Business
Council testimony on reauthorization of funding and programs
under the Health Care Reform Act
Testimony of
Daniel B. Walsh
President
The Business Council of New York State
Senate Health and Insurance Committees
Re-authorization of the Health Care Reform Act (HCRA)
January 11, 2005
Majority Leader Bruno, Chairman Hannon, Chairman Seward and members of
the Senate Health and Insurance Committees, thank you for inviting The
Business Council to offer comments on re-authorization of the Health Care
Reform Act (HCRA).
Re-authorization of HCRA is on the list of major challenges facing the
executive and legislative branches in the next six months. Your action
on HCRA renewal, the adoption of a fiscally-sound
2005-06 state budget including core changes to Medicaid and the resolution
of the Campaign for Fiscal Equity case, should be among the most important
measures of success for the 2005 legislative session.
The HCRA-renewal question will be a critical one for you this session
because it is linked to closely to the state's budget—and the state's
fiscal challenges. I believe the most important action you can take to
answer the public’s rising dissatisfaction is to pass a fiscally-sound
budget by April first. For this reason, it's essential that lawmakers
consider the state's HCRA programs and HCRA problems quickly and courageously.
HCRA has changed many times since 1996—in 1999, 2000, and 2003.
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.
The program has become a behemoth. 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.
HCRA has become synonymous with the health care system in New York. HCRA
is the embodiment of a hospital-centric mentality that has not wavered,
even in the face of rapid change in the delivery of health-care that should
prompt adjustments in society's thinking about how to support the delivery
of health care.
Let me begin with our priorities, broadly-stated:
- The HCRA and health care system must be more accountable,
- It must spend less.
- The money must be spent differently.
1. Make HCRA more accountable.
All HCRA revenues/spending should be
on-budget.
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. The Comptroller
deserves credit for his insistence that funds be brought on-budget and
we applaud the Senate for making this a priority in its budget reform
legislation.
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.
Promote deregulation and greater regional approaches.
HCRA was adopted in 1996 with great fanfare; deservedly so. 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 has never been fully unleashed.
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 mcehanisms. 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, and more.
There has been a relentless drumbeat about the “uniqueness”
of New York. It is used to defend the non-profit tradition, the unique
taxes employers pay for graduate medical education, the regulations on
continuing care retirement communities, the benefit structure of Medicaid
and on and on. People scoff when we suggest that economic forces are the
best way to bring about change.
We have never advocated open warfare in the marketplace. Quite the opposite.
If encouraged more, a deregulated market could result in greater regional
collaboration and more of a regional imprint on the local health-care
system. This could help make the system stronger or stabilize it, rather
than making it weaker.
Re-authorization should emphasize changes that make the system more
accountable.
- Put all HCRA revenues and expenditures onto the state budget.
- Emphasize market forces more.
- Put each revenue source to key tests of affordability and accountability.
Let’s ask whether the revenue source is reliable. Let's consider
the
effect that increasing those revenues will have on those who have to
pay for it.
- Put each spending program to similar tests. Let’s ask if the
program is
still necessary and are there identifiable goals associated with it.
And
is the program structured and run in the most cost-effective way.
2. Spend less,
In New York, we spend far more on health care than other states, without
achieving dramatically better health outcomes for New Yorkers.
Another flamboyant statement by The Business Council? No. This is one
of the opening lines in the report of the Governor’s Health Care
Reform Working Group – a report that serves to jumpstart the discussions
of HCRA. We’re glad the Senate is building momentum on the renewal
debate with today’s hearing.
Reduce the burden of the graduate medical tax.
HCRA saddles employers with especially burdensome taxes, especially the
tax to fund graduate medical education. 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.
The ability for any stakeholder to sustain a new or higher tax is at
the tipping point. We strongly oppose any punishing new or higher tax
on businesses, individuals, health plans or hospitals and nursing homes.
We oppose transferring public health programs to HCRA and to the state
Insurance Department where they become an added burden on insured employers.
The last two years we have surveyed our membership about the cost of
doing business in New York. The responses to the health-care question
are off-the-charts.
Our 2003 survey of more than 600 businesses showed that health insurance
was business's number one concern. Almost nine of 10 respondents (89 percent)
said the cost of employee health insurance has a high impact on their
operations. Most of the rest (9.5 percent) said the impact of these costs
is moderate. Virtually no one (1.3 percent) said the effect of health
insurance costs on their operations is low.
This year, our member survey of nearly 500 member businesses, almost
nine of 10 respondents (89 percent) said the cost of employee health insurance
has a high impact on their operations. Only (9.5 percent) said the impact
of these costs is moderate. Virtually no one (1.3 percent) said the effect
of health insurance costs on their operations is low.
3. Spend differently.
A recent U.S. Census Report: “The Facts About Upstate New Yorkers
without Health Coverage: An Update from the 2004 U.S. Census” shows
that the percentage of New Yorkers with employer-provided health insurance
has declined slightly in recent years. At the same time, the percentage
of New Yorkers with taxpayer-funded health insurance has increased.
Not a surprising finding. But what can be done to reverse the trend?
The Governor of Tennessee has taken the dramatic step of proposing to
dismantle the state’s TennCare program.
Negotiate a Freedom Health Law.
We urge the Senate to negotiate the two-house passage of Senator Seward’s
Freedom Health Plan bill to allow employers more options and less expensive
health insurance. The state needs to offer carrots to small business to
incent coverage, instead of hitting the most vulnerable businesses with
punishing new taxes.
The issue of employer-sponsored coverage could fill another legislative
hearing. We have said repeatedly for years that you can not make health
insurance more affordable by making it more expensive.
Health insurance needs to be less costly. Let’s find ways to do
that this year.
It is likely that a bonding initiative is on its way to help finance
hospital information technology needs. It raises many questions:
1) Will it be hospital-only, sustaining the policy that the hospital
is at the center of the health care delivery system?
2) Will it tie-in to the initiative of President Bush’s new office
of National Coordinator for Information Technology -- which has a goal
making creating a fully “interoperable” system in which two
different doctors at two different sites can access a patient’s
medical records?
3) Will it be written in a way to improve quality and cut down on medical
errors?
4) Will it respond to the inability to close down certain institutions
because of their heavy debt load?
Wire the system.
The initiative of the National Coordinator for Information Technology
deserves special attention. The office of the National Coordinator was
created by President Bush by Executive Order, and its work holds the potential
for great accomplishments. Prominent New Yorkers from all stakeholder
groups have recognized this unique opportunity and are working collaboratively
to develop health information technology requirements. The requirements
will have at their foundation standards that allow systems to communicate
with each other.
If successful, an individual’s electronic medical record can be
made available at different points of care in the delivery system, resulting
in better patient care. The Taconic IPA in the Hudson Valley is already
taking a leading role in New York State, and The Business Council strongly
supports their work.
Any policy decisions involving information technology should encourage
and enhance interoperability as its primary goal.
The state should participate more actively in quality initiatives.
There are numerous other quality initiatives that can improve care and
reduce errors, many organized and led by the business community. The work
of the Leapfrog group and Bridges to
Excellence are two initiatives that are taking hold in New York. Dr. Michael
Stocker, CEO of Well Choice Inc., working closely with Business Council
member companies, has taken a leadership role in rewarding quality in
the health care system.
The Governor’s Task Force had a number of important recommendations
around quality. It is an issue that needs close attention.
There are other actions that need action too, many also highlighted in
the Governor’s report. Medical malpractice reform deserves special
mention. Shifting the costs of medical malpractice around the system is
not the answer.
Closing
Earlier, I called HCRA a behemoth, not necessarily a flattering term.
The Business Council has been relentless in its criticism of the amendments
to HCRA in 1999 and 2002. The changes did
not represent cohesive health care policy and greatly slowed the movement
to deregulation.
The changes failed to make sense of rising costs and inconsistent quality
or accessibility. Since then, system has further weakened.
Holding a hearing the second week of session on one of the most important
issues facing this legislature lends a great sense of urgency. Its an
urgency we feel from our own members.
We look forward to working together to create a more sensible and more
rational HCRA system.
