Section 2

The high costs of health care in New York State

In a competitive global economy, New York employers and employees are becoming wary of the amount of money they spend on health care, compared to their counterparts in other states and nations. Spending on hospitals, doctors' services, home health-care, drugs and other personal health-care services and products averaged $3,693 per person in New York State in 1993, the latest year for which nationwide statistics are available; that was about 22 percent above the national average.⁽⁴⁾

New York was ranked the fourth highest state in employer-paid health-care expenditures per job in 1994, or about 38.5 percent higher than the national average of $2,622.⁽⁵⁾ New York State taxpayers are shouldering the largest burden when it comes to Medicaid cost per recipient. In 1996, Medicaid cost taxpayers $6,811 per recipient in New York, compared to a national average of $3,369.⁽⁶⁾ These costs make New York an expensive place to purchase health-care coverage and, thus, are one more reason the state is an expensive place to do business.

Since the wealthiest New Yorkers can afford health-care coverage, and the poorest

New Yorkers are protected by Medicaid, it is middle-class New Yorkers who are hit hardest by higher than average health-care costs and higher than average taxes to support Medicaid.

Table 1
Personal Health-Care Expenditures Per Capita, 1993
Rank	State	Amount	Rank	State	Amount
1	Massachusetts	$3,892	27	Colorado	$2,821
2	Connecticut	3,727	28	Maine	2,771
3	NEW YORK	3,693	29	Texas	2,760
4	Pennsylvania	3,451	30	Kentucky	2,738
5	Rhode Island	3,431	31	Kansas	2,726
6	New Jersey	3,275	32	Nebraska	2,726
7	Florida	3,266	33	South Dakota	2,724
8	Delaware	3,233	34	Nevada	2,705
9	Tennessee	3,181	35	Arizona	2,697
10	North Dakota	3,173	36	Oregon	2,636
11	Minnesota	3,137	37	Alaska	2,630
12	New Hampshire	3,074	38	North Carolina	2,623
13	Maryland	3,060	39	Vermont	2,602
14	Missouri	3,047	40	Iowa	2,601
15	Louisiana	3,034	41	Virginia	2,576
16	Ohio	3,025	42	Arkansas	2,520
17	California	3,017	43	Montana	2,501
18	Hawaii	2,989	44	South Carolina	2,489
19	Illinois	2,972	45	Oklahoma	2,488
20	Georgia	2,913	46	New Mexico	2,400
21	Alabama	2,884	47	Mississippi	2,344
22	Washington	2,879	48	Utah	2,214
23	Wisconsin	2,875	49	Wyoming	2,123
24	Indiana	2,874	50	Idaho	2,068
25	Michigan	2,869	U.S. Average		$3,020
26	West Virginia	2,859	N.Y.S. % above average		22.3%
Source: U.S. Department of Health and Human Services, Health Care Financing Administration.

 

Table 2
Percent of Persons Without Health Insurance in 1997, and Increase in Uninsured, 1995-96 to 1996-97 (States ranked by percent of persons uninsured)
Rank	State	% of Persons Uninsured	Chg. in % Uninsured	Rank	State	% of Persons Uninsured	Chg. in % Uninsured
1	Arizona	24.5%	2.0%	27	Maryland	13.4%	-1.0%
1	Texas	24.5%	NA	27	Utah	13.4%	0.8%
3	Arkansas	24.4%	3.3%	29	Oregon	13.3%	0.4%
4	New Mexico	22.6%	-1.5%	30	Delaware	13.1%	-1.3%
5	California	21.5%	0.4%	31	Massachuse	12.6%	0.8%
6	Mississippi	20.1%	0.2%	31	Missouri	12.6%	-1.0%
7	Florida	19.6%	0.7%	31	Virginia	12.6%	-0.4%
8	Montana	19.5%	3.4%	34	Illinois	12.4%	0.7%
9	Alaska	18.1%	2.8%	35	Connecticut	12.0%	1.6%
10	Oklahoma	17.8%	-0.7%	35	Iowa	12.0%	0.3%
11	Idaho	17.7%	1.9%	37	New	11.8%	0.9%
12	Georgia	17.6%	-0.1%	37	South	11.8%	1.2%
13	Nevada	17.5%	-0.6%	39	Kansas	11.7%	-0.4%
13	NEW YORK	17.5%	1.1%	40	Michigan	11.6%	1.0%
15	West Virginia	17.2%	0.9%	41	Ohio	11.5%	-0.2%
16	South	16.8%	1.1%	42	Indiana	11.4%	-0.6%
17	New Jersey	16.5%	1.1%	42	Washington	11.4%	-0.5%
18	Alabama	15.5%	1.0%	44	Nebraska	10.8%	0.9%
18	North	15.5%	0.6%	45	Rhode Island	10.2%	-1.4%
18	Wyoming	15.5%	-0.2%	46	Pennsylvania	10.1%	0.1%
21	North	15.2%	3.5%	47	Vermont	9.5%	-1.8%
22	Colorado	15.1%	0.1%	48	Minnesota	9.2%	0.6%
23	Kentucky	15.0%	0.2%	49	Wisconsin	8.0%	0.3%
24	Louisiana	14.9%	2.8%	50	Hawaii	7.5%	-0.7%
24	Maine	14.9%	0.7%	U.S. Average		16.1%	0.4%
26	Tennessee	13.6%	-0.6%	N.Y.S. % above avg.		8.7%	175.0%
Source: U.S. Census Bureau, September 1998

Surveys show the single greatest reason Americans give for being uninsured is the cost of coverage.⁽⁷⁾ It's not surprising, then, to find that New York State's uninsured problem has worsened with rising health-care costs. From 1991 to 1996, the proportion of New Yorkers without insurance rose 34 percent, while the national uninsured rate had risen 8.3 percent.⁽⁸⁾ In 1997, some 3.17 million New Yorkers were without health insurance. That figure represents 17.5 percent of the state's population, compared to a national uninsured rate of 16.1 percent.⁽⁹⁾

The cost of health coverage to both employer and employee is inextricably linked to the number of uninsured people, in New York as elsewhere. A study of small-firm health coverage showed that while the percentage of small firms offering coverage to American workers grew between 1989 and 1996, the trend was not shared in the East. Worse was the finding from the same study that the proportion of American small- and large-firm employees in health plans decreased between 1989 and 1996. This means more workers are actually turning down health coverage when it's offered to them. The authors of the study suspect the reason is because workers believe they can't afford their share of the premium.⁽¹⁰⁾

This finding by economists at the Agency for Health Care Policy and Research in Rockville, Maryland, should serve as an incentive for policy makers to reconsider any actions that drive up the costs of health care. As costs rise, they directly affect both the employers' and the employees' shares of health-care premiums.

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4. The Public Policy Institute, Managing With Care. May 1998, p. 12.

5. Tax Foundation.

6. O'Leary Morgan, Kathleen, et. al., eds. Health Care State Rankings 1998. Medicaid Cost per Recipient in 1996. Table. Lawrence, Kansas: Morgan Quitno Press, 1998. p. 324. Because of differences in what each state's Medicaid programs cover--New York's, for example, is a major source for financing the care of the institutionalized--this gap appears somewhat larger than it is. Still, New York leads the nation in this cost.

7. See, for instance, Donelan, Karen, ScD, et. al. “Whatever Happened to the Health Insurance Crisis?” Journal of the American Medical Association Vol. 276, No. 16 (1996): pp. 1346-1350.

8. The Public Policy Institute, Managing With Care, 1998, p. 14-15.

9. United States Bureau of the Census.

10. Cooper, Philip F. and Steinberg Schone, Barbara. “More Offers, Fewer Takers For Employment-Based Health Insurance: 1987 and 1996.” Health Affairs Vol. 16, No. 6 (November-December, 1997): pp. 142-149.