The Business Council and other leading business groups in New York are strongly resisting a late maneuver to weaken a compromise "mental health parity" bill in the waning hours of the legislative session this week.

The state Senate in recent months has championed a compromise mental health parity proposal. The bill would require health insurance policies to cover various kinds of treatments for specified mental illnesses, but would exempt businesses with 50 or fewer employees from the mandate. The Senate passed this bill on June 22.

This week, the state Assembly proposed a bill that would eliminate this exemption and instead offer a 3 percent tax credit for small businesses with 50 or fewer employers and income of $290,000 or less. The Assembly bill is also much broader than the Senate bill, covering a wider range of mental illnesses and emotional disorders.

The Business Council strongly opposes health-insurance mandates because they inflate the cost of health insurance and thus make it likelier that individuals and businesses will not be able to afford any insurance coverage at all.

After the Senate proposed easing the burden of the mandate on small businesses, The Council said it appreciated "the recognition that the original mandate proposal would be quite costly, and that small businesses would be especially hard hit," said Elliott Shaw, The Business Council's health-policy lobbyist.

The "New York Main Street Small Business Coalition," including The Business Council, objected to the Assembly proposal in part because it would benefit many fewer employers.

For example, while the Senate plan would exempt all business, the Assembly's tax credit would be available to many fewer employers. Sole proprietors would be ineligible, for example, as would many businesses with net income above the bill's relatively low income threshold. In addition, the coalition argued that the cost of the health insurance mandate will ultimately exceed the 3 percent tax credit.

Earlier this year, an analysis of existing and proposed health insurance mandates by the New York State Conference of Blue Cross/Blue Shield Plans reported that the original mental-health parity proposal would increase by at least 3 percent. Every 1 percent of increase in premium costs puts health-insurance coverage out of reach for an estimated 30,000 New Yorkers, the conference added.

The Conference of Plans also said:

• Mandates already on the books increase premiums by 12.2 percent, or an increase in individual coverage of more than $400 a year and more than $1,000 a year in family coverage.
  
  
• A national study found that 20-25 percent of uninsured Americans lack coverage because of benefit mandates.
  
  
• Among the 50 states, New York has the third-highest average annual cost of employment-based health insurance for family coverage and eighth highest for single coverage.
  
  
• Thirty-eight states had a higher proportion of its population under age 65 covered by private health insurance than New York in 2002, the most recent year for which data are available.
  
  
• Nearly 18 percent of New Yorkers under age 65, about three million New Yorkers, had no health insurance in 2002.