State holds down health insurance premiums (not)

by E.J. McMahon |  | NY Torch

Governor Cuomo’s office has issued a press release boasting that the state Department of Financial Services has turned down $500 million in proposed private health insurance premium increases. But here’s the thing: New York State is also imposing more than $4 billion a year in taxes and assessments on private health insurance, mainly to subsidize Medicaid and other public insurance programs through the Health Care Reform Act (HCRA) budget.

See details here — from an obviously interested party (the Conference of Blue Cross Blue Shield plans), but unassailable on the specifics. State government charges added to health insurance premiums are, in effect, the third largest tax New Yorkers now pay, behind the personal income and sales taxes, and ahead of corporate franchise tax. The “covered lives assessment” on private insurers alone is costing New Yorkers more than twice as much as the Cuomo administration just “saved” in premium increases.

Interestingly, the second sentence of Cuomo’s press release has the governor emphasizing that “more needs to be done to control the cost of health care, which is the underlying reason premiums continue to rise,” and the governor is directly quoted as saying that health insurance “must be made affordable by identifying ways that can be used to restrain the rising cost of health care services.”  So true.

Unfortunately, not only is the state (under a policy pre-dating Cuomo) driving up the cost of health insurance by taxing it, but a certain new federal health insurance law with an Orwellian name (the Affordable Care Act) is expected to drive up health care costs even further.  Indirectly, of course.

As P.J. O’Rourke observed: “If you think health care is expensive now, wait until you see what it costs when it’s free.”  The New York corollary: if you think health insurance is too expensive now, wait until you see how costly it gets when the state works harder to hide the bill from you by holding down premiums.



- E.J. McMahon is the Research Director at the Empire Center for Public Policy.