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June 22, 2004

Council, other groups urge lawmakers to exempt small businesses from any mental-health mandate

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: