The Daily Dose
New Year, Same Old Problems
State lawmakers are back at the Capitol for a legislative session, which will likely be dominated by budget talks. And with health care being a major subject of debate in every legislative session, I am pleading with policymakers to keep affordability at the forefront.
Here’s why …
Each year, state and federal lawmakers pass dozens of laws that are well-intentioned, but often lead to higher costs. As a result, 7 cents of every dollar you spend on health insurance goes directly to the government, not for care, but for taxes, fees, and assessments. If that doesn’t sound like a lot, let me break it down in dollars and cents.
Health Care Reform Act (HCRA) Tax
Twenty years ago, New York state passed the Health Care Reform Act (HCRA), with the goal of ending state-imposed price controls on hospitals. The law’s intentions were good but it levied a hefty tax on health insurers and consumers to – in part – pay for the charity care that hospitals provide. Over the past two decades, HCRA taxes have ballooned to a whopping $5.5 billion a year and now rank as the third-largest tax in the nation’s highest-taxed state.
So what does that mean for a small, not-for-profit health plan like CDPHP®? Last year, CDPHP and its customers paid more than $45 million in HCRA taxes. That’s a scary number when you consider the continuous increase in health care costs.
Health Insurance Tax
Then there’s the health insurance tax (HIT), a $100 billion-plus federal sales tax the government kindly calls “an annual fee on health insurers.” The tax, imposed as part of the Affordable Care Act, is expected to increase the cost of insurance premiums by $7,000 over the next 10 years. In fact, the Congressional Budget Office said the HIT is “largely passed through to consumers in the form of higher premiums.”
The HIT will mostly impact the nation’s small businesses, as the National Federation of Independent Business says the tax will reduce private sector employment by about 200,000 jobs, 60 percent of that falling on small business. For CDPHP, the health insurance tax amounts to $27 million per year.
Covered Lives Assessment
Next up, let’s talk about a little (not so little) thing called the “covered lives assessment.” This state-based tax is an annual surcharge levied on health plans and is based on the number of people they insure. Created in 1996, the tax was intended to pay for graduate school medical expenses, but over time, it has been used for general funds. Last year, the state collected about $1 billion from New Yorkers in the form of the covered lives assessment. At CDPHP, this added up to just over $8 million.
Dizzy yet?
I could keep going, but I think you get the point. The number of taxes, fees, and mandates jacking up the cost you pay for health care is seemingly endless. The above-mentioned mandates were all well-intentioned, but were not designed to address the single-biggest problem facing our nation’s great health care system. The cost of health care is simply too high, and before lawmakers move forward on any health care-related legislation, I am imploring them to guarantee New Yorkers that they won’t once again increase the cost of their care.
John D. Bennett, MD, FACC, FACP About the Author
John D. Bennett, MD, FACC, FACP, is president and CEO of Capital District Physicians’ Health Plan, Inc. (CDPHP), an award-winning, physician aligned, not-for-profit health plan based in Albany, NY. Bennett has held the position since 2008 after serving more than 10 years as chair, vice chair, and board member for CDPHP. During his tenure, CDPHP has been ranked among the top-performing health plans in New York and the nation, most recently named #1 in Customer Satisfaction in the 2023 J.D. Power Member Health Plan Study. Under his leadership, CDPHP has also become known as a model employer regionally and nationally and was recently named among the top five Best Companies to Work for in New York by the Society for Human Resource Management, as well as Forbes Best-in-State Employers 2022. Prior to joining CDPHP, Bennett served as founding member and CEO of Prime Care Physicians, PLLC. During his tenure, he co-led a team of 25 cardiologists and helped grow the practice to a 100-physician multi-specialty group. Bennett is board certified by the National Board of Medical Examiners and the American Board of Internal Medicine, with subspecialties in internal medicine and cardiology. He earned his medical degree at SUNY-Downstate Medical Center, Brooklyn, and a Bachelor of Science degree at Rensselaer Polytechnic Institute. Bennett completed an internship and residency in internal medicine and a fellowship in cardiovascular disease at Albany Medical Center. He is a Fellow of the American College of Cardiology and the American College of Physicians. Bennett is currently board chair for the Center for Economic Growth and the Capital Region Chamber, and vice chair for the Palace Theatre. Bennett also serves on the boards of the New York eHealth Collaborative (NYeC), the Alliance of Community Health Plans (ACHP), America’s Health Insurance Plans (AHIP), Rensselaer Polytechnic Institute, and Russell Sage Colleges. Bennett is a member of the New York Public Health and Health Planning Council where he helps shape decisions related to New York State's public health and health care delivery system. Well-known locally and nationally for advancing health care innovation, Bennett was recently named to Crain’s New York Business 2021 Notable in Health Care, as well as the Albany Business Review’s Power 50 list.
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