To retain good employees, Rich Michals Jr. has paid the entire cost of health insurance premiums for his local workers at the Farmingdale-based Parcel Management Auditing and Consulting for all of the business’s 27 years. He said he’ll continue doing so, but after years of cost increases, for the first time he’s considering plans that include co-pays for his eight employees, among other options.
“We’ve been hunting around for different rates,” he said.
As open enrollment begins this month for many insurance plans, Long Island workers and employers are seeing premium increases, some in double digits.
The price increase for Michal’s company’s current plan is similar to the 6.5% average expected increase in employee health benefit costs nationwide, according to projections from more than 1,700 employers released in September by the Manhattan-based consulting firm Mercer. Employers typically increase their employees’ premiums by an amount similar to their cost increases, said Sunit Patel, chief actuary at Mercer. Some employers were projecting increases of more than 10%, and a small number were not planning a price rise, the survey found.
WHAT NEWSDAY FOUND
- As open enrollment begins this month for many health insurance plans, Long Island residents and businesses are seeing increases in premiums, some in double digits.
- Average increases include a projected 6.5% rise nationwide for employer-sponsored plans, 13% for small-group plans in New York and an estimated 11.6% for Medicare Part B standard monthly premiums.
- Experts said weight-loss drugs, medical advances, hospital consolidation, an aging population, and an increase in the number of people with chronic diseases are among the reasons health care costs are rising.
Most employers in the survey said they will implement “cost-cutting changes” in plans — such as increased co-pays and deductibles — to address rising benefit costs and reduce premiums. Others are cutting back coverage of popular, but expensive, weight-loss drugs.
New York businesses with 100 or fewer employees that have small-group plans will see on average an increase of 13%, the largest hike in at least a decade, a Newsday analysis found, and nongroup, individual-based plans will rise an average of 7.1%. The increases for the state-regulated plans were approved by the Department of Financial Services, which noted that the price hikes were typically much less than insurers requested.
Medicare Part B standard premiums will rise by a projected 11.6%. For those on Affordable Care Act plans, premium increases could be massive in some cases, if more generous government subsidies passed in 2021 expire on Dec. 31. Democrats’ push to extend the subsidies is one reason for the federal government shutdown.
Behind the hikes in premiums — the payments to insurance companies for coverage — are continued increases in health care costs that have outpaced inflation most years. Between 2000 and 2024, the cost of medical care rose 121%, while the cost for all consumer goods and services increased 86%, according to an analysis of federal data by the health policy nonprofit KFF.
Here’s a look at what’s causing Long Islanders to dig deeper in their pockets to pay for health care.
Weight-loss drugs
Tens of millions of Americans said they take GLP-1 drugs such as Wegovy, which is approved for weight loss, or Mounjaro, which is approved for diabetes. Tens of millions more are eligible for such medications. Companies typically cover them to treat diabetes. Nearly 20% of companies with at least 200 workers and 43% of companies with 5,000 or more employees covered the drugs for weight loss in 2025, according to a KFF survey of nearly 1,900 firms.
But the drugs’ high cost, with list prices that can exceed $1,000 a month, is leading many employers to say they will stop covering the drugs for weight loss or enact more limitations.
There are drugs that are much more pricey than GLP-1 medications, but not nearly as many people take them, said Cynthia Cox, a vice president at KFF and director of its ACA program.
“They’re not astronomically expensive,” she said of GLP-1 drugs, “but they’re expensive enough that, if you multiply that times a lot of people taking it, that’s what drives costs up.”
Other medical advances
“We’ve made really great advancements in diagnostics and therapeutics that have improved health care and health outcomes significantly, but they also have increased costs,” said Patel, of Mercer.
One example is the increasing number of expensive gene, cell and biologic therapies, stated a July analysis by the American Academy of Actuaries. Some cost hundreds of thousands, or even millions, of dollars per treatment.
An aging population
As Long Island’s — and the nation’s — population ages, and as the percentage of people with chronic diseases grows, that leads to higher costs to treat them, said Wendy Darwell, president and CEO of the Suburban Hospital Alliance of New York State, which represents hospitals on Long Island and in the Hudson Valley.
“You’re talking about folks who have more complex care needs,” she said. “They tend to stay in the hospital longer, utilize the emergency room more.”
New York’s expensive health care
New York had the country’s highest annual average premium in 2024 for employer-based plans, according to an analysis by KFF: $9,589 for individual plans, compared with $8,486 nationwide. The number includes employer and employee contributions.
“Health insurance premiums are directly tied to the underlying costs of medical care, and as medical costs go up, that’s putting pressure on premiums,” said Leslie Moran, spokeswoman for the New York Health Plan Association, which represents insurers.
An analysis by the research organization RAND found that New York had the nation’s eighth highest combined inpatient and outpatient costs.
Hospitals say their expenses are higher than elsewhere.
“It’s an expensive state to do business in,” Darwell said. “Our labor costs are high — property, energy, all those other contributing factors are higher.”
In addition, health care taxes — such as on hospital services, managed care organizations and insurers — are among the steepest in the country, said Bill Hammond, senior fellow for health policy at the fiscally conservative Empire Center for Public Policy.
And there are more mandates in New York than in most other states, such as requiring coverage for certain procedures, or barring or capping patient cost-sharing, such as co-pays, for some drugs and treatments, he said.
America’s expensive health care
The United States has by far the world’s most expensive health care system, but it has lower life expectancy when compared with other large, wealthy countries, according to multiple studies. (It also had the highest rate of preventable and treatable deaths when compared with nine other wealthy nations, according to an analysis by the Commonwealth Fund, a Manhattan-based health care research and policy nonprofit.) Multiple factors could contribute to high costs, but “at the heart of it is that other countries have more direct regulation over health care prices than the U.S. does,” said Cox, with KFF.
Hospital consolidation and insurance profits
Hospitals on Long Island, and nationwide, have been consolidating and creating ever-larger health systems. Other than the public Nassau University Medical Center in East Meadow, there is no longer an independent hospital on Long Island. That has led health systems to demand higher reimbursement rates from insurance companies, pushing up costs, said Moran, with the insurance group.
“It gives them more leverage,” she said.
Darwell acknowledged that hospitals, which in New York are all nonprofit, consolidated in part to gain more negotiating leverage. But, she said, even the largest health systems are much smaller than large insurers, which are raking in huge profits. UnitedHealthcare, the nation’s largest health insurer, reported $15.6 billion in operating earnings for 2024.
Hospitals lose money on most patients, because most are on Medicare or Medicaid, and on uninsured patients who receive free or discounted care, she said.
“Medicare and Medicaid pay less than the cost of provided care, and so if you’re going to keep your doors open, you need to make that up somehow, and that means trying to secure higher reimbursement rates from commercial insurance plans,” Darwell said.
If the 2021 enhanced ACA subsidies are not extended, that would lead to more people forgoing insurance coverage, and more uninsured people receiving free or discounted hospital care, she said. People who are older and sicker would sacrifice to maintain insurance, while many younger, healthier people would decide it’s not worth it, creating an insurance pool with higher per-person costs, she said.
Health insurance premium average increases
- 6% to 7%: Premium increase for 2026 for workers in employer-based plans, based on projections from more than 1,700 companies.
- 13%: State-approved increase for 700,000 New Yorkers covered under state-regulated small-group plans for employers with up to 100 workers. Insurers had asked for a 24% increase.
- 7.1%: Approved increase for individuals purchasing insurance, including Affordable Care Act plans. That amount could be substantially higher for some policyholders if expanded federal subsidies adopted in 2021 expire Dec. 31.
- 11.6%: Medicare beneficiaries’ Part B standard monthly premium projected increase. A June report from the Medicare system’s trustees projected monthly costs would go from $185 in 2025 to $206.50 in 2026.
Sources: Mercer, New York Department of Financial Services, Medicare system trustees’ report
David Olson covers health care. He has worked at Newsday since 2015 and previously covered immigration, multicultural issues and religion at The Press-Enterprise in Southern California.