MEMORANDUM IN OPPOSITION
Date: May 2, 2006
Bill: S.7002 (Morahan) - An
act to amend the public health law in relation to establishing a healthcare
reinvestment fund suburban demonstration project.
This legislation would
mandate more than a quarter-billion dollar tax solely on small business premium
payers who purchase their insurance from for-profit health plans in a
nine-county region. The Employer Alliance for Affordable Health
Care is a coalition of nearly 2,500 small and medium size employers
dedicated to keeping health insurance affordable by reducing government
mandates. While the focus of the Alliance has been on
traditional provider and service insurance mandates that disproportionately
impact small employers, this is a significant tax on small businesses and
accordingly we oppose this legislation.
New York’s businesses pay a
substantial amount of taxes to help underwrite health care in New York State. In fact, no other state taxes premium
payers as aggressively as New York
in the area of health care.
Currently, employers pay more than $1.5 billion annually to finance bad
debt and charity care as well as Graduate Medical Education. Additionally, premium payers contribute
taxes to help fund nearly $200 million in operational aid for the State
Insurance Department and other state programs. Today, health Insurance taxes represent
the second highest tax on employers in New York State
– only second to corporation franchise taxes. These taxes directly contribute to New York’s high health
insurance costs and rate of uninsured.
Instead of finding ways to alleviate high costs of health insurance,
this bill seeks to exacerbate this by further taxing those least able to
While this proposal to extract additional taxes is
bad enough, we have equal concerns as to where this money is being
directed. Under the terms of the
bill, revenues raised from this tax will once again go to subsidize hospital
operations. What the sponsor of
this bill fails to realize is that there is already a substantial investment
for information technology being made by the state and federal government
targeted to regional hospitals. In
addition to the HEAL grants authorized as part of the Hospital Rightsizing
Commission, hospitals will soon also be able to take advantage of federal
programs (“Fsharp”) created to address this same
need. Why these nine counties need
to tax employers to raise capital for the same needs is unfathomable and can
only be called an excessive demand.
It is time that lawmakers stopped catering solely to
their local hospitals and begin to take note of the toll these taxes are taking
on community businesses that are generously contributing to hospital operations
through very high premiums and taxes.
Without special attention to the burden that is being placed on small
businesses, New York
will continue to have a chronically high-uninsured rate and premiums well above
the national average.
The targeting of small businesses in nine counties to
produce more than one-quarter billion dollars is bad policy and will be
counterproductive. Once again,
small employers seek “parity” with large employers who can self-insure and as a
result have maximum flexibility in putting their benefit package together while
skirting certain state taxes and mandates.
Legislation like this only highlights this disparity - where those least
able are asked to contribute the most.
This legislation is unconscionable.
For all these reasons, the Employer Alliance for
Affordable Health Care opposes the passage of S.7002.
For Affordable Health Care
Albany, New York 12201-1412
Scott Miller, Chairman