Major Cuomo donor garnered state approval of huge health rate hikes


A company whose officials have been major donors to Gov. Andrew Cuomo – and which received an unusual $25 million state grant for projects it was already building – also was allowed by state insurance regulators to issue a huge rate increase for plans sold by its health care company.

For 2017, the Department of Financial Services – which must approve rate increases for companies on the New York Affordable Care Act market – allowed Crystal Run Health Plan to increase its rates by 80.5 percent for individual plans and 58.5 percent for small group plans.

That was the highest in both categories by far for any non-Crystal Run company, with the next highest increase approved by DFS for individual plans 29.2 percent. The approved rates were announced by DFS in August 2016.

Crystal Run executives, doctors or their spouses have given at least $400,000 to Cuomo, including 10 donations each worth $25,000 over a two-day period in October 2013. A Cuomo campaign spokesman has said the donations stemmed from a fundraiser. Seven of the donors had otherwise not given in a New York election for at least a decade.

A Cuomo spokesman has repeatedly said that campaign donations never impact administration policy.

Crystal Run Health Plan was launched in 2015. In 2016, it sharply dropped its rates – to the lowest ones in the mid-Hudson region of New York – before the major hike for 2017.

For instance, the premiums for its most expensive plan for individuals went from from $570 to $451 in 2016. Then they spiked to $803 in 2017.

After the hike, the company’s premiums reverted to the middle of the pack for that region of New York.

The physician-owned, Orange County-based company had requested even higher rates for 2017, which were lowered slightly by DFS.

DFS spokesman Richard Loconte defended the approval of the rate increases.

“In 2015, Crystal Run was a new insurer with no claims experience history and a small membership and therefore utilized a known actuarial firm to establish estimated premiums,” Loconte said. “The differences in the rates between 2016 and 2017 reflect the fact that this is a new insurer with limited actual claims experience. Rates for 2017 reflected the fact that the insurer had accumulated more accurate data, enabling it to request more appropriately priced premiums. In approving any insurer’s rates, DFS carefully reviews the available data to determine whether an insurer has the necessary resources to pay consumer healthcare claims.”

Public comments about the huge 2017 hikes, posted on DFS’ websites, show concern among customers of the company, who lobbied DFS not to approve them.

“If they get this HUG[E] increase, my premium will just about double,” wrote one. “That is crazy.”

“Crystal run [k]new exactly what they were doing by offering their plans in the beginning,” wrote another. “I feel as though this is a bait and switch.”

In seeking the rate hike for 2017, Crystal Run offered several justifications to DFS: That there were expected changes in medical and pharmacy claim costs; higher medical service unit costs than expected; and demographic changes and changes in administrative expenses, among other reasons.

The company could not be reached for comment.

For 2018, DFS approved in mid-August of this year very modest rate increases for Crystal Run: 6.8 percent for individuals and .8 percent for small groups.

As reported by the Times Union in February, the state in March 2016 gave the $25 million to Crystal Run to build two 70,000-square-foot health care facilities in West Nyack and Monroe, despite the fact that both had broken ground about six months earlier.

Crystal Run opened both health care facility projects before Comptroller Tom DiNapoli even approved the $25 million contract subsidizing them. The Department of Health says Crystal Run has not yet been reimbursed for its expenses and the “review process is ongoing.”

The state Health Department said the projects landed the money because they were among the high-scoring proposals in a competitive state procurement process.

The developer for two projects was Columbia Development, the Albany-based firm whose principal is facing a state bid-rigging charge in a unrelated matter.

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