Category Archives: Health Care

Hammond gets it right

The Empire Center’s Bill Hammond has a terrific OpEd in today’s NY Post that echoes a message we’ve been saying for years: mainly, that New York has a problem with health taxes. From the OpEd:

“The habit hooked the state government 20 years ago this month, when the Health Care Reform Act took effect…

Over the 12 years from 2000 through 2011, lawmakers either hiked the HCRA taxes or created new ones 14 times — causing annual receipts to almost triple. The addiction had taken hold.

Including the nation’s heaviest state tax on cigarettes, HCRA now brings in $5.5 billion per year, making it the third-largest tax in the nation’s highest-taxed state.

Insidiously, the surcharges on health insurance are collected in ways that hide them from public view. Yet they add as much as 6.2 percent to a typical New York City resident’s insurance costs, compounding the pain of high premiums and deductibles.

One of the surcharges, known as the “covered lives assessment,” varies wildly from one part of the state to another. In 2016, it ranged from $10.24 per year in the Utica-Watertown region to $202.82 in New York City, a difference of 1,880 percent.”

The OpEd goes on from there, and we encourage to read it in full: http://nypost.com/2017/01/12/new-york-is-addicted-to-health-taxes/.

The Business Council will release our own legislative agenda next week, and you can be sure we will have more to say on HCRA when we do.

Hard to find logic in DFS move

Much has been made recently about Howard Zemsky, the chief executive of Empire State Development, and his recent defense of Start-Up New York’s advertising campaign, which he said was “…paying dividends to New Yorkers in more intangible ways, including reversing…the state’s decades-old reputation as a place unfriendly to businesses.” Millions of dollars in advertising notwithstanding, we are very concerned with communications from other members of the administration, whose recent activities send a very chilling message to employers in New York.

In a recent letter regarding Anthem’s proposed acquisition of Cigna, Superintendent of Financial Services (DFS), Maria T. Vullo, took some unprecedented steps that highlighted the department’s inconsistent philosophies regarding the cost of healthcare in New York. Moreover, the letter sends a very strong and negative message to employers desiring to expand operations in New York, which is especially disconcerting given the significant longstanding economic presence these businesses already have in the state. Such actions should concern any of us trying to do business in New York.

As a representative of New York’s employers, I find it especially troubling that DFS dedicated much of their professed concern discussing the future market share of the commercial self-insured market. These are companies that opt to insure their employees out-of-pocket, rather than purchase insurance. Such insurance arrangements are typically entered into by sophisticated businesses in a very competitive and price sensitive market, and this is a market already regulated by the federal government through ERISA. While tensions between the state and the federal government over ERISA plans are not new, this letter signals a new attempt by a state agency to regulate employers in matters that fall far out of its jurisdiction.

Also deeply concerning is the DFS’ confusing logic on controlling the costs of healthcare for consumers in the state.  DFS simply assumes that a carrier’s increased market share will somehow have a negative impact on the value-based payment model being promoted by the state, leading to higher costs for consumers, despite the fact that there is no evidence to support such an assumption.

This logic is flawed in several ways. The letter says that competition in the health insurance industry is needed so that providers (doctors, hospitals, etc.) can negotiate with various insurers to maximize their income. Perversely, this will naturally lead to an increase in health care premiums, an issue to which the DFS should be particularly sensitive. The fact that increasing the income of healthcare providers is not part of the mission of the Department of Financial Services aside, this statement simply misses the point. While the verdict on the cost-savings of the value-based payment model is not yet in, such a model never envisioned a marketplace where healthcare providers are given endless leverage to negotiate universally higher fees.

Further, the letter fully ignores the reality of healthcare provider mergers and acquisitions in the state. Last year alone there were 940 healthcare service transactions in New York, up from about 480 in 2010. This increase is at an unprecedented pace in New York; one which is likely to only accelerate. Numerous recent studies show that such mergers create upward pressure on healthcare costs. If the Department of Financial Services is concerned with the cost implications of diminished competition, why isn’t this side of the equation being considered?

Employers in New York are saddled with some of the very highest costs of doing business in the nation. Everything from property taxes to workers’ compensation costs to the price of health coverage. In order to change New York’s poor business reputation, we need more than advertisements; we need policies that work to lower these costs for employers. We need consistency in policy across the state’s many regulatory agencies and we need regulators that stay within the jurisdictional limits set by law. It’s time that all of New York’s regulating agencies get on board to building a better economy for all of us.

Analysis highlights flaw in medical mergers

Today the New York Times took a look at medical practice and hospital mergers to help determine if the quality of care is worth the increases in costs. The analysis asserts that the use of what is known as an integrated delivery system (I.D.S.) is spreading but, according to the commentary, “…the evidence suggests that an I.D.S. doesn’t always improve patient care and keep costs down…”

The Times piece goes on to say, “Other research that examined 15 nationally prominent integrated delivery systems found no meaningful differences in the quality of care provided by their flagship hospitals, compared with their main competitors. And it turned out that the I.D.S. hospitals were more costly.”

Hospital and healthcare system mergers and acquisitions were supposed to create efficiencies and bring costs down. However, as this piece outlines, multiple recent studies have concluded that consolidation of medical providers leads instead to higher prices for patients.

Policymakers need to concentrate on legislative and regulatory solutions that ensure decreases in healthcare costs, instead of relying on methods that do the opposite. This is why The Business Council opposes measures such as S.4417-A (Murphy) / A.2888-A (Abinanti), which would exclude the Westchester Health Care Corporation from state antitrust laws in its contracts and arrangements with multiple providers.

Biopharmaceutical sector provides outsized economic benefit

PhRMA is out with a study that shows the biopharmaceutical sector has an enormously positive impact on job creation and economic growth in New York State. According to a newly released report, the sector provides more than 50,000 direct jobs and nearly 200,000 in additional jobs are supported by the sector. These jobs range in industry from science, to management, to architecture and engineering, to transportation, and more.

Those jobs account for more than $19B in wages to New York State residents. That income translates to roughly $4.5B in tax revenue for the state and federal government.

Beyond that, between director and indirect output, the goods and services produced by the sector generates a combined $74.1B in economic activity. That equals roughly $182,000 in economic output per employee, a truly astounding figure.

The full PhRMA report can be accessed here. A copy of the New York economic impact is posted below.

Biopharmaceutical sector provides economic benefit

Health Republic: What went wrong and why?

Crain’s New York recently published a terrific article laying out the reasons how and why Health Republic turned into such a catastrophic failure.

From the article:

“On Sept. 25, 2015, Health Republic was ordered to shut down by the same state and federal agencies that had given the insurer their regulatory blessings just two years earlier. In 20 months, from January 2014 through August 2015—when it became clear the insurer couldn’t survive—Health Republic had accumulated tens of millions of dollars in losses. The company was ordered to close its doors effective Nov. 30, leaving 209,000 enrollees to scramble for new coverage.

A three-month investigation by Crain’s New York Business shows that, from its conception in 2012, Health Republic was on unsteady ground. Crain’s found that management deliberately set low premium rates as a marketing ploy to attract customers. Regulators approved those rates but then wouldn’t let the company raise them after it became clear that the prices jeopardized the company’s solvency. 

To put it more bluntly; Health Republic’s failure was the result of negligent leadership and incompetent government oversight.

Again, from the article:

“By several accounts, DFS did not monitor Health Republic closely, aside from handling initial consumer complaints. It wasn’t until early 2015 that DFS began demanding monthly financial reports from Health Republic instead of only quarterly and year-end financial statements. By then, the company realized it had lost $77.5 million in 2014, an amount it had still hoped would be covered by the federal backstop. Meanwhile, Health Republic’s executives tried to reduce losses. They stopped selling policies in several upstate counties where claims were particularly high. The company also tried to interact directly with providers to manage patient care that generated expensive claims but was blocked by the restrictive contracts that had been signed with MagnaCare.”

Even now, months after the failure, the fallout continues. The real question is: What will New York State lawmakers and policy officials due to ensure that the regulators accomplish their primary mission of maintaining carrier solvency so this doesn’t happen again?

Report: State errors led to insurer’s collapse

Today the Empire Center released a report that concludes that the recent collapse of Health Republic (the health insurance co-op established under the ACA) which disrupted coverage for 215,000 New Yorkers, was a result, in large-part, to failures by the state and the Department of Financial Services (DFS). The report states that DFS took no obvious steps to address serious and glaring financial problems at Health Republic and instead used its regulatory power of prior-approval of health premiums to further lower Health Republic’s inadequate premiums.

Consistent with the position that The Business Council has often opined, the report concludes that DFS needs to concentrate more on plan solvency. We believe the goal of making health coverage more affordable is best achieved by the removal of high taxes and unfunded mandates, rather than the imposition of price controls through a politicized prior-approval regime. The Empire Center’s report can be found The Empire Center’s report can be found here.

New York State gets healthier

In a fascinating and thorough state-by-state study of public health, conducted by UnitedHealth Foundation (a charitable foundation of The Business Council member UnitedHealth) and the American Public Health Association, New York State climbs in the rankings to #13.  According to the report, New York adults are becoming a bit more physically active and our state’s obesity figures have slightly decreased.

While there is certainly room for improvement, New York’s climbing in the ranks represents a move in the right direction for all New Yorkers, especially employers who are always looking to help better the health of their employees. The study can be found here.

State Department of Health to ignore FTC

Late last month the Federal Trade Commission (FTC), prompted by a letter from The Business Council, several member companies, and other business groups, warned the New York State Department of Health (DOH) that the state’s Medicaid reform efforts may allow for anticompetitive behavior. But, according to a report in the National Law Review, it looks DOH is ready to ignore that warning.

Forgive us for going into the weeds a bit here: The crux of the issue is that the FTC believes a DOH-backed program called the Delivery System Reform Incentive Payments (DSRIP) in fact violates federal antitrust laws. We feel the same way, and said so in this letter. What we find most concerning is that despite objections from the business community and the federal government, the DOH is ready to ignore these concerns and move forward. Ultimately, we feel this will result in increased costs for the consumer which will in turn negatively impact the state’s economy.

The National Law Review has an excellent article on this issue, we encourage you to read it here.

Xerox awarded major contract

Congratulations to Xerox, a member company, on being selected by New York to update the state’s Medicaid claims processing system to a new technology platform that will put the Empire State on the cutting edge.

According to a report in Business Wire, the five-year contract totals just under $565 million. The article quotes New York State’s Medicaid Director Jason Helgerson as saying, ““Xerox is giving New York the flexibility to customize our Medicaid program so we can best serve both the people who rely on this system and the healthcare providers who are on the front lines of caring for them every day. We’ll rely on Xerox to offer a simple and straightforward experience for our service providers and our Medicaid population.”

The story goes on to add that the new system, dubbed Health Enterprise, will allow for:

  • Quicker updates
  • Modularity and interoperability
  • Mobile access
  • Population health management

For more information on the contract, and to read the whole story, please click here.

IBM aims to shake up the health care industry

Forbes.com is out with a very interesting story about how IBM, a member company, is making a significant foray into the health care industry.

According to the story, “IBM’s pitch is that it will be able to create a new middle layer in the health care system – linking the old electronic records systems, some of which have components dating back to the 1970s, with a new, cloud-based architecture, because of its deep breadth of experience.”

The article goes on to say that as part of the effort, IBM is acquiring two companies, Cleveland’s Explorys and Dallas’ Phytel. The computing giant also announced strategic partnerships with Apple, Johnson & Johnson (also a BCNYS member), and Medtronic.

The entire effort centers around IBM’s Watson computer. You probably remember Watson from its famous appearance as a contestant on Jeopardy! a few years ago.

The article states the jury is still out on whether Watson is up to the task, but IBM is convinced the technology is ready. Stay tuned!