Here are 5 takeaways from a new Fiscal Policy Institute analysis
A new report from the Fiscal Policy Institute reveals that New York’s healthcare costs surged by 48% from 2010 to 2019—outpacing national trends and putting a growing financial burden on consumers. The culprit? Not public programs like Medicaid or Medicare, but the private insurance sector. According to the report, public payers have done a better job at controlling costs, while private insurers have fueled spending spikes, largely due to rising hospital prices and weak cost containment.
Here are the five biggest takeaways from the report:
1. Private insurers — not public programs — are driving up spending
From 2010 to 2019, private insurance spending per beneficiary in New York rose 38%, compared to just 16% for Medicare and 8% for Medicaid. This is despite the fact that public programs often serve populations with greater health needs. The gap is even more troubling considering that private insurance enrollment only increased by 2% in that time, while overall private-sector spending jumped by 40%.
2. Hospital care is the biggest driver of cost growth
Hospital spending now accounts for 38% of total healthcare costs in New York—more than any other category. Per-capita hospital care spending in the state increased by 54% during the 2010s, 15 percentage points higher than the national average. Despite a drop in utilization (fewer inpatient and outpatient visits), private insurers continued to pay more per encounter, fueling overall cost growth.
3. Public programs contain hospital spending more effectively
While private payers saw hospital spending soar, Medicare and Medicaid largely kept those costs in check. Between 2010 and 2019, per-beneficiary hospital spending rose just 6% for Medicare and actually declined by 2% for Medicaid. These programs control prices through administrative rate-setting, unlike private insurers who negotiate rates individually with hospitals—often leading to inflated prices due to hospital consolidation and market power.
4. Consumers are paying the price through higher deductibles and out-of-pocket costs
The report shows that the average deductible for individual plans rose 86% from 2010 to 2019, while family plan deductibles increased 68%. Out-of-pocket healthcare spending jumped 59% after adjusting for inflation, reaching $21.2 billion in 2019. These rising costs have left many New Yorkers underinsured, vulnerable to medical debt, and less likely to seek timely care.
5. Market power is inflating private insurance rates
Some claim hospitals raise prices for private insurers to offset low public program payments. But the report rejects this theory, citing studies showing that hospitals with the highest commercial prices are typically large, wealthy systems—not struggling safety-net providers. In fact, public underpayment isn’t driving private overpayment—it’s market leverage and consolidation in the hospital sector that are pushing costs higher for employer-sponsored plans.
What can be done?
The report suggests revisiting New York’s former system of hospital rate-setting, which in the past helped contain costs and expand access. As healthcare spending continues to rise post-pandemic, analysts argue that state policymakers must act decisively to prevent further erosion of healthcare affordability—especially for those reliant on private insurance. The alternative, they warn, is a healthcare system where costs spiral unchecked, and consumer access suffers.
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