The Business Council of New York State strongly opposes S.3577 (Rivera) / A.5248 (Gottfried), which creates the New York Health Plan, a government-run healthcare system.
Year after year, the sponsors introduce a version of this bill, purposefully lacking specifics. However, it remains abundantly clear that the proposed system would draw revenue from a massive new payroll tax (paid at least 80% by employers, 20% by employees, and 100% by self-employed individuals, as well as taxes based on other taxable income, such as capital gains, interest and dividends).
There is no effective limit on these new taxes as it creates a parallel income tax structure with no set tax rates or tax ceilings. Estimated costs have ranged from the rose-colored $91 billion per year touted by the bill’s sponsor, to as much as $226 billion yearly from independent estimates. However, the current version of the plan calls for the addition of long-term care, estimated at an additional $50 billion annually, bringing the cost of the New York Health Plan to over a quarter of a trillion dollars per year. The detrimental ramifications of the largest tax increase ever (tripling existing state taxes) are almost beyond imagination.
The bill also makes most group health insurance coverage illegal in New York State, prohibiting the issuance of insurance policies that "duplicate" coverage offered to individuals under the New York Health Plan. In this one provision, this bill eliminates an entire industry sector in New York along with the jobs and family incomes that go with it, as well as eliminating coverage choice and options for the vast majority of New Yorkers. This legislation could lead to the loss of 150,000 jobs, as high-wage, high-value industries move to neighboring states. The downstream impact of these job losses, felt by vendors serving those employers as well as every business patronized by the employees, would be extraordinary.
Amazingly, the sponsor's bill memo contains no real fiscal or economic impact assessments, no calculation of the amount of new taxes to be imposed, no apparent consideration of the adverse economic impact of eliminating an entire industry sector and its related jobs, or any other evidence of a serious assessment of its costs and benefits.
This legislation is also deeply flawed in its calculations and attempts to use existing federal funds to pay for the program. The bill uses funds, now received for Medicare, Medicaid, Family Health and Child Health Plus combined with state revenue to fund the New York Health Trust Fund. There is simply no guarantee or even reason to suspect that the federal government would grant necessary federal waivers to allow New York to fold those programs into New York Health. Further, Medicare money belongs to the recipient rather than the state. Thus, it is not feasible or legal to incorporate these funds.
Perhaps most disturbing is the shocking fact that for all the economic destruction that this plan would cause, it will hardly increase the percentage of insured New Yorkers. New York has been particularly successful in providing insurance coverage to our residents. In fact, more than 95% of state residents have coverage – New York’s uninsured rate dropped to 4.7 percent in 2017, the lowest ever recorded. Of the remaining New Yorkers who are uninsured, half are believed to be Medicaid eligible. This leaves a very small percentage of New Yorkers left to insure to achieve universal coverage.
While more work is needed to address the cost of health care and subsequently health insurance, we believe that there are many avenues that can be pursued to ensure universal coverage in New York without resorting to programs that will cost hundreds of millions of dollars, destroy tens of thousands of jobs and severely damage our economy for decades to come.
This bill would restrict health care choices for New Yorkers, diminish the quality of health care in the State, triple our tax burden and make the State a far less attractive place to do business.
For these reasons, The Business Council opposes the enactment of S.3577 (Rivera) / A.5248 (Gottfried) in the strongest possible terms.