NY excessive taxes drive up healthcare costs

January 17, 2013 Updated Jan 17, 2013 at 8:35 AM EDT

By WKBW News
By Tracey Drury, Buffalo Business First Reporter

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January 17, 2013 Updated Jan 17, 2013 at 8:35 AM EDT

Some of the state's largest health insurers are pushing back in an awareness campaign about rising health insurance costs, putting the blame squarely on the state's shoulders.

The report, released Jan. 16 by the New York State Conference of Blue Cross Blue Shield Plans (NYSCOP) and business groups, says New Yorkers with private health coverage will pay $4.8 billion in state health insurance taxes this year. And with employers paying the bulk of premiums, the state tax on private coverage amounts to a hidden business tax.

The analysis of health insurance taxes, titled "The Facts About Taxes on New York's Privately Insured" is one component of a public education campaign designed to increase awareness of the taxes and fees the groups say are driving up the cost of health insurance.

NYSCOP is a partnership of Rochester-based Excellus Blue Cross Blue Shield, the parent of Univera Healthcare, and New York City-based Empire Blue Cross Blue Shield. In addition to the insurers, the report was supported by The Business Council of New York State, the National Federation of Independent Business and Unshackle Upstate. Both groups say the state's taxing policies are putting employers at risk.

"New York State's excessive taxes on health insurance have been driving up the cost of coverage for decades, stagnating small businesses and making New York one of the most expensive health insurance markets in the country," said Heather Briccetti, president and CEO of The Business Council of New York State. "New taxes and fees in the federal health care law will add a financial burden on New York families and small businesses at a time when they can least afford it."

Brian Sampson, executive director of Unshackle Upstate, echoed those thoughts, saying that new taxes and fees, especially hidden ones, goes against the group's goal of improving the upstate economy.

"New York cannot attract and retain great employers and employees if it is not competitive. And tacking on billions of dollars' worth of veiled health insurance taxes and fees is unacceptable," he said.

The NYSCOP report highlights four state taxes that affect the cost of health insurance premium: A tax on health plans for each covered life that they insure, known as the Covered Lives Assessment, which will result in $1.05 billion in payments; a 9.63 percent tax on sales by hospitals and other health care services, $3.02 billion; assessments on all health plans to fund operations of the state's insurance department within the Department of Financial Services, $331 million; as well as premium taxes on those who receive health coverage from commercial insurers, $406 million.

Last spring, Business First included information about some of those tax payments in a story about how insurers break down their administrative costs. Excellus, which had total revenue of $5.7 billion, paid $32.6 million alone to the state insurance superintendent in 2011, the largest single expense in the general administrative category; while Independent Health, where revenue totaled $1.62 billion, paid $6.2 million in taxes and fees to the state. For HealthNow NY, the parent of BlueCross BlueShield of WNY, the expense totaled $13 million in assessments in 2011 just for its share of the state insurance industry payments for operational costs.

"They amount to additional taxes to us as a business doing business in New York," said Julie Snyder, director of corporate relations. "It definitely impacts the cost of health insurance for our members and for us as a business. It is a hidden cost."

The NYSCOP report also highlighted new federal health insurance taxes beginning in 2014 that will boost the payments even more, including two new taxes stemming from the federal Affordable Care Act that will levy another $1.7 billion, bringing the total health insurance tax bill to more than $6.5 billion.

The complete report is available here.

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