New York’s individual health-insurance market is not often held up as a national model, and for good rea son. It’s the most regulated, most expensive and, as a result, one of the smallest in the country, with only a few costly health plans available.
Since New York policymakers inflicted costly regulations on insurers in 1994, enrollment in the individual insurance market has plummeted by 96 percent.
Current prices are staggering. In New York City, the cheapest individual plan costs $9,036 a year for a single person and $26,460 for a family. In contrast, the Congressional Budget Office estimates the average national family premium at $12,000 to $15,000 a year.
Yet both the House and the Senate health-reform bills would make the rest of America look more like New York’s dysfunctional market -- and then force New Yorkers to foot a larger share of the trillion-dollar cost.
Only five states now have New York-style insurance regulations, but both bills force those rules on all 50 states and then force people to buy coverage or face tax penalties. Think about it: If 45 states don’t regulate insurance like New York does, there is probably a very good reason. And there is: These regulations drive up costs and limit choices.
Adding insult to expensive injury, Congress also plans to expand Medicaid coverage. Here, too, New York is an example of what not to do. The Empire State has the most expensive Medicaid program in the country -- spending as much as Texas, Florida and Illinois combined.
New York’s Medicaid program is the fourth largest among all the states as a percentage of the population enrolled, yet the state’s rate of uninsured ranks 24th highest in the country. Of the 26 states with a lower rate of uninsured than New York, only two have a larger share of residents on Medicaid.
Clearly, doubling down on Medicaid is not the right path to universal coverage -- yet Congress wants to push millions of Americans into Medicaid and thrust new costs onto the states.
The Senate bill (which is more likely to become law) envisions Medicaid coverage for adults with no children and no disabilities -- many of whom don’t qualify for long-term welfare or food stamps. In fact, only five states now have a traditional Medicaid program that covers such individuals at all and only one state covers adults at income levels as high.
The Senate proposes to pay for this new health-care entitlement through new taxes on the middle class and wealthy, including a new Medicare payroll tax on individuals making more than $200,000 and family incomes over $250,000. Since government programs always cost more than advertised, expect those taxes to go up.
But making the nation look a lot more like New York won’t leave New Yorkers unscathed. Middle- and upper-income taxpayers here will foot more of the bill because our higher cost of living, higher health-care costs and more expensive insurance plans makes us a target of Congress’ soak-the-rich approach to funding health-care reform.
For instance, the Senate bill’s Medicare payroll-tax hike will hit a 30 percent larger share of New Yorkers than of Americans as a whole.
And Tax Foundation economist Patrick Fleenor estimates that the 40 percent excise tax on “Cadillac” health plans contained in the Senate bill will also hit New Yorkers more, because of our higher health-care costs. A back-of-the-envelope estimate, based on 2008 Medical Expenditure Panel Survey-Insurance Component data, shows that its impact would be about 8 percent heavier, on average, in New York than for the nation as a whole.
The House bill would be even worse for New Yorkers, because it contains a 5.4 percent income-tax surcharge on higher earners. The tax is projected to raise $461 billion nationally. According to Josh Barro, a Manhattan Institute expert on state tax issues, New Yorkers would bear at least $57 billion of this burden (12.3 percent).
Translation: Post-reform, under either the House or Senate bills, New Yorkers will be sending more money to DC as Democrats increasingly target the “wealthy” that live here.
Call it the Empire Plan: Congress would force the rest of the states into New York’s high-cost, overregulated insurance market -- and then send a disproportionate share of the bill to New York taxpayers. That’s the wrong plan for New York and the nation.
This piece originally appeared in New York Post