Mark Wagar, President and CEO of Empire BlueCross BlueShield urged further improvement to the federal health care reform legislation that today does little to control the rising costs of health care and will increase premiums for too many New Yorkers and too many across the nation.
"We urge Congress to not support a bill that will further increase the underlying costs of health care premiums that New York residents pay while, at the same time, subsidizing other states," added Wagar. Additionally, Wagar offers specific congressional actions that will make the most difference to New Yorkers, including:
* Reducing taxes for those already paying for health benefits and not starting taxes until reform changes take effect
* A stronger individual mandate for a more basic, minimum benefit package -- potentially reducing New Yorker individual premiums by more than 60 percent
* Greater investment in real cost and quality improvement measures for health care providers
* Reducing the disproportional impact of Medicaid cost shifts to the state of New York
* Addressing the disproportionate share of Medicare cuts New York beneficiaries will shoulder
On Saturday, the United States Senate Majority released its "Manager's Amendment" to the health care reform legislation currently being debated in the U.S. Senate. One provision in the amendment included a multi-billion annual tax that will be levied on the health insurance industry. As stated by the Congressional Budget Office, this tax will get passed on to consumers through higher premiums. The amendment specifically provides that a few not-for-profit health insurance companies will be exempt from this tax -- in essence leaving for-profit plans and most not-for-profit plans and their members, to shoulder the entire tax burden.
What does this mean to the nearly 17 million New Yorkers who have private health insurance?
It means that New Yorkers will have to share the burden of paying what will eventually be a multi-billion dollar national health coverage tax. The legislation is already expected to result in increased premiums -- this provision will only add to this negative impact. New Yorkers with private coverage will be forced to subsidize other states that were exempted from the tax due to the efforts of a few large special interest not-for-profits in certain States.
Any proposal to tax only certain health plans will create an uneven competitive playing field, without improving access to health benefits coverage or enhanced health services. While some plans are technically "not-for-profit", that does not mean they are not "profitable." Insurers are required to generate a "net income" in order to help ensure they can pay future claims by members. In many cases, not-for-profit simply reflects a tax status under the Internal Revenue Service Code and the behavior of not-for-profit and for-profit plans are identical. In fact, in many states, the net income on a per-member, per-month (PMPM) basis for not-for-profit health plans is actually higher than that of the for-profit health plans.
Over time, un-equal taxation will lead to the erosion and potential insolvency of those plans that bear a disproportionate share of the tax, including for-profit plans, as a progressively smaller share of the overall market would bear the burden of sustaining the entire amount of the tax. Perversely, the government will ultimately receive less revenue from the tax when there are fewer entities remaining subject to the tax.
Empire BlueCross BlueShield is the largest health insurer in New York supporting nearly six million members and more than 38,000 business, union and small employers in New York.
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