Governor Pataki has vetoed a bill that would have forced New York State taxpayers to subsidize a $25 million giveaway to unions from a taxpayer-funded health-insurance program that was created to benefit specific small businesses and some uninsured workers.

In an August 2 letter to the Pataki administration, the Council derided the bill as "a special interest power grab at its worst," and urged the Governor to veto it.

"The legislation runs far afield of the intent of Healthy New York to assist small businesses in providing health insurance for their workers and their dependents," the Council's letter said. "Using millions of dollars of stop-loss money to subsidize health insurance for union benefit plans would be a giant step towards eviscerating the Healthy New York program."

The bill would have diverted $25 million from the taxpayer-supported Healthy New York program to fund three to five self-insured multi-employer union benefit plans.

"If the Healthy New York program has an excess of stop-loss money, there are more effective ways to utilize the money to help struggling small businesses gain access to more affordable health insurance," the Council's letter concluded. "This legislation is clearly not beneficial to the state’s uninsured population, to sole proprietors or the many thousands of small businesses with two to 50 workers who are trying to find a way to provide health insurance to their workers for the first time."

In his veto message, the Governor cited objections to the bill raised by the state Insurance Department and the state Health Department.

"The bill would allocate Healthy NY funds to subsidize health insurance coverage that far exceeds what is available under the traditional Healthy NY benefit package," the Governor's message said. "In fact, the bill would prohibit a benefit fund from participating in the demonstration program unless it provides coverage superior to the Healthy NY streamlined benefit package."

The Governor's veto message also noted that the bill includes no safeguards to ensure that funds would subsidize coverage of persons who already get health insurance benefits through union plans.

And the Governor cited agency fears that the bill would hurt the overall Healthy NY program by allocating "a substantial portion" of its funds to this "demonstration" program.

In the debate over the bill, The Business Council had also highlighted the irony of unions seeking taxpayer funding for their health-insurance plans even as they charged that some large employers were steering their employees towards government-supported health insurance plans.