Provides for establishment of the New York health plan and makes an appropriation to the temporary commission on implementation of the plan

Summary of provisions

Section 1 amends the Public Health Law by adding a new Article 51 estab- lishing the New York Health Plan. Article 51 sets forth the administra- tive structure of the New York Health Plan (including its establishment as an independent public benefit corporation), the powers and duties of the governing board, the scope of benefits, payment mechanisms and cost controls.

Key features of New York Health include the following:

Benefits * Benefits would include medically necessary health services including preventative and primary care, hospital care, dental, eye care, prescription drugs, mental health, treatment for drug and alcohol addictions, and rehabilitative care;

Coverage * Coverage would be extended to residents of New York State without regard to age, income, health or employment status;

Payment * Payment for provider services would be on the basis of global budgets for hospitals and other institutional providers, individual practition- ers would be able to choose fee-for-service, capitation or be salaried by a global budget institution. There would be no out-of-pocket charges for individuals, and no balance billing;

Administration * Administration of the plan, as an independent public benefit corpo- ration, would be by an 18-member Board of Governors, appointed by the Governor and confirmed by the Senate. The Board would be representative of consumers and providers of health care services, as well as labor and business;

Financing * Financing of the program would be through several sources. Current federal, state and local expenditures for health care services - prima-

rily through Medicare and Medicaid - would be incorporated into the New York Health Plan. Employers and employees, persons who are self-employed and those with high investment incomes would pay a uniform New York Health Plan premium. In addition, as much as $5 billion in administra- tive overhead - under our current method of providing health insurance - would be eliminated, redirecting dollars to broaden coverage under the plan.

Section 2 amends the State Finance Law by adding a new section 89-h establishing the New York Health Trust Fund. Monies in the fund would be used to finance the New York Health Plan. Sources include: federal, state and local expenditures for the Medicare and Medicaid programs; premium payment revenues paid by employers and employees; funds previ- ously appropriated for services that would now be covered by the New York Health Plan. Monies in the fund would be solely for the purposes of New York Health, and would not be subject to appropriation.

Section 3 amends the Tax Law by adding a new Article 35 establishing a mechanism to collect New York Health Plan premium payments. An 8% employer and 2% employee payroll premium (the employer may pay the employee's share), and a 9% premium payment on self-employment income would be established. Premium payments would also be levied on unearned income in instances where such income exceeds 50% of an individual's total income, additional revenues include premium payments by out-of- state employers. Persons eligible for Medicare benefits would be exempt from payment of the premium on unearned income.

Section 4 establishes a temporary commission on implementation of New York Health to examine New York statutes and make recommendations to conform state statute to the provisions of New York Health. The commis- sion would be jointly appointed by the Governor and the Legislature.

Section 5 directs the Superintendent of Insurance, in consultation with a technical advisory committee, to examine the premium rate structure for insurance underwritten in the state and to identify that portion of premiums which are attributable to health care expenditures due to implementation of New York Health.

Section 6 appropriates $500,000 to the temporary commission on implemen- tation of New York Health.

Section 7 provides for an effective date on the first of January follow- ing enactment into law, and also establishes the following timetable for implementation:

* by February 28 the Governor shall make the initial appointments to the New York Health Board of Governors;

* by March 31, the Commissioner of Health is directed to apply for necessary federal waivers to allow for the participation of Medicare and Medicaid in the New York Health Plan;

* by December 31 the Board of Governors and the Commissioner of Health shall develop a procedure for the deposit of Medicare and Medicaid funds into the New York Health Trust Fund;

* On January 1 premium payments and New York Health Plan benefits would begin.

Justification

Today, New Yorkers spend an exorbitant amount of money for a patchwork of health coverage programs that fail to cover millions of individuals, fail to provide needed services, and fail to control costs. Huge and growing amounts are spent on paperwork and administration, rather than health care services. New York Health offers an opportunity to provide quality health care coverage to all New Yorkers, while also containing increases in medical costs. Over 3 million New Yorkers lack health insurance coverage while another 3 million are underinsured. In addi- tion, more and more New Yorkers are confronted with the choice of main- taining coverage in the face of rising out-of-pocket expenses, mounting costs and health insurance premiums, or going without coverage. In addi- tion, the rise of managed care has transformed the health care delivery system. The patient's health care professional's judgments on treatment are second-guessed by corporate personnel. Only through comprehensive reform, as that proposed by New York Health, will there be a re-balance of the health care system to patient needs and the professional judg- ments of practitioners. The New York Health Plan seeks to address the needs of that portion of the population lacking health insurance cover- age, as well as the needs of the growing number of New Yorkers who are frustrated with the coverage they have. Through establishment of a uniform and universal benefit plan, coverage could be extended to all New Yorkers while also reducing expenditures and controlling health care costs. The New York Health Plan achieves savings through the consol- idation of health care expenditures under a single, publicly financed insurance program. Such a program eliminates more than $5 billion in administrative waste, including excess insurance company administration and costs of billing and collecting for hospitals, physicians and other health care providers. It also provides stability to New York's hospi- tals, freeing up resources for patient care. The savings would be used to finance increased health care coverage for the 3 million New Yorkers lacking coverage, and the many million more with inadequate coverage.

Funds could thus be targeted for primary and preventive services, train- ing of health care workers, and to enable physicians to set up practices in inner city and rural communities.

Legislative history

2008: S.3107- Referred to Health 2007: S.3107- Referred to Health 2007-08: A.7354- Reported to Ways and Means 2006: A.6576- Referred to Health Committee

Fiscal implications

No new costs to state and local government. Current governmental expend- itures for the provision of health care services, such as Medicaid, would be utilized to support coverage under the New York Health Plan, cost control and quality assurance mechanisms under the plan will restrain health care cost increases otherwise experienced by govern- mental payors. In addition, as an employer, state and local government - like all employers providing health benefits - will realize a reduction in their expenditures for employer-provided health insurance coverage by paying the lower New York Health Plan premium payment.

Effective date

The first of January following enactment.