ISSUE IN BRIEF:
Health Insurance Mandates and “Pay or Play Taxes”
Legislators like
to pass new health insurance mandates. They don't require any money from
the state treasury and they appeal to groups - often providers of the
service - who call for the new coverages. The Business Council is not
opposed to most of the services that are being requested; rather we oppose
forcing all health insurance policies to be overly-expansive. The incremental
build-up of the mandates over the past two decades are one of the reasons
that health insurance in New York State is about 25% higher than the
national average.
There are a range
of other punishing tax proposals that would be counterproductive to helping
small business buy health insurance for their workers, including:
- Play
or pay, where a small business who could not afford to buy health
insurance for their workers would be taxed on a per-head basis. The money
generated under some schemes would not even go towards purchasing health
insurance.
- An
obesity tax.
- A
tax on health insurance plan surplus.
Mandated benefits -- proposed Timothy's Law - The Business Council opposes the Assembly's expansive
mental health mandate because it is expensive and, if passed, would further
drive up health-insurance costs and increase the total number of uninsured
New Yorkers.
This bill would require that every insurance policy in the
state provide full coverage for the diagnosis and treatment of mental disorders,
including nervous disorders, emotional disorders, and dependency on alcohol
or other drugs. The bill would also mandate that policies impose no limits
on the coverage of mental disorders that are not imposed on physical disorders.
If passed, the mandate would add
at least $200 million to skyrocketing insurance costs. That $200 million
is in addition to $130 million in new taxes, fees, and “assessments” on
health care that are part of the state budget.
The bill is cost-prohibitive for
most businesses. Companies that believe they would like to- and can afford
to- offer a higher level of mental health benefits already can buy an insurance
rider. Many insurance plans offer mental health and substance-abuse benefits.
Already the state has over 30 mandated
benefits that significantly increase the cost of health insurance. The
average family in New York pays more than $1,000 per year to cover the
cost of mandated services, according to a recent study by the Employer
Alliance for Affordable Health Care.
Passing this new mandate would increase
premiums by another 3 percent, according to the study. Moreover, there
is not a consensus that mandating full mental-health coverage would be
the most effective health-policy option.
“This [mandate] could lead individuals
to receive services that are not shown to be effective or have been shown
to be ineffective leading to wasted health care dollars and false hope,” said
Donna Novak, author of the Employer Alliance study.
Employers in the state will face
the real possibility of dropping coverage or passing the cost along to
employees as rates continue to rise. These added costs will also contribute
to an increase of uninsured New Yorkers - a figure that already stands
at more than three million. As health insurance becomes more expensive,
New Yorkers drop out of insurance plans because the cost, even when shared
with their employer, is too high.
In 2000, the legislature recognized
what rising health-care costs mean to small businesses by enacting Healthy
New York. Passing this new burdensome mandate flies in the face of that
initiative and further burdens small businesses that already buy health
insurance, and by definition are not eligible to buy into Healthy New York.
The Business Council is supporting
efforts to create a health-benefit cost commission. This commission would
study the cost and effectiveness of all proposed health care mandates.
Twenty-two other states have mandate review boards that serve the same
function. The absence of a commission in New York is problematic. Advocates
who support this new mental-health mandate maintain that the new burden
would affect premium costs only minimally. But a variety of expert groups
have estimated that it could drive up premiums as much as 3-5 percent.
Enacting a health-benefit commission would help legislators accurately
estimate the true costs of mandates before enacting them.
