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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.


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.

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