Albany-(March 9, 2009) The state's leading labor and business organizations united today to oppose proposed health insurance taxes that would make coverage more expensive while doing nothing to reduce health care costs. The groups agreed that these taxes will increase health insurance costs and make it harder for employers and workers to afford coverage.
“The health insurance taxes proposed in the Executive Budget raise the cost of health insurance, thus making it more difficult to negotiate health care benefits. The proposal also penalizes employers that provide insurance, while allowing those who do not offer health insurance to continue paying nothing. As a result of rising costs for responsible employers, jobs are eventually cut and the number of unemployed workers grows across the state. During this historic economic downturn, New York simply cannot afford the dwindling tax base and faltering local economies sure to result from this proposal,” said Denis Hughes, president New York State AFL-CIO.
“The proposed health insurance taxes in the Executive Budget will drive up the cost of health insurance, making it unaffordable for many New Yorkers,” said Kenneth Adams, president & CEO of The Business Council of New York State, Inc. “Employers and their workers are already struggling to afford health coverage, many will simply not be able to absorb the increased costs caused by these taxes. The Business Council urges the Legislature to reject these taxes.”
“The current crisis should be a time that New Yorkers work together to get a handle on our long-term fiscal challenges, including the cost and availability of health care. Raising taxes on the health insurance industry may help close the immediate deficit, but it only increases the burden on employers and working people that is crushing our state economy,” stated Kathryn Wylde, president & CEO, the Partnership for New York City.
"Real healthcare reform involves finding ways to cut costs for employers that are providing health insurance to their employees. The executive budget does exactly the opposite. It punishes these employers by adding taxes to their healthcare costs and actually forces them to cover the cost of healthcare for uninsured employees of their competitors. Union labor in the building and construction trades, who are employed by thousands of employers in this state, opposes this proposal, which will damage our ability to continue providing health insurance to our members and create jobs in a struggling economy," stated Gary La Barbera, president of the Building and Construction Trades Council of Greater New York.
"If this tax is enacted we will be forced to make cuts to our welfare funds. These are benefits that we bargained for in collective bargaining and therefore we essentially paid for them," said Greg Floyd, president of the International Brotherhood of Teamsters Local 237.
"At a time when there is a national discussion on providing health care to everyone, this is not the time to be penalizing responsible employers, and the unions that represent these employees, by subjecting their health benefit funds to taxes. This can only encourage employers to walk away from health care" stated George Miranda, International Brotherhood of Teamsters Joint Council 16 President.
“Building Trade Employers Association union contractors are providing health insurance to construction workers on every one of our projects in New York City. Raising costs of employers who are doing right by their workers will only make it harder for us to compete and create jobs in an economy in crisis. That will send a terrible message not only to business, but to working men and women,” said Lou Coletti, president of the Building Trade Employers Association.
The State Legislature approved increasing health insurance taxes by $348 million as part of the Deficit Reduction Plan to help close the current year's $1.6 billion budget deficit. An additional $481 million in new and increased health taxes that were proposed in the overall Executive Budget await lawmaker action, including:
- $63 million from establishing a third party administrator claims processing fee, which is a $1 assessment on health, pharmaceutical, dental and vision claims valued at more than $20 processed by entities that administer self-funded health insurance plans. We expect that self-insured employers would ultimately be responsible for paying this claims fee.
- $180 million by increasing the state Insurance Department Section 332 assessment on all New York insurers; $108 million is estimated to be paid by health insurers.
- $62 million by increasing the Article 32 premium tax on commercial insurers from 1.75 percent to 2 percent
- $126 million by increasing the HCRA hospital services surcharge – essentially a sales tax on health care services performed in hospitals – from 8.95 percent to 9.63 percent, and
- $50 million from expanding the (proposed increased) 9.63 percent hospital services surcharge to other services provided in other health-care settings by establishing a physician procedure surcharge.
New Yorkers — individuals and businesses — that purchase private health insurance currently pay more than $3.1 billion in health taxes through the Covered Lives Assessment; the HCRA hospital services surcharge; the Insurance Department Section 332 industry-wide assessments that fund Department operations and are also sub-allocated to other agencies and programs; and the 1.75 percent premium tax. They simply cannot afford new taxes to be added on.
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