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Legislative Memo

Lev Ginsburg
Director of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S.2007/A.3007 Part H

Support

SUBJECT:

HCRA Tax Extension

 

DATE:

February 6, 2017

 

The Business Council strongly opposes S.2007/A.3007 Part H which, without any analysis of need whatsoever, extends the provisions and associated taxes of the Health Care Reform Act (HCRA) for three years, through March 31, 2020.

The surcharges and assessments (taxes) on health insurance, dating back to the Health Care Reform Act (HCRA) in 1996, amount to an annual tax of over $5 billion on employers and individuals who purchase health insurance.  With no appreciable value-add, these taxes add well over $1000 per premium for the average family buying a policy in New York.  These taxes far exceed national averages and other New York State taxes on employers and employees. 

Revenues generated from the various state taxes on health insurance and health care services are supposed to be earmarked for specific health-delivery related uses.  These include taxes on the insured through the covered lives assessment, designed to support graduate medical education and surcharges on hospital and other health care services, supposed to pay hospitals for bad debt & charity care.

HCRA tax rates and the amount of tax collected have been steadily increasing while payments to the stated beneficiaries of the tax revenues, namely hospital bad debt & charity care and graduate medical education have been steadily declining.  The remainder of this enormous amount of money is now being used to fund a myriad of other programs, some altogether outside the health care arena. 

New York State has seen dramatic enrollment of new enrollees in health insurance since the passage of the ACA and the development of New York State of Health.  This year will set a new record with 3.4 million enrollees, millions of whom are previously uninsured prior to the ACA.  As the numbers of New York’s uninsured has shrunk exponentially over the last several years, so should have the need for the payment of hospital bad debt & charity care and the need for the corresponding taxes meant to cover these expenses.

This proposal simply extends a gigantic tax for three more years without even a cursory review of any actual need pursuant to the intent of the law.  It is difficult to comprehend how with the enormous successes in enrollment in health insurance in New York, we haven’t experienced even the most modest reduction in need of charity care.  It simply makes no sense.

Given the enormous load on New Yorkers from health insurance taxes and a fundamental shift in the number of New Yorkers with insurance coverage, we strongly oppose this extension and call for a study into the further need of these taxes.  We are certain that any true investigation would lead to significant reduction in overall New York HCRA taxes with the ultimate elimination of taxes to support hospital bad debt & charity care as those needs disappear.  Any further use of HCRA tax monies should be limited to funding health care and health insurance initiatives as intended by the law rather than the opaque spending that currently occurs.  Reforming the HCRA tax rather than simply extending it is a common sense way to decrease the massive tax burden on working New Yorkers.

For these reasons, The Business Council opposes S.2007/A.3007 Part H.