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Council testimony before Assembly on proposals for mandated health care coverage

Testimony of
Elliott A. Shaw, Jr.
Director of Government Affairs
The Business Council of New York State, Inc.


Assembly Standing Committees on Health, Insurance and Labor
Proposals for Mandated Health Care Coverage
May 23, 2006


Chairwoman John, Chairman Gottfried, Chairman Grannis and members of the Assembly Health, Insurance and Labor Committees, thank you for inviting The Business Council to offer comments on so-called fair share legislation.

We prefer to call these bills the Health Scare bills, because that is precisely what they have done to the business community. We’ve been inundated with phone calls and e-mails from shocked employers across the state. I wish some of them could have left their workplace for the day today and taken a bus to Albany to join us.

New York’s system is broken

For the past few years, health care “policy” in Albany has been a series of patches, one-shots, give-aways and shifts of responsibility from one taxpayer pocket to the other. We lurch from one health-care fix to the next – yet somehow, each time our problems only get worse. New York continues to pay the price in higher Medicaid costs, excess hospital capacity and public health measures that are frequently no higher than average and sometimes below.

I know some of you were upset that the state missed the opportunity to expand coverage when the not-for-profit conversion money was diverted in previous budgets -- and again when the tobacco money was squandered as a giant one-shot. If the state now tries to mandate and tax its way to the goal, I think you’re going to be equally disappointed in the results.

As Attorney General Spitzer said in a January 18, 2006 speech to chamber of commerce executives, “for too long we have not made honest and hard choices, and as a result we find ourselves with a system that is at once too

costly and yet leaves too many without adequate access to the health care they need. As remarkable as the care for individual patients can be, the system, as a delivery system is broken.”

That’s a remarkable statement. And now the Assembly has proposals to put off the honest, hard choices yet again, in favor of a so-called “cure” that would surely prove worse than the disease. If health insurance has gotten too expensive for employers in low-margin businesses to afford – well, let’s force them to buy it anyway, or impose a ruinous tax on them if they don’t. This idea isn’t “fair” – not to employers, and not to the employees whose employers will no longer be able to afford their salaries. And it doesn’t “share” the burden of resolving New York’s out-of-control health-care costs – it simply searches for a new set of payors to pour more money into the system.

Albany’s whole approach to New York’s broken system reminds me of the old saying: “If you’re lost, any map will do”.

The business community does want a level playing field

One of the most interesting points in the hearing notice is that it explicitly says that the point of these proposals is NOT to extend coverage to more of the uninsured. No, the point is supposedly to give business a “level playing field”. Business people are supposed to believe that the Assembly wants to do us a favor, by forcing all employers to share in a cost some of them aren’t now paying for. A question: Did somebody in business ask the Legislature to do us this favor? At The Business Council, we’ve heard nothing but dismay over the whole idea. Who, please, has asked for this kind of so-called help?

And why does the Assembly insist on providing a level playing field on an issue where the business community is not asking for it -- yet remains entrenched in opposition on every issue where the business community is begging for it?

There are a number of actions you can take in the next four weeks to give the business community a more level playing field with our competitor states:

• Reform New York’s workers’ compensation system, which has the second highest cost per claims in the nation;

• Reform Labor Law 240-241 which does not exist in border states of Pennsylvania, New Jersey and Massachusetts;

• Eliminate the tax on the business community that funds graduate medical education, a tax that no other state imposes on their businesses;

• Eliminate or reduce other HCRA taxes. As a key justification for the existing HCRA taxes on employers who DO provide health insurance is to help pay for the uncompensated care of those who work for employers that DO NOT provide health insurance. Isn’t it interesting, however, that not one of these proposals to mandate that more employers provide insurance would pass any of the savings back to the covered employers in the form of reductions in those HCRA assessments? “Fair share,” indeed.

It’s long past time for the Assembly to consider some of the business climate reforms that business has asked for – instead of dreaming up “favors” that the business community hasn’t asked for. Every expert – and every candidate for Governor, in both parties – agree that the economy in New York, particularly upstate, is among the weakest in the nation. And nothing – absolutely nothing – was done in the recently passed state budget to improve it.

Not a single business has called our office asking us to support any of these measures. When one of the health care special interests trotted out a similar proposal a few years ago, half the businesses they cited as supporters were their very own vendors.

New York’s health care system is too expensive

Here’s the fundamental fact – one which Albany has been turning a deaf ear for years: New York State cannot make health insurance more affordable by making it more expensive.

The bills cited in the hearing notice would punish good, honest employers for the failure of government at all levels, and most particularly in Albany, to do anything to make health insurance more affordable. It is frightening to believe that the best answer Albany can come up with on health care is to add to the health-care costs of employers.

One of the striking outcomes of the Massachusetts law is that lawmakers and stakeholders used the potential loss of federal money to work for a consensus solution to seemingly intractable problems. In New York, health care interests are spending millions on radio, television and newspaper advertising, lobbying firms and lawyers in a fight to make sure we maintain the status quo.

Whereas states like Massachusetts are attempting to introduce levels of personal responsibility into the health-care equation, New York’s response is more and bigger mandates on employers. Monies collected would be used to provide an undefined level of subsidized health-care coverage to certain employees of employers.

How do we measure the “fair share”?

If this is a fair share proposal, let’s ask whether there are fair shares of lost jobs. The policies enacted in Albany are among the reasons that Upstate has created jobs at less than one-third the pace of Ohio in the last 15 years. How will anyone explain to workers in Rochester the additional jobs that will be lost because of a new, multi-billion-dollar health-care tax? Over the last 15 years, while Michigan has gained more than 400,000 jobs, and nationwide employment is up by 24 million, Western New York has lost thousands of good jobs. Over the past 15 years employment in the Syracuse area is up 1 percent. That growth is less than one-tenth the rate of growth in Pennsylvania.

Will billions of dollars in new health-care taxes add to job growth in Central New York, or will they drive even more of your constituents away?

Even the most conservative estimate calculates job loss at 69,000 according to the Employment Policies Institute (EPI), which sponsored a study to look at the bill sponsored by Assemblyman Gottfried. The EPI study shows that:

• The vast majority of the uninsured in New York are either unemployed or employed at firms with fewer than 100 employees;

• 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;

• Before other economic adjustments, the total employer obligation is in excess of $5.7 billion, and could be as high as $9.2 billion.

What would a business need to pay the added costs

The Retail Council testimony highlights a New York City restaurateur who says she would need to boost sales at least $50,000 per month to expand coverage to everyone.

We could cite example after example of how many extra tools or lumber a hardware store would need to sell, how many cars a used-sales lot would need to sell or how much more a not-for-profit would need to raise in fundraising to pay the added burden of many of these bills. How are they supposed to do that in an upstate community that has lost population?

One bill, interestingly, exempts manufacturing and agriculture because of the concern over job dislocation. That concern should extend to employers of all sizes, in all industries, in all parts of the state. It is a concern we share with those employers. We will continue to speak-up for sensible policies to make New York’s health-care system less costly for taxpayers and employers and we will continue to champion sound solutions to give employers more affordable health insurance options. These proposals do neither, unfortunately, and I hope you lay them aside for a more comprehensive exchange on the ills of the state’s health-care system.