Zack Hutchins
Director of Communications

For Release — Tuesday, January 11, 2005


ALBANY—Re-authorization of the state’s multi-billion dollar health-care program should only be done if lawmakers can ensure more accountability and less waste, Business Council President Daniel B. Walsh said in testimony before the Senate Health and Insurance Committees today.

Walsh testified at the Committee’s hearings on the re-authorization of the state’s 1996 Health Care Reform Act (HCRA).

"HCRA has become a behemoth," Walsh said. "The number of people in the room today attests to that. I wonder if the room would be this filled if the hearing was on the industrial future of the state."

“Re-authorization of HCRA is on the list of major challenges facing the executive and legislative branches in the next six months. The HCRA-renewal question will be a critical one for you this session because it is linked so closely to the state's budget—and the state's fiscal challenges.”

HCRA has changed many times since 1996—in 1999, 2000, and 2003, Walsh said. The HCRA system has become entwined with the funding of health care in New York, and it is imperative that the decisions on its future be done with the budget you pass on April 1.

Walsh told the committee that the HCRA program, in order to comply with the state’s fiscal and financial health, needs to become more accountable, spend less, and spend differently.

“In 2003, state Comptroller Alan Hevesi released a report that recommended moving all HCRA revenues and spending to the state budget to provide greater accountability and oversight of the funds. Please do that."

Putting HCRA funds on-budget is essential to making the system more accountable to taxpayers and public and private payers of health insurance, Walsh said.

“A more complete picture of HCRA funding will tell the public a story of a system that over-burdens employers with taxes, provides inadequate information and measurements about what the programs deliver and often pays the same for sub-par care that it does for those who provide excellent care,” Walsh said.

Lawmakers also need to promote deregulation and greater regional approaches to health care.

HCRA was adopted in 1996 with great fanfare; deservedly so, Walsh said. After a generation of government price-setting, New York joined the rest of the country in unleashing market forces as one of the determining factors in shaping the size and scope of the system.

“But the full power of market forces has never been fully unleashed,” Walsh testified. “Many of the changes adopted since 1996 have relied on a variety of ‘one-shot’ funding schemes, expanded programs broadly, and transferred various public health programs to the HCRA banner and HCRA funding mechanisms. Roadblocks to creating valuable public report cards have also made the system less responsive to market pressures and less accountable to the public. It is nearly impossible for consumers to make informed choices about how much health care will cost at one hospital compared to another. . . or which one is likelier to provide better care.”

A system less responsive to market pressures will invariably result in over-capacity, inefficiency, and unnecessarily high debt. New York’s system shows signs of all three, Walsh said. “A deregulated market could result in greater regional collaboration and more of a regional imprint on the local health-care system,” Walsh continued. “This could help make the system stronger or stabilize it, rather than making it weaker.”

Walsh suggested several other changes to make the program more accountable, including ensuring the reliability of each revenue source and ensuring each spending program is structured and run in the most cost-effective way. He also urged lawmakers to consider the amount of money spent through the HCRA program, and the burden the program has on those who pay for it—New York employers.

“HCRA saddles employers with especially burdensome taxes, especially the tax to fund graduate medical education,” Walsh said. “A scan of the country is instructive. Not a single other state thinks it is a good idea to tax businesses to pay for new doctors. Perhaps that's because New York employers are helping to fund doctors that eventually move to their states. The graduate medical education tax should be cut in half and the state should be prohibited from changing employers' tax rate retroactively.”

New York’s employers cannot sustain any new or higher taxes, Walsh said. Transferring public health programs to HCRA and to the state Insurance Department would only add to the burden on insured employers.

Walsh noted that respondents to a recent Business Council survey of its members showed that concern about health-care costs "it off the charts." This year, the member survey of nearly 500 member businesses showed almost nine of 10 respondents (89 percent) said the cost of employee health insurance has a high impact on their operations. Virtually no one (1.3 percent) said the effect of health insurance costs on their operations is low.

HCRA money also needs to be spent differently, Walsh said. Recent Census data show that the percentage of New Yorker’s with employer-provided health insurance has declined in recent years while the percentage of New Yorkers with taxpayer funded insurance has increased.

“We urge the Senate to negotiate the two-house passage of Senators Bruno and Seward’s Freedom Health Plan bill to allow employers more options and less expensive health insurance,” Walsh said. Such a plan would offer small business an incentive to provide health coverage, instead of hitting them with a cumbersome new tax.

“The Business Council has been relentless in its criticism of the amendments to HCRA in 1999 and 2002,” Walsh continued. The changes made during those re-authorizations did not represent cohesive health care policy, greatly slowed the movement to deregulation, and failed to take into account rising costs.

Since those re-authorizations, the system has further weakened, making changes in the programs' accountability and spending even more necessary, Walsh said.

The testimony.