Cost Concerns Grow Despite New Health Plan Competition in Syracuse

Originally published as Community Report No. 7 by the Center for Studying Health System Change (HSC), 2003. Authors: Glen P. Mays, Sally Trude, Lawrence P. Casalino, Laurie E. Felland, Gary Claxton, Jessica H. May, Megan McHugh, Lydia E. Regopoulos. HSC was a nonpartisan policy research organization funded principally by the Robert Wood Johnson Foundation.

Community Report: Syracuse, New York -- Cost Concerns Grow Despite New Health Plan Competition

In January 2003, HSC researchers visited Syracuse, New York, for the fourth round of the Community Tracking Study, interviewing more than 70 health care market leaders. Syracuse was one of 12 communities tracked by HSC every two years through site visits and every three years through surveys. Despite the arrival of new health plan competitors in the market, employer concerns about rising health care costs were intensifying, and the local health care system faced growing financial pressures from multiple directions.

New Competitors Enter the Insurance Market

The Syracuse insurance market had been dominated by Excellus BlueCross BlueShield, the regional Blue Cross plan. But new competitors, including national plans, had entered the market seeking to gain share by offering lower premiums. This increased competition gave employers more options and put some downward pressure on premium growth. However, market observers questioned whether the new entrants could sustain their lower prices over time, particularly given the concentrated hospital market that limited health plans' ability to negotiate significantly lower provider rates. The history of other HSC-tracked communities suggested that new plan entrants often priced aggressively to gain market share initially but raised rates once they had established a presence.

Hospital Consolidation and Cost Pressures

Syracuse's hospital market was characterized by significant consolidation, with a small number of systems controlling the majority of inpatient capacity. This concentration gave hospitals considerable negotiating power with health plans and contributed to price increases that were flowing through to employer premiums. Community Hospital, Crouse Hospital, and the large University Hospital (SUNY Upstate) were the key players. Capital investment in facilities and technology continued despite the market's modest growth prospects, raising questions about whether the community could sustain the level of hospital infrastructure being maintained.

Employer Responses and Access Concerns

Employers in Syracuse were responding to cost pressures by increasing cost-sharing requirements for employees, narrowing plan options, and in some cases reducing benefits. The community's economic base, which included manufacturing, education, and government, was under strain, limiting employers' ability to absorb rising health care costs. For lower-income workers and the uninsured, access to care remained a significant concern. The community's safety-net providers faced growing demand, and the gap between those with adequate coverage and those without was widening.

Sources and Further Reading

This Community Report was based on site visits to Syracuse, New York, conducted in January 2003 as part of HSC's Community Tracking Study. The research team included Glen P. Mays, Sally Trude, Lawrence P. Casalino, Laurie E. Felland, Gary Claxton, Jessica H. May, Megan McHugh, and Lydia E. Regopoulos. The Community Tracking Study was funded by the Robert Wood Johnson Foundation.