Friday, February 26, 2016

New Yorkers don’t need another health insurance tax

Health Republic Insurance of New York was the largest of the 23 non-profit cooperatives created under the Affordable Care Act. It started up in 2013 after receiving $174.4 million in seed money from the feds. At its peak, it was serving 200,000 New Yorkers. Despite such a massive customer base, its business model wasn’t sustainable, so, under fear of insolvency, it was shut down by state regulators last year after losing $77.5 million in 2014 and another $52.7 million in just the first half of 2015.

The failure of Health Republic left many doctors, hospitals and other providers hung out to dry. They’ll never have the chance to collect nearly $200 million in unpaid claims.

Because of that, there’s a concerted effort by led by various health organizations to bring a health guaranty fund to New York. The Empire State is the only one in the union lacking such a system which would reimburse doctors and hospitals if a health plan went belly up. This is being championed in the legislature by Senator David Valesky (D - Oneida) as bill S.6667 and Assemblyman Richard Gottfried (D-Manhattan) as bill A.9311.

While my heart goes out to the healthcare providers who remain unpaid for services rendered, it’s not the job of the government or taxpayers to mitigate a business’s risk or make one whole in the event of a severed business relationship. Risk and the management thereof are inherent parts of being an entrepreneur and doing business.

No matter what business you are in, customers will go bankrupt and you account for that as uncollectibles in your books and/or you do everything possible to prevent your firm from entering into or continuing to do work with customers who are difficult payers or show a chance of going out of business.

Despite your best efforts, you still end up getting hurt every once in a while. We’ve had customers go bankrupt on us. When they did we never asked for the state to bail us out. Nor do we want it to. Nor can it. Manufacturers aren’t afforded the privilege of a guaranty fund and neither are farmers or retailers -- and none of us should be. So, why should such protection be granted to doctors and hospitals?

Money doesn’t grow on trees, either. Under their Valesky/Gottfried proposal, the state’s new account would be funded by an alleged one-time assessment on all health insurance companies. One-time? What if many more insurance companies go under due to the Obamacare model?

Even if they don’t, one assessment is one assessment too many; New York employers and the insured are taxed enough as it is. The state collects $5.6 billion annually in fees and assessments (read “taxes”) on health insurance. It’s a key reason why health insurance costs so much and is increasingly expensive every single year. When you see premiums rising by 5 to 10 percent per annum and employers putting high deductibles on their workers, there’s no more wiggle room. Everyone’s already paying enough. As a matter of fact, we’re already paying too much.

From the 29 February 2016 Greater Niagara Newspapers

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