It’s enough to make you sick.
While the nation debates health-care reform, state Democrats are secretly considering $1 billion in new taxes on medical services, The Post has learned.
Although the taxes would be imposed on health-care providers, they’d be passed along to insurers or local governments. And it’s ultimately taxpayers who’d be sucker-punched.
The clandestine strategy was prompted by Democrats desperate to dodge Gov. Paterson’s proposed cuts in education and more readily noticeable health-care spending, according to a source.
“The Democrats don’t want to cut programs as Paterson proposed, so they’re looking at a health-care hike as an alternative,” said the source. “They’re looking at another round of tax hikes.”
The increases are expected to be considered by the state Senate Finance Committee, headed by Brooklyn Democrat Carl Kruger, at a two-day special legislative session slated to begin today.
They’d be imposed on top of about $8 billion in new taxes and fees approved earlier.
Since the new taxes would show up on bills to insurance companies, they would likely raise premium rates.
The measure would also hit local governments, which pay a portion of all Medicaid costs. They would then scramble to make up their losses through taxes.
New Yorkers already dig deep for their medical insurance.
City residents who buy their medical coverage directly from insurers saw premiums skyrocket 20 percent to 30 percent this year, a Post analysis shows.
For GHI’s policyholders, premiums surged 30 percent. That means the monthly cost for an individual shot up to $2,277 for HMO coverage, a $526 increase compared with a year ago. The price tag now comes to a staggering $27,324 a year.
Health-care experts agree the increases are evidence that the market for individual policies — mostly from the city — has collapsed.
They described a vicious cycle in which yearly increases drive younger and healthier policyholders to drop their insurance coverage, leaving sicker and older customers in a shrinking pool to pay for even higher medical premiums.
There are about 31,000 policyholders in the direct-pay market, down from more than 100,000 a decade ago
“The direct-pay market has been in a death spiral for years. It’s the worst place to be,” said David Sandman of the New York State Health Foundation.
Under state law, insurers must offer comprehensive HMO and out-of-network coverage for those who can’t obtain insurance through an employer. But no authority checks whether the increases are fair.
Following deregulation a decade ago, the state Insurance Department lacks the power to review or reject premium increases. Insurers are only required to file their plans with the state.
Paterson has proposed legislation to give the Insurance Department “prior approval” of rate increases. The proposal was sidetracked during a power struggle in the state Senate.
“We can’t investigate whether those premium increases are justified before they go into effect. It makes sense to have regulatory oversight of health-insurance premiums in New York,” said John Powell, the Insurance Department’s health policy chief.
The health-care bill passed by Congress addresses the problem by requiring virtually everyone to obtain insurance.
Those who don’t get coverage through their job would enroll in exchanges. Lower-income citizens and merchants would be eligible for subsidies.