MEMORANDUM IN OPPOSITION

This legislation is another misguided effort to establish a community reinvestment program by excising excessive profits from health plans and “reinvest” that money into New York’s health care system. The Employer Alliance for Affordable Health Care is a coalition of nearly 3,500 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 legislation represents a bald face attempt to highjack money that has been accumulated through the premiums paid by small businesses and sole proprietors. The Employer Alliance demands that any excess premium paid to health plans and earmarked for “reinvestment” should be returned to the businesses and premium payers that paid them in the first place.

While this proposal to redirect “excess profit” is dubious enough, we have equal concerns as to where this money is being earmarked. Under the terms of the bill, revenues raised from this tax will once again go to subsidize health care infrastructure – presumably hospital operations. What the sponsor of this bill fails to realize is that there is already a substantial investment being made by the state and federal government targeted to hospitals statewide. 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.

Health care costs are the number one concern for small businesses in New York. Years of double-digit increases in excess of the rate of inflation, has left New York premium payers beleaguered. In tandem with those high premiums, New York’s businesses pay substantial taxes to underwrite New York’s health care system. In fact, no other state taxes health insurance premium payers as aggressively as New York. Currently, employers pay more than $2.5 billion annually to finance bad debt and charity care as well as Graduate Medical Education. New York State’s health Insurance taxes represent the second highest tax on employers - second only to corporate franchise taxes.

This legislation ignores the needs of those who have underwritten hospital and health care services in New York for decades. While we leave it to regulators to determine the proper level of plan reserves to ensure the future payment of provider claims, in all fairness, any so-called excess must be returned to the small businesses and individuals who paid them.

For all these reasons, the Employer Alliance for Affordable Health Care stands with the Business Council of New York State, the National Federation of Independent Business in opposing the passage of S.6506/A.8704.

Employer Alliance For Affordable Health Care
PO Box
Albany, New York 2201-1412
(518) 462-2296
employeralliance@yahoo.com
www.employeralliance.com
Jeff Leland, Chairman