April 16, 2001
Study: New Yorkers pay $1.3 billion a year in taxes on private health insurance
New York State taxpayers paid more than $1.3 billion in state taxes on private health insurance last year, according to a new report by the state Conference of Blue Cross and Blue Shield Plans.
Among business taxes, only one, the corporate franchise tax, cost business taxpayers more, the report, "The Facts About Taxes on New York's Privately Insured," said. Because employers pay most private health insurance premiums, state health taxes are widely seen as a business tax.
In 2000, New York collected $2.6 billion from the corporate franchise tax and $1.3 billion from taxes on private health insurance, the report said. That's more than was collected from the corporation and utilities tax ($1.04 billion), the petroleum business tax ($.96 billion), the bank tax ($.63 billion), and insurance taxes ($.6 billion), the report showed.
Among all state taxes, the report noted, only the personal income tax ($27 billion), the sales and use tax ($8.7 billion), and the corporate franchise tax raised more than taxes on private health insurance.
The report examines four state health taxes, the amount raised from these taxes in 2000, and where the money goes:
- A tax on health plans for each covered life they insure, $690 million, is used primarily to subsidize teaching hospitals for the training of resident physicians.
- An 8.18 percent tax on hospital and other health-care services, $536 million, is used for a variety of hospital subsidies and other health services.
- Assessments on not-for-profit insurers and health maintenance organizations, $48 million, support operations of the state Insurance Department.
- Premium taxes on those who receive health coverage from commercial insurers, $37 million, are used for general state purposes.
The new report echoes a November 1999 report by The Public Policy Institute, the research affiliate of The Business Council. That report, "The Tax New Yorkers Pay to Train Other States' Doctors," showed that New York's health taxes drive up the cost of health care for all New Yorkers and undermine the state's economic competitiveness.
"It's important for the public and policymakers to understand what financial responsibility is already imposed on those who voluntarily purchase health coverage in New York," said Geoffrey Taylor, public policy director for the Conference of Blue Cross and Blue Shield Plans. "If we all look at the big picture, we're punishing the voluntary purchasers of health coverage with a heavy tax burden."
New York's per-capita health-care spending exceeded the national average by nearly 26 percent between 1988 and 1998, according to an earlier conference study, Taylor noted. During the same period, the number of New Yorkers under age 65 who are privately insured declined at a faster rate than 46 other states, according to another conference study, he noted.
State lawmakers are considering dozens of bills before them that would add even more costs in the form of state mandated benefits, such as infertility coverage, contraceptives, expanded mental health coverage, and guarantee funds for hospitals, Taylor said.
"Collectively, these public-policy trends work against the broader goal of encouraging more New Yorkers to purchase quality-but affordable-health coverage," he added.