Government Affairs Albany Update
February 25, 2011
OGS Commissioner. Governor has nominated Assemblywoman RoAnn Destito to serve as Commissioner of the New York State Office of General Services (OGS). Assemblywoman Destito currently serves as Chair of the Assembly Committee on Governmental Operations which includes legislative oversight of OGS. She has represented the 116th Assembly District since 1992. Additional information is available here.
- Business Council budget testimony
“The best economic development program to create jobs in New York is to create a better business climate. Governor Cuomo’s budget starts that process with structural reforms to reduce state spending, hold the line on taxes now and allow for tax relief in the future.” This was the thrust of testimony provided Acting Business Council President Heather Briccetti to a joint Senate and Assembly budget hearing on February 14. The Business Council expressed its strong support for the budget’s focus on spending controls rather than tax and other revenue increases. Our complete budget testimony is available here. In addition, the Business Council has highlighted several issues in the Executive Budget proposal. These include:
- Support for the “Recharge NY” proposal, a permanent replacement for “Power for Jobs,” (see bill memo here.)
- General support for proposed amendments to the Excelsior jobs program (see bill memo here.)
- Concerns regarding the proposal to create a new Department of Financial Regulation, especially with regard to proposed enforcement authority (see bill memo here.)
- Support of proposed changes to state government procurement programs (see bill memo here.)
- Medicaid Redesign Team Completes Work
Governor Cuomo assembled a Medicaid Redesign Team to refocus the state’s Medicaid program so as to provide quality health care at lower costs, stressing that this was not a “budget exercise that it must be a management exercise… More funds do not mean better health care.” After receiving thousands of proposals through numerous stakeholder meetings and the web, the MRT whittled the list to 79 recommendations, many of which seek to meet the objective of providing quality health care within the Medicaid program, but do not necessarily re-engineer the Medicaid program to bend the cost curve. The complexity of the proposals require further research and dialog as the recommendations become part of the formal budget making process.
Several recommendations are of concern to The Business Council because they will ultimately result in higher premiums in the private-pay market, without necessarily reforming or re-engineering the Medicaid program. Areas of concern include (but are not limited to):
- Extending the HCRA Surcharge to Outpatient Services
This proposal has been scored to generate $100 million annually, however, no context is provided describing how a tax increase on private pay insurance - which is estimated to increase premiums by 1 to 2 percent - will improve the Medicaid program. HCRA surcharges currently generate over $2.3 billion annually; have increased 351 percent since their inception in 1997, and already provide a significant subsidy from those with private and employer sponsored health insurance to the Medicaid program.
- Reform Medical Malpractice and Patient Safety
While the Business Council has been a long-time supporter of medical malpractice reform, and can support the recommendation within this proposal to cap non-economic damages, a second part of the proposal creates an indemnity fund for neurologically impaired infants to be “capitalized by an assessment on all insurers' gross premiums (except annuities) or other sources including HCRA funds or some combination of sources.” This assessment, coupled with the excess medical liability coverage for which insurers are already assessed to the tune of $140 million, will continue to put pressure on health insurance premiums in the commercial market. While many of the details of this remain to be worked out, true medical malpractice reform does not equal a cost shift. Merely finding a way to pay for a $60 million medically-related expense fund for impaired infants, after the litigation process has completed, does not represent true reform. This proposal is among the larger items in the overall package scored at generating state savings of $208 million in 2011-2012, larger than savings proposed to the home health agency services and personal care services combined.
- Bundling pharmacy into Medicaid Managed Care and Comprehensive fee-for-service pharmacy reform
There are a number of different components within these recommendations, including a streamlined prescription filling and dispensing processes for the Medicaid system, changes to facilitate Medicaid leveraging supplemental rebates, and redesigning how the preferred drug list is comprised and implementing a preferred drug program. The key factor for The Business Council is to ensure that “savings” to the Medicaid program do not translate into “cost shifts” to the private pay insurance market. These recommendations were scored by the MRT as generating savings in 2011-12 of approximately $50 million and $90 million respectively – which could have the unintended consequence of putting pharmacy riders on many commercial health plans out of reach for employers.
- Extending the HCRA Surcharge to Outpatient Services
- “Millionaire’s Tax”
A number of advocacy groups have called for an extension of the upper income personal income tax surcharges adopted in 2009 and set to expire at the end of the 2011 tax year. These surcharges kick in at incomes as low as $200,000 for single taxpayers. The Division of Budget projects that the surcharges, if extended, would generate about $1 billion in new revenues for FY 2012, and $4 billion or more for FY 2013. The Business Council has strongly opposed the extension of these surcharges for several reasons. They adversely impact business taxpayers including subchapter S corporations, partnerships, LLCs and sole proprietors (about 25 percent of income subject to these surcharges is considered as business income by the DOB. They adversely impact the state’s business climate, leaving New York with among the highest marginal PIT rates of any state. Finally, extension simply fails to fix the state’s long term gap between revenues and trend-line spending. Even if the surcharges were extended, the state would face a $10 billion budget gap in Fiscal 2013. While no specific extension legislation has been introduced yet, we have issued a memo in opposition to the concept (available here.)
Several issues of interest to the Business Council will be addressed on next week’s legislative committee agendas.
- “Recharge NY”
This legislation, proposed as part of the budget but introduced as a stand-alone Governor’s Program bill, would create a permanent, 910MW program to replace Power for Jobs and related cost savings and rebate program. This bill is strongly supported by The Business Council and other business organizations. We urge members to weigh in with their support as well. The bill is on the Senate Energy Committee agenda for next Tuesday. Our bill memo is available here.
- Article X Siting Law
This legislation, S.191 (Maziarz) would reinstate New York’s “one-stop” siting process for major electric generating facilities and major repowering projects. The Business Council has called for re-enactment of a centralized siting law that would encourage and expedite private sector investment in new power generation. This bill is also on next Tuesday’s Senate Energy Committee agenda. Our bill memo is available here.