. He also said health care in New York is a more heavily regulated industry when compared to other states.

"If you look at New York's regulatory environment compared to California's, New York has many more regulations and controls," he said. For example, he said, New York regulates how much hospitals may invest in new technologies. "Therefore, they might be slightly more outdated and therefore more expensive to maintain," he said.

Representatives from the health care industry, who said the costs reflect a higher quality of services, suggested that a leading factor in health care costs was "excessive" profits reported by managed care plans. "If you look at the last several years, you'll see tremendous HMO profits in New York State," a spokesman for the Healthcare Association of New York State, William Van Slyke, said.

Representatives from the health insurance industry, meanwhile, denied that managed-care plans are profiting excessively, suggesting instead that profit margins are consistent with those among area hospitals.

Officials cited state regulations and health care taxes as factors driving insurance costs. Under the Health Care Reform Act, insurance plans pay $2 billion in taxes to cover bad debt, charity care, and graduate medical education, the senior vice president of the New York Health Plan Association, Leslie Moran, said.

Ms. Moran also said that in recent years, state regulations have mandated that insurance plans in New York must cover a "laundry list" of services, including infertility, chiropractic, and mental health treatments. "When you increase the number of service treatments and providers that have to be included in the benefits package, every little bit adds to the cost of insurance," she said.