By Michael Capaldo
The New York State Assembly recently passed a bill that would outlaw private health insurance for the majority of New Yorkers, force many of them to enroll in a state-run health plan, and make everyone who lives and works in New York State – whether they enroll or not – pay for it through new taxes on payroll and investment income.
The New York Health Act was first introduced in the early 1990s, when 13.5 percent of New Yorkers didn't have health insurance. Regarded as an impractical and incredibly expensive idea since it was introduced 26 years ago, it's only passed the Assembly a few times – and never once made it out of committee in the Senate.
Some may think it's an idea whose time has come, but the facts prove otherwise. In the quarter-century since Democratic Assemblyman Richard Gottfried first introduced his bill, the number of uninsured New Yorkers has dropped from 13.5 percent to 5.4 percent – and rates for individual coverage decreased by 53 percent – because of the passage of the Affordable Care Act.
During that same period, the Legislature passed the Health Care Reform Act (HCRA). Intended to help hospitals transition from state-regulated pricing of services, it was turned into an ongoing revenue stream by the Legislature, which extends HCRA's taxes every time that they're about to sunset.
Supporters of the bill claim that it will generate cost savings via efficiency – but it eliminates all copays, deductibles and coinsurance, in effect covering all health care expenses. The bill also allows for providers to negotiate payment rates with the state for their services via collective bargaining, as if they were a union.
As such it's difficult to expect that the bill will bring about any savings – especially when considering the state's track record of creating revenue streams, increasing them and using them for other purposes.
Medicare, Medicaid and Essential Plan enrollees would give up their current coverage, as would many who receive health insurance from their employers. Employers who provide coverage via self-funded plans – 25 percent of New York residents – can't be forced to participate. But they and their employees will be forced to pay for the plan since the plan is funded by new payroll and investment income taxes.
The state's efforts within the framework of the Affordable Care Act have created some successes. The Legislature should look to capitalize on those successes and that existing framework instead of advocating for a costly and inefficient state-run health care plan that will lead to a crushing tax burden being imposed upon New York residents and businesses.
Michael Capaldo is an employee benefits consultant and media chairman of the New York State Association of Health Underwriters.