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Legislative Memo

Lev Ginsburg
Director of Government Afairs
T 518.465.7511 x207
www.bcnys.org

BILL:

A.162/S.249 (Parts D, G)
A.158/S.58 (Part C)
A.160/S.60 (Part D)

Support

SUBJECT:

Deficit Reduction Plan & Executive Budget – Health Insurance Taxes

 

DATE:

January 29, 2009

 

The Business Council strongly opposes provisions in the 2009-10 Executive Budget that would impose almost $770 million in new or increased assessments and surcharges on health care and health insurance, including $590 million within the Deficit Reduction Plan.  These proposed taxes will add hundreds of dollars to the cost of providing private health insurance for the average family, including employer-provided coverage.  Already struggling to afford health coverage, many employers and their workers will simply not be able to absorb these increases, thereby adding to the number of uninsured New Yorkers or driving more New Yorkers into government-funded programs.

Business Council members have repeatedly identified the cost of employee health coverage as their most significant cost-of-doing-business issue.  New Yorkers - both individuals and businesses - that purchase health insurance currently pay more than $3.1 billion in health taxes through the Covered Lives Assessment; the (HCRA) hospital services surcharge; the Insurance Department Section 332 industry-wide assessments that fund Department operations and are also suballocated to other agencies and programs; and the 1.75 percent premium tax. 

It is estimated that the current health tax burden already adds between 3 and 7 percent to the cost of health coverage.  Because employers pay for most privately insured New Yorkers' health benefits, these various insurance surcharges and industry assessments are viewed as taxes on business. They drive the cost of doing business in New York higher and create obstacles to private sector growth.

The Deficit Reduction Plan and Executive Budget would increase these four health taxes and add additional taxes as follows:

If approved, the health taxes in the Deficit Reduction Plan and Executive Budget will drive up the cost of health insurance for all Business Council member employers that purchase health coverage – from sole proprietors and small businesses to the largest self-insured companies – yet will provide no additional covered benefits or have any effect on addressing the rising cost of health care.  

Rather, by pushing premiums higher, these taxes will force more business owners – particularly small business owners - to reduce or eliminate coverage for their workers, driving up the ranks of the state's uninsured, or shift more of the cost to their employees.

For these reasons, The Business Council strongly urges you to reject these new and increased taxes.