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For Release — Feb. 24, 2011

Business Council says higher taxes on health insurance the wrong prescription

ALBANY— “The proposal to expand the current Health Care Reform Act (HCRA) tax on medical services is really a tax increase that will force employers and workers to pay more for health insurance,” said Heather Briccetti, acting-president & CEO of The Business Council of New York State. “This is a bad idea that has been considered and rejected before. It is simply a cost-shift to the private insurance market rather than a redesign of Medicaid.”

Proposal #264 being considered by the Medicaid Redesign Team would expand the 9.63 percent HCRA tax to cover surgical and radiological services performed in private ambulatory centers, physician's offices and urgent care settings. Currently the tax is applied on all hospital discharges.

The tax which is imposed on private health insurance has increased 351% since the program was implemented in 1997. The current costs taxpayers approximately $2.3 billion. This proposal would increase that tax burden by $58 million this year and $100 million per year going forward.

Currently, this tax alone adds approximately 4% to the cost of every health care premium dollar. If this proposed expansion of the HCRA surcharge is enacted, it will increase that burden, increasing the cost of health insurance to the majority of New Yorkers who access health insurance through the private market.

“The Business Council opposes taxes on health insurance premiums and services and asks the Task Force to focus on the mission of re-engineering a Medicaid program which is the most costly in the country,” added Briccetti. “New York's employers and their workers cannot afford another cost shift to subsidize the most expensive Medicaid system in the nation.”

The Business Council's memo in opposition is available here.

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