Rochester Business Journal: New York needs health insurance reform | Guest Opinion

March 6th, 2026

Justin Wilcox // March 6, 2026 – Read here.

For small businesses across New York, health insurance is no longer just a benefit issue — it is a cost-control crisis. Premiums continue to rise faster than wages and revenue, based on skyrocketing healthcare costs, forcing difficult tradeoffs for employers who lack the scale or leverage of large corporations. One overlooked feature of state insurance law is quietly making that problem even worse.

When a patient is treated by an out-of-network doctor and the insurer and provider disagree on payment, the dispute is resolved through arbitration. In New York, arbitrators are required to give substantial weight to a benchmark known as “Usual and Customary Cost,” defined by law as a high percentile of provider-billed charges in a particular geographic area.

Those billed charges are not prices negotiated in a market, nor are they tied to the actual cost of delivering care. Instead, they are “sticker prices” unilaterally inflated by some providers. As those sticker prices rise, the benchmark automatically rises without any review. By aggregating these billed charges within a geographic area, the UCR bakes these unilateral price spikes directly into the benchmark. Since the process relies on these unilateral submissions, a few high-billing providers can push the 80th percentile ever upward, creating artificial price increases that we all must pay. The result is pricing driven by the highest charges in the system rather than by efficiency, value, or competition.

For example, between 2014 and late 2018, the average charge for treating a finger crush injury rose from $450 to $14,298. In one case, a plan was forced to pay a $24,000 billed charge for services that would have cost no more than $600 under Medicare rates. For small employers, this structure has predictable consequences. Arbitration awards based on elevated benchmarks increase insurance payouts, which in turn result in higher premiums. Unlike large firms that can self-insure or negotiate aggressively, small businesses absorb these increases directly.

The impact shows up in balance sheets and payroll decisions. Dollars spent on rising healthcare costs are dollars not spent on hiring, wages, capital investment, or expansion. For many local businesses, retailers, restaurants, service firms, these costs are the difference between stability and distress.

This is not a market failure driven by demand or utilization. It is a policy choice that tilts pricing power toward out-of-network specialist doctors and away from employers and consumers. By setting arbitration outcomes to inflated charges rather than real-world prices, the system simply rewards higher billing, not better care.

There are workable alternatives. Benchmarks based on Medicare rates or actual negotiated in-network prices reflect real payment dynamics and provide predictability for employers and insurers alike. Many states have adopted such approaches without disrupting access to care.

If New York is serious about addressing health care affordability, it must reexamine policies that drive costs higher. For small businesses already operating on thin margins, continuing to rely on an arbitrary and inflationary benchmark is not sustainable. Reforming this rule would be a meaningful step toward restoring balance and giving employers a fighting chance to offer coverage without sacrificing growth.

By Justin Wilcox is executive director of Upstate United