Home

Legislative Memo

Lev Ginsburg
Director of Government Affairs
T 518-694-4462
www.bcnys.org

BILL:

S.4840-A (Rivera) / A.4738-A (Gottfried)

Support

SUBJECT:

Creation of the New York Health Plan

 

DATE:

June 4, 2018

 

The Business Council of New York State strongly opposes A.4738-A (Gottfried) / S.4840-A (Rivera) creating the New York Health Plan, a government run health insurance system.

While the bill is purposefully light on specifics, it is clear that the proposed system would draw revenue from a tremendous new payroll tax (paid at least 80% by employers, 20% by employees, and 100% by self-employed as well as taxes based on other taxable income, such as capital gains, interest and dividends). There is no effective limit on these new taxes as it creates a parallel income tax structure with no set tax rates or tax ceilings. Estimated costs range from the rose-colored $91 billion per year touted by the bill’s sponsor to as much as $226 billion yearly from independent estimates. The ramifications of such monstrous tax increase on employers, employees and consumers (more than doubling existing state taxes) are almost beyond imagination.

The bill also makes most group health insurance coverage illegal in New York State, prohibiting the issuance of insurance policies that "duplicate" coverage offered to individuals under the New York Health Plan. In this one provision, this bill eliminates an entire industry sector in New York, and the jobs and family income that goes with it, as well as eliminates coverage choice and options for the vast majority of New Yorkers. This legislation could lead, at a minimum, to the loss of 175,000 jobs as high-wage, high-value industries move to neighboring states. The downstream impact of these job losses, felt by vendors serving those employers as well as every business patronized by the employees would be extraordinary.

Amazingly, the sponsor's bill memo contains no real fiscal or economic impact assessments, no calculation of the amount of new taxes to be imposed, no apparent consideration of the adverse economic impact of eliminating an entire industry sector and its related jobs, or any other evidence of a serious assessment of its costs and benefits.

This legislation is also deeply flawed in its calculations and attempts to use existing federal funds to pay for the program.  The bill uses funds, now received for Medicare, Medicaid, Family Health and Child Health Plus combined with state revenue to fund the New York Health Trust Fund. There is simply no guarantee or even reason to suspect that the federal government would grant necessary federal waivers to allow New York to fold those programs into New York Health. Further, Medicare money belongs to the recipient rather than the state.  Thus, it’s not feasible or legal to incorporate these funds.

Additionally, the bill dispenses with meaningful cost containment provisions.  In a world in which resources are limited always and everywhere, this bill's promise of universal, unlimited coverage is a mirage. Single-payer systems inevitably must keep costs lower by rationing care, not by being more efficient. In this "free-for-all system," costs are driven up by patients over-consuming perceived "free" health services and the rationing of these services follows.

A socialized health-care payment system will not only ration care but will decrease the quality of health care for everyone. There will be substantially less potential payoff for health care innovation and less investment in advanced medical equipment and new technology. Also, despite the bill's provisions for collective bargaining, like other existing socialized medicine systems, it will ultimately provide substantially lower payments to health care providers and will lead to both shortages and inferior quality of care in the long run.

This bill will restrict health care choices for New Yorkers, diminish the quality of health care in the State, increase the tax burden for every working New Yorker by unprecedented amounts and make the State a far less attractive place to do business.

For these reasons, The Business Council strongly opposes the enactment of A.4738-A (Gottfried) / S.4840-A (Rivera).