A.162/S.249 (Parts D, G) A.158/S.58 (Part C)A.160/S.60 (Part D)


Director of Government Afairs
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A.162/S.249 (Parts D, G) A.158/S.58 (Part C)A.160/S.60 (Part D)


Deficit Reduction Plan & Executive Budget – Health Insurance Taxes



The Business Council strongly opposes provisions in the 2009-10 Executive Budget that would impose almost $770 million in new or increased assessments and surcharges on health care and health insurance, including $590 million within the Deficit Reduction Plan.  These proposed taxes will add hundreds of dollars to the cost of providing private health insurance for the average family, including employer-provided coverage.  Already struggling to afford health coverage, many employers and their workers will simply not be able to absorb these increases, thereby adding to the number of uninsured New Yorkers or driving more New Yorkers into government-funded programs.

Business Council members have repeatedly identified the cost of employee health coverage as their most significant cost-of-doing-business issue.  New Yorkers - both individuals and businesses - that purchase health insurance currently pay more than $3.1 billion in health taxes through the Covered Lives Assessment; the (HCRA) hospital services surcharge; the Insurance Department Section 332 industry-wide assessments that fund Department operations and are also suballocated to other agencies and programs; and the 1.75 percent premium tax. 

It is estimated that the current health tax burden already adds between 3 and 7 percent to the cost of health coverage.  Because employers pay for most privately insured New Yorkers' health benefits, these various insurance surcharges and industry assessments are viewed as taxes on business. They drive the cost of doing business in New York higher and create obstacles to private sector growth.

The Deficit Reduction Plan and Executive Budget would increase these four health taxes and add additional taxes as follows:

  • $226 million in Insurance Department Sec. 332 assessments to pay for public health programs, Timothy's law mandate, tobacco prevention, early intervention program (60 percent of the overall $382 million to be generated from the assessments imposed by the Insurance Department on all domestic insurers comes from health insurers). This represents a huge shift of program costs from the General Fund and HCRA to the Department of Insurance assessments. 
  • $240 million increase in the Covered Lives Assessment, raising this assessment to $1.19 billion
  • $62 million by increasing the Article 32 premium tax from 1.75 percent to 2 percent
  • $126 million by increasing the HCRA hospital services surcharge from 8.95 percent to 9.63 percent
  • $50 million from expanding the 9.63 percent hospital services surcharge to other services provided in other health-care settings
  • $63 million from establishing a health claims processing tax on third party administrators.

If approved, the health taxes in the Deficit Reduction Plan and Executive Budget will drive up the cost of health insurance for all Business Council member employers that purchase health coverage – from sole proprietors and small businesses to the largest self-insured companies – yet will provide no additional covered benefits or have any effect on addressing the rising cost of health care.  

Rather, by pushing premiums higher, these taxes will force more business owners – particularly small business owners - to reduce or eliminate coverage for their workers, driving up the ranks of the state's uninsured, or shift more of the cost to their employees.

For these reasons, The Business Council strongly urges you to reject these new and increased taxes.