The closing days of the legislative session could prove costly for New York health insurance consumers as lawmakers push a raft of proposals that would make coverage more expensive, harder to find, or both.

One such bill – which takes the side of drug makers in their perennial tug-of-war with insurance plans – has already passed both houses, meaning it will become law unless vetoed by Governor Hochul.

As a way of controlling drug costs, insurers often impose larger copayments for high-priced brand-name drugs, especially when inexpensive generic equivalents are available.

Drug makers have tried to offset that tactic by offering coupons that offset or eliminate the copayments for consumers. Some health reformers have argued that such coupons should be banned, because they encourage consumers and doctors to use unnecessarily expensive medications.

The bill recently approved by lawmakers – sponsored by Assembly Health Chairman Richard Gottfried and Senate Health Chairman Gustavo Rivera – would go in the opposite direction. It requires insurers to count the coupons against their customers’ annual deductibles, even when the customer is spending nothing out-of-pocket.

Although the proposal would save money for individual patients, the New York Health Plan Association has warned that it means higher costs overall for consumers, employers and taxpayers. 

A second piece of legislation pending in Albany would seek to impose a 9.63 percent tax on profits, dividends and certain other transfers that flow out of state.

The proposal nominally targets big, for-profit companies, but industry officials say the wording of legislation would also cover certain payments made by not-for-profit insurers to affiliates in other states. Critics also contend that the proposal would violate the U.S. Constitution’s Commerce Clause, which generally forbids state taxes that discriminate against out-of-state entities. (Those were the grounds on which the initial version of New York’s tax on prescription opioids was thrown out in court.) 

Although the out-of-state transfer tax has yet to pass either house, its last-minute progress bears watching. It’s being pushed by the health-care workers union 1199 SEIU and the Greater New York Hospital Association, two of New York’s most influential lobbying forces.

New York already imposes heavy taxes on health insurance through the misleadingly named Health Care Reform Act, or HCRA. The law’s two surcharges on coverage are projected to bring in $5.2 billion this year, making them the state’s third largest source of revenue after income and sales taxes.

New Yorkers and their employers currently pay the second-highest health premiums in the U.S. If the state’s lawmakers continue imposing excessive taxes and ill-conceived mandates, that situation is likely to get worse.

 

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

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