Letter to NY Congressional Delegation on national health care reform

July 28, 2009

Honorable Charles E. Schumer
Member of the United States Senate
313 Hart Senate Office Building
Washington, DC  20510

Dear Senator Schumer:

On behalf of The Business Council and its 3,000 members from across New York State, I write to ask that the New York Congressional delegation pursue national health care and health insurance reform with particular sensitivity to the impact these changes will have on New York’s citizens and businesses.  Health care accessibility and affordability remain a top priority of our membership, which includes businesses of every size, sector and region in New York State. However, many of the components in proposals from the House and Senate could cause significant disproportionate financial burden to New Yorkers and our current health care delivery system. Therefore, our members ask that the delegation carefully review all reform proposals through a “New York” lens.

As you likely are aware, New York State has the broadest safety net of subsidized health coverage options of any state in the nation.  This is important to emphasize because while New York’s uninsured population is estimated at 2.5 million, independent analysis indicates that more than 40% of the State’s uninsured population is currently eligible for one of New York’s subsidized health plan options but voluntarily selects out of coverage.  These plans include Medicaid, with an extensive menu of services; Child Health Plus supporting coverage for children in households with incomes up to 400% of the federal poverty threshold; Family Health Plus providing affordable comprehensive coverage for adults whose income exceeds Medicaid income thresholds; and Healthy New York, a means-tested coverage option for working New Yorkers who do not receive employer-sponsored and employer-subsidized coverage.  Commencing in January, 2010, Family Health Plus will roll out its employer buy-in option allowing small businesses the choice of a comprehensive coverage plan.

All of these New Yorker-subsidized health insurance coverage options come at a cost to New York’s businesses and taxpayers.  Currently, taxes on New Yorkers who voluntarily purchase private health coverage total about $4.2 billion per year, reflecting as much as 10 percent of the cost of health insurance coverage in some areas of New York.  For example, New Yorkers with private coverage (not any of the subsidized options above) are assessed a “hospital patient services assessment” — essentially a sales tax on health care services performed in hospitals — at 9.63 percent.

And finally, New York is one of a few states which require a local cost-sharing for Medicaid, which is funded primarily through the local property tax.  The property tax impacts New Yorkers in all income brackets.  In New York, Medicaid comprises a much larger portion of the state’s health spending: one out of three dollars.  Therefore, shifts in Medicaid spending as a result of any federal changes would have greater consequences in New York’s health care delivery system than they would in most states. Given the amount New York taxpayers and businesses spend on Medicaid — $49 billion this state fiscal yea r— and the number and range of affected interests, understanding New York’s system of health care in this way is essential for policy makers to assess and balance the financing strategies and coverage mandates and how that translates to New York’s taxpayers and businesses. 

The Business Council’s members greatly appreciate the diligence with which both the House and the Senate are undertaking this very complicated topic.   Small details in any reform program design will have large impacts on take-up of insurance by eligible individuals and could disproportionately burden New York taxpayers and businesses, who already shoulder a significant burden to provide health coverage options for millions of New Yorkers.   

The Business Council asks that all financing mechanisms being contemplated to support national health care reform be analyzed for the cost impact New Yorkers will need to bear.  Undoubtedly, financing national health care reform for New York’s businesses will mean these taxes will be in addition to, not in place of, substantial mandated health-insurance taxes already borne by New York businesses and its citizens. Small business surtaxes will not equalize New York’s burden – they will exacerbate it. Employer mandated coverage as part of national reform will not lower New York’s businesses costs but add to them as New York businesses will continue to have to pay for New York-subsidized coverage pools already operating.

Business Council members are committed to health care reform but ask that the New York delegation take care to “do right by New Yorkers” rather than merely “getting it done”.  New Yorkers – citizens and businesses – cannot afford to subsidize the rest of the country at the expense of our state’s economic competitiveness. Our extensive safety net subsidized options will not disappear under health care reform, but are likely to grow, and with that will be the burden of needing to support those models.  We stand ready to work with you as you negotiate national health care reform and ask that you keep New York’s businesses and taxpayers in mind as you weigh the very complex funding options on the negotiating table.


Signed / Kenneth Adams