S. 7090 (Spano) / A. 10583 (Gottfried, et.al)
The health-scare plan of 2006
April 12, 2006
The Business Council of New York State, Inc., strenuously opposes the above-captioned legislation which would create yet another government bureaucracy to offer more subsidized health-care and no solutions, or even attempts at solutions, to control health-care costs.
We repeat what we have been saying for years: New York State cannot make health insurance more affordable by making it more expensive.
Once labeled the “Wal-Mart” bill, we prefer to call it what it is: “A Health Scare Act of 2006”. It is, indeed, scary to believe that Albany's answer to the provision of affordable health-care is to add to health-care costs of employers. Worse yet, this bill would penalize employers who have done the most to control health-care costs. These companies would be forced to pay the difference in what they are paying and the arbitrary $3.00 per hour per employee that this legislation would assess on each covered employer.
The bill, sponsored by Senator Nicholas Spano, Assemblyman Richard Gottfried and 80 of his Assembly colleagues, would require all non-manufacturing, non-agricultural businesses in New York, employing more than 100 people, to spend $3 per hour per employee on health benefits or pay the equivalent amount to the state.
Whereas, states like Massachusetts are attempting to introduce levels of personal responsibility into the health-care equations New York's response is more and bigger mandates on employers. Monies collected would be used to provide an undefined level of subsidized health-care coverage to certain employees of employers.
The mandated fee would amount to a $9.2 billion tax on New York employers according to the Employment Policies Institute (EPI).
In addition to assessing billions in new taxes and fees on employers, the legislation would have little to no effect on the current uninsured population in New York. Of the 2.8 million New Yorkers who are uninsured, 2.2 million are unemployed or work for businesses employing less than 100 people, according to the EPI.
The flaws inherent in this six page bill are enough to fill a book. In no particular order, they are:
- First, it ignores the need for cost-containment in New York's
health-care system-- a system that is overly costly, rife with waste
and inefficiency and excessively bureaucratic. Consider these two
examples: 1) New York is currently negotiating the creation of a
Medicaid Inspector General to root out hundreds of millions of dollars
of Medicaid fraud; 2) the Governor and legislature have created a
hospital commission to finally make tough decisions about a more
appropriate number of hospitals and hospital beds in the state. This
legislation creates a whole new category of state run health insurance
without any attempt to put in cost controls.
- Second, the exemptions
for manufacturing and agricultural companies serve as exhibit A
about what's wrong with this bill - it will lead to significant
job dislocation and the sponsors are as much admitting it with the
exemption for some employers.
- Third, Senator Spano and Assemblyman
Gottfried set an arbitrary value ($3 per hour) on what they think
businesses should be expending on health-care. This figure likely
represents an approximation of what they would like raise to continue
to finance New York's elaborate and expensive health-care system.
What would they say to the innovative and creative employer who
has designed a disease state management program for their chronically-ill
employees, negotiated discounts with local providers and financed
healthy lifestyle initiatives at their workplace? The answer is
a government imposed penalty on the employer! Innovation will not
be rewarded, it will be penalized. The message to an employer who
manages to keep their costs to say, $1.90 per hour: Here is your
state government bill to pay the state another $1.10 per hour per
- Fourth, the bill directly contradicts a Senate and Assembly
proposal to allow Freedom Health Plans, which provide the opportunity
for businesses and individuals to utilize federally-created health
savings accounts with higher deductible health insurance policies.
Those policies would be more affordable than what is currently available
on the market. That bill has been passed by the Senate in 2004, 2005
- Fifth, the Spano bill also contradicts another Senate
proposal to phase-in a significant health insurance tax credit for
small businesses. That bill has also passed the Senate this year
and in previous years as part of one-house Senate budget bills.
- Sixth, like many similar proposals, most notably the
bill passed in the state of Maryland, it is likely to be a sweeping
violation of the federal Employee Retirement Income Security Act,
which governs employer-sponsored health plans of multi-state employers.
- Seventh, the Spano / Gottfried bill stands in stark contrast to the approach in Massachusetts to inject greater personal responsibility on the part of the individual to make more informed health care purchasing choices. The new Massachusetts law requires an individual, who makes more than 300% of the federal poverty level, to purchase a health insurance policy for themselves or pay stiff new penalties to the state. This in-part reflects that large numbers of younger people decline employer-sponsored health care coverage because they do not want to make the employee required contribution and they do not think it is something they need. The law also requires a limited contribution from employers who do not offer health insurance for their workers. That contribution is $295 per employee per year.
Comparison between the Massachusetts law and this bill:
- 100 employees with no health insurance
- $295 times 100=$29,500 due and owing to the state
Spano/Gottfried 100 employees working 40 hour weeks with no health insurance
- $3 times 40 hours per week = $120 per week
- $120 per week times 52 weeks = $6,250 per year per employee
- 100 employees times $6,250 =$625,000 due and owing to the state
Note that even with this staggeringly high burden on employers, the New York bill would cover only a small fraction of the uninsured B while the Massachusetts bill is intended to cover virtually everyone.
- Eighth, the bill keeps in place New York's unique in the country taxes on employers to pay the costs of training new doctors; in some communities this fee is over $400 per employee annually.
For the above reasons, The Business Council opposes this legislation and other similar bills and we request that they not be approved.
This legislation will be included as one of the scoring measurements of The Business Council's “Vote for Jobs Index 2006”. This is The Business Council's annual assessment of legislator's action on key issues of concern to the state's business community.