Director of Communications

ALBANY—New York's business community, and its small businesses in particular, are increasingly unable to cope with health insurance costs that are skyrocketing in part of state policies set in Albany, Business Council President Daniel B. Walsh told state Legislators in testimony today.

Albany must take no steps to worsen businesses' burden of health-care costs, and should consider mandate reform and other steps that can ease the problem, Walsh testified before the Senate Standing Committee on Insurance.

Businesses, especially small businesses, "are being swept away by a health insurance system in crisis," Walsh said. "Endless increases in health care costs have led to double-digit increases in premiums. This spiral has pinched profits, thwarted employment growth, and forced smaller and smaller companies to consider risking everything to go self-insured.

"Spiraling costs are swelling the ranks of the uninsured, even as state government is enacting programs to shrink the rolls. Employees are asked to pick up more of the burden, and in some cases this has directly resulted in labor turmoil."

Health-care costs are increasing everywhere, but Albany has worsened New York businesses' burden by approved cost-inflating health-insurance mandates and by imposing a unique $1.4 billion tax "to prop up inefficiency in our health-care system," Walsh said.

This negative trend still has momentum, he said: "We hear talk of more mandates, higher surcharges and unbelievably, a $1,000 per employee tax on small businesses that are unable to afford coverage."

He added: "These proposals only erode the small business owners confidence that the system will be fixed."

Only sweeping reform will ease the problem he said. "New York's health-care system cannot be patched or re-glued. It must be overhauled," Walsh said.

"Our first request today is to Do No Harm. Or, more accurately, Do No Further Harm. We ask, in the strongest terms, that the Legislature reject higher taxes on health insurance and reject the imposition of new health insurance mandates," Walsh said.

He also outlined several specific policy recommendations, saying Albany should:

  • Reject all new health-care mandates and create health benefit and cost commission that would analyze the effect of all proposed mandate before they take full effect.

  • Create a new tax credit to let small businesses credit 20 percent credit of health insurance costs against their state income tax.

  • Give all businesses access to Healthy New York, or create a similar product that all small businesses can buy.

  • Give small business financial incentives and technical assistance in establishing health and wellness programs at their workplace.

Walsh pointed to a number of independent reports confirming the precarious state of businesses' ongoing ability to pay health-care costs:

  • Employers nationwide face the fourth consecutive year of double-digit increases in health-care costs in 2003, with the increase the highest since the early 1990s. Increases in costs of hospital care are driving higher costs.

  • Consumers whose employers provide health insurance for them generally have little idea how much the insurance costs and where the money goes, a recent Zogby International poll shows.

  • Personal health-care spending in New York nearly doubled from 1988 to 1998, where a population that is 6.7 percent of the nation's spend 8.4 percent of more than $1 trillion in nationwide expenditures.

  • One-third of responding New York State employers said their workers' share of health-insurance premiums increased in the 12-month period ending in April 2002.

Without aggressive state and federal action to make the nation's health-care system more efficient and affordable, Walsh predicted, employees will themselves face higher payroll deductions, co-pays, and deductibles. And some employers will encourage their workers to get into government programs, which in turn will only escalate the problems with the state's Medicaid program.