MEMORANDUM IN SUPPORT

Bill: S.8481– An Act to amend the insurance law and the legislative law in relation to implementing the health care quality and cost containment commission.

The Employer Alliance for Affordable Health Care is a grassroots coalition of more than 2,500 employers and individuals committed to keeping health care in New York affordable. S.8481 seeks to establish a more rational approach to legislating health insurance mandates by creating the New York Health Care Quality and Cost Commission to provide the Legislature with cost/medical efficacy studies on proposed health insurance mandate prior to legislative consideration. We enthusiastically support its passage.

The Employer Alliance applauds our lawmakers and the Governor for agreeing to underwrite this proposal with a $300,000 appropriation in the 2006-2007 budget. S.8481 is required to formally establish the commission, its duties and functions. Without this implementing legislation, New York will miss an opportunity to procure an important weapon in the crucial fight for affordable health insurance.

New York’s insurance markets are in crisis and the symptoms of this crisis are increasingly evident:

· According to the United Hospital Fund, in 2003 employer-based health insurance coverage in New York State dipped to 60%. In New York City that number is a shocking 47%. Surveys confirm that the overwhelming reason why employers don’t provide coverage is affordability.

· Despite intensive efforts to enroll eligible New Yorkers into subsidized programs, nearly one-in-five non-elderly New Yorkers still have no health insurance. That number drops to one-in-four in New York City.

· Family health insurance premiums in New York cost nearly as much ($11,400) as the annual wages for a full-time minimum wage employee.

· Recent surveys by the NFIB and the Business Council confirm that health insurance costs – not taxes – are the leading concern for small businesses in New York.

Numerous studies have conclusively determined that there is a nexus between high premium costs and the number and cost of state health insurance mandates. If we are to keep premiums affordable, we must first ensure that government takes no action that would increase premiums. An independent mandate commission will provide the necessary data to help lawmakers make sound decisions that will ensure their actions won’t further erode insurance coverage in New York.

While New York has not had the benefit of a mandate commission, it has undertaken two mandate studies in the past six years with beneficial results, highlighting the importance of having a full-time commission. New York’s chiropractic mandate law (1998) included a requirement that the Department of Insurance study the impact of this new mandate. That study, released in 2000, determined that the cost of these services accounted for as much as 2.6% of premium and concluded that there were “no savings attributable to the passage of the mandate.” Unfortunately, this study was done after the enactment of the legislation. We have little doubt that if such a study were available to lawmakers prior to the passage of this mandate, it would have looked very different – or perhaps would not have been passed at all. It has since been determined that the chiropractic mandate is one of the most expensive mandated services in New York adding more than $265 to the annual premium of every family policy in New York. In 2002, while considering a mandate to cover computer aided detection (CAD) mammograms, the legislature wisely passed a bill that called for the Department of Insurance to study this issue. The report concluded that a lack of data prevented a recommendation to mandate computer aided detection screenings. Since that time new studies on CAD have been released. If a commission was in place, they might be able to effectively track scientific advances to determine if their findings in 2002 are still appropriate today. Finally, in 2003, the Employer Alliance issued an independent actuary report on the cost of New York’s mandates. That study concluded that the current mandate burden cost every fully insured policy 12.2% annually – nearly $1,300 on every family policy.

Mandate commissions are not a new concept. Twenty-six other states have enacted laws to create entities similar to the one envisioned in S.8481. This includes our closest neighbors, Pennsylvania, Vermont, Massachusetts and New Jersey. These states have all decided that any measure that may increase costs and diminish coverage needs to be scrutinized before consideration. As a state with one of the highest premium rates in the nation, our legislators need a commission to provide them with the data they need to make sound decisions.

Taking the lead from Massachusetts, many states are now seeking innovative approaches to address the chronic uninsured. Before they can make a significant step in this direction, states must first make sure that those with insurance have the capacity to continue to afford it. A mandate commission will help make this happen in New York. The New York Legislature has already seen the wisdom of such an entity and supported it with a $300,000 appropriation. It would seem that only the dysfunction of Albany politics stands between the passage of this necessary legislation and more affordable health insurance. We hope lawmakers will take the lead and pass this long over-due legislation.

September 2006