April 12, 2006
Study: Controversial health-mandate proposal would cost tens of thousands of jobs, add a huge new business-tax burden, give little benefit to uninsured
A controversial proposal to impose a new health insurance mandate and tax on many New York State employers could cost the state up to 100,000 jobs and impose $9.2 billion in new taxes on businesses, a new study by a University of Kentucky economist shows.
"Even the most conservative estimate calculates job loss at 69,000," said a release on the study by the Employment Policies Institute, which sponsored the study by Dr. Aaron Yelowitz. "Despite the high price tag, this policy would ignore over 83% of the uninsured in New York.
The bill, which is sponsored by Assemblyman Richard Gottfried (D-Manhattan) and Senator Nick Spano (R- Westchester County), would require all non-manufacturing, non-agricultural businesses with 100 or more employees to provide $3 an hour in healthcare benefits for every affected employee, or pay an equivalent tax to the state.
The $3 assessment would rise annually with the consumer price index medical cost increases. Medical costs are 4 percent higher this year than last. The CPI on Medicaid costs showed a 47 percent increase between 1994 and 2004.
EPI says the new study shows that:
- The vast majority of the uninsured in New York are either unemployed
or employed at firms with fewer than 100 employees; of the 2.7
million uninsured New Yorkers, about 2.2 million (83%) would not
gain health insurance under the bill.
- Almost 3 million currently insured employees are affected by
the bill, either because employers must offer (or pay a fee for)
what is essentially redundant coverage, or because their current
health insurance is not rich enough to meet the mandate.
- As a result of the poor targeting of the mandate and considerable fees associated with millions of already insured employees, the cost per newly insured employee will be as high as $19,617 a year.
"Before other economic adjustments, the total employer obligation is in excess of $5.7 billion, and could be as high as $9.2 billion," said Dr. Yelowitz in his study. "Job loss will occur for workers who are near New York's minimum wage of $6.75 as well as for workers who are at firms near the 100-employee threshold. The low-end job loss estimate exceeds 69,000 during the first year of the mandate; the high-end job loss estimate is nearly 100,000 jobs."
To read the study, "The Impact of the 'Fair Share for Health Care Act' on New York's Labor Market," visit www.EPIonline.org/studies.
The Employment Policies Institute is a nonprofit think tank that studies public-policy issues related to entry-level employment.