Health reform hurts, helps Will changes put New York taxpayers on the sick list? Or will gains lower costs? Final bill could offer a bit of both
By CATHLEEN F. CROWLEY, Staff writer First published in print: Sunday, January 3, 2010
National health reform means 2.5 million more New Yorkers will get health coverage, but it could come with a high price tag for the state.
The bill approved by the U.S. Senate would cost New York state an additional $1 billion to insure those previously uninsured, the state would likely create a new bureaucracy to run an insurance exchange and New Yorkers with rich health benefits -- including many state and county workers -- may be taxed more. The House bill is much more generous to the state, but there is no telling which version will get final approval from Congress. Leading up to the vote, the state and interest groups will be lobbying for some of the more favorable wording of the House bill.
Here's a closer look at three issues that New Yorkers should watch:
More eligible, but little aid
Millions of additional New Yorkers will be eligible for Medicaid under health reform, but the Senate plan would pay for only a fraction of them. Medicaid is the public health plan for the poor and disabled. The Senate bill gives extra money to states that do not yet enroll people who make up to 133 percent of the federal poverty level, which is about $14,400 annually for an individual and $29,300 for a family of four.
New York leaders have already expanded coverage well beyond that point. Currently the state enrolls adults with annual incomes up to $17,300 and will soon increase the threshold to $21,600.
"Since New York is one of the states that has gone out in front and provided health care coverage to more of its citizen, we will not get any enhanced federal funding," said Wendy Saunders, the state's deputy secretary for health, Medicaid and oversight.
As a comparison, Louisiana's Medicaid system doesn't cover any single adults and only enrolls parents who make up to 17 percent of the federal poverty level, which is a household income of less than $4,000 annually. Under the Senate plan, the federal government would pay 95 to 100 percent of the costs of expanding the Louisiana Medicaid system to cover adults making up to $14,400.
The House bill, on the other hand, would add $4 billion to the state's coffers because it would pay for some of the adults already enrolled in Medicaid.
State leaders have encouraged the New York Congressional delegation to work the House formula into the final version of the health reform bill.
"The delegation certainly has been supportive," Saunders said. "We are feeling cautiously optimistic."
'Cadillac' tax on plans?
To pay for the additional Americans who will receive free or subsidized insurance, the Senate bill proposes to levy a "Cadillac tax" on people with rich health benefits. Many state and county workers could be hit by the new rule.
"It's another way of taking from those that have enough to support those that don't have enough," said Thomas Flynn, a Rochester-based principal at Mercer, a national consulting group that advises employers on health benefits and wages.
Unions, including those representing public employees, traditionally have sacrificed pay in return for better benefits so their health plans are typically generous, Flynn said. The tax works like this: Individuals with plans worth more than $8,500 and families with plans worth more than $23,000, would pay a 40 percent tax on the value that exceeds the threshold. The value includes the annual premium, employer contributions to health insurance, coverage for dental, vision and other benefits, and reimbursements from health savings accounts. So an individual plan with $9,500 worth of benefits would be taxed $400.
Government workers aren't the only ones who would be affected. Statewide, the average insurance premium in 2016 is expected to be $13,500 for an individual and $24,000 for a family, according to Saunders, making it likely that many New Yorkers would be subject to the Cadillac tax.
"Assuming this becomes law, labor and management need to start talking about how to avoid that threshold," said John W. Rodat, commissioner of management and budget for Albany County.
Rodat said the tax will ripple into collective bargaining and wage issues. There will be a "cross-over point" where taking cash would be less expensive than taking a health benefit for workers, he said.
A national survey by Mercer found that nearly two-thirds of employers would cut health benefits in order to avoid the tax.
Kenneth Brynien, president of the state Public Employees Federation, said union leaders are lobbying Congress to stop the tax, which is not part of the House proposal.
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