STATE OF NEW YORK ________________________________________________________________________ 1927 2023-2024 Regular Sessions IN ASSEMBLY January 23, 2023 ___________ Introduced by M. of A. GOODELL -- read once and referred to the Commit- tee on Ways and Means AN ACT to amend the financial services law, the tax law and the public health law, in relation to enacting the Health Care Tax Reform Act The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. This act shall be known and may be cited as the "Health 2 Care Tax Reform Act". 3 § 2. Legislative findings. The Legislature hereby finds that: 4 (a) The affordability of health care and health insurance is extremely 5 important in ensuring that the maximum number of New York State resi- 6 dents can obtain high quality affordable health care; 7 (b) Health care and health insurance are currently subject to several 8 taxes that directly and indirectly increase the cost of health insurance 9 coverage, including an annual flat tax on all privately insured people 10 in New York State called the covered lives assessment that raises the 11 costs to health plans by $1.1 Billion, a 9.63% sales tax surcharge on 12 certain hospital based health services that costs consumers $3.6 13 Billion, a 1.75% flat tax on all commercial health insurance policies 14 that costs consumers $350 Million, and a gross receipts tax on insurance 15 companies called a section 206 assessment that costs health plans $149 16 Million a year; 17 (c) Collectively, the taxes on health care and health insurance cost 18 consumers a total of over $5 Billion in 2018, which exceeds the total 19 amount of taxes paid by corporations through the franchise taxes and 20 exceeds all other types of taxes except for personal income taxes and 21 general sales taxes; and 22 (d) The taxes on health care and health insurance are fundamentally 23 regressive taxes because the taxes are unrelated to a consumer's wealth 24 or ability to pay, directly impact hospitalization costs at a time when 25 consumers are facing some of their greatest health care challenges, EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00606-01-3

A. 1927 2 1 directly increase the cost of health insurance, and are counterproduc- 2 tive to the public policy objective of making health insurance as 3 affordable as possible. 4 § 3. Section 206 of the financial services law is amended by adding a 5 new subsection (g) to read as follows: 6 (g) For the fiscal year commencing on April first, two thousand twen- 7 ty-three, the commissioner shall only collect eighty per centum of any 8 assessments collected pursuant to this section in the fiscal year 9 commencing on April first, two thousand twenty-four, and provided 10 further, however, that for the fiscal year commencing on April first, 11 two thousand twenty-six, the commissioner shall only collect sixty per 12 centum of any assessments collected pursuant to this section in the 13 fiscal year commencing on April first, two thousand twenty-four, and 14 provided further, however, that for the fiscal year commencing on April 15 first, two thousand twenty-seven, the commissioner shall only collect 16 forty per centum of any assessments collected pursuant to this section 17 in the fiscal year commencing on April first, two thousand twenty-four, 18 and provided further, however, that for the fiscal year commencing on 19 April first, two thousand twenty-eight, the commissioner shall only 20 collect twenty per centum of any assessments collected pursuant to this 21 section in the fiscal year commencing on April first, two thousand twen- 22 ty-four, and provided further, however, that for the fiscal year 23 commencing on April first, two thousand twenty-nine, no such assessment 24 under this section shall be collected. 25 § 4. Section 1502-a of the tax law, as amended by section 2 of part 26 B-1 of chapter 57 of the laws of 2009 and as further amended by section 27 104 of part A of chapter 62 of the laws of 2011, is amended to read as 28 follows: 29 § 1502-a. Tax on non-life insurance corporations. (a) In lieu of the 30 tax imposed by section fifteen hundred one of this article, every domes- 31 tic insurance corporation, every foreign insurance corporation and every 32 alien insurance corporation, other than such corporations transacting 33 the business of life insurance, (1) authorized to transact business in 34 this state under a certificate of authority from the superintendent of 35 financial services[,] or (2) that is a risk retention group as defined 36 in subsection (n) of section five thousand nine hundred two of the 37 insurance law, [~~or (3) that is a health maintenance organization~~ 38 ~~required to obtain a certificate of authority under article forty-four~~ 39 ~~of the public health law,~~] shall, for the privilege of exercising corpo- 40 rate franchises or for carrying on business in a corporate or organized 41 capacity within this state, and in addition to any other taxes imposed 42 for such privilege, pay a tax on all gross direct premiums, less return 43 premiums thereon, written on risks located or resident in this state. 44 The tax imposed by this section shall be computed in the manner set 45 forth in subdivision (a) of section fifteen hundred ten of this article 46 as such subdivision applied to taxable years beginning before January 47 first, two thousand three, except that the rate of tax imposed by this 48 section shall be [~~one and seventy-five hundredths percent on all gross~~ 49 ~~direct premiums, less return premiums thereon, for accident and health~~ 50 ~~insurance contracts, including contracts with health maintenance organ-~~ 51 ~~izations for health services, and~~] two percent on all [~~other~~] such 52 premiums except accident and health insurance contracts, including 53 contracts with health maintenance organizations for health services. 54 (b) In lieu of the tax imposed by section fifteen hundred one of this 55 article, every domestic insurance corporation, every foreign insurance 56 corporation and every alien insurance corporation, other than such

A. 1927 3 1 corporations transacting the business of life insurance that is a health 2 maintenance organization required to obtain a certificate of authority 3 under article forty-four of the public health law, shall, for the privi- 4 lege of exercising corporate franchises or for carrying on business in a 5 corporate or organized capacity within this state, and in addition to 6 any other taxes imposed for such privilege, pay a tax on all gross 7 direct premiums, less return premiums thereon, written on risks located 8 or resident in this state. The tax imposed by this section shall be 9 computed in the manner set forth in subdivision (a) of section fifteen 10 hundred ten of this article as such subdivision applied to taxable years 11 beginning before January first, two thousand three, except that the rate 12 of tax imposed by this section shall be one and seventy-five hundredths 13 percent on all gross direct premiums, less return premiums thereon, for 14 accident and health insurance contracts, including contracts with health 15 maintenance organizations for health services, provided, however, that 16 for the taxable year beginning January first, two thousand twenty-five, 17 the percentage shall be one and four tenths percent, and provided 18 further, however, that for the taxable year beginning January first, two 19 thousand twenty-six, the percentage shall be one and five hundredths 20 percent, and provided further, however, that for the taxable year begin- 21 ning January first, two thousand twenty-seven, the percentage shall be 22 seven tenths of one percent, and provided further, however, that for the 23 taxable year beginning January first, two thousand twenty-eight, the 24 percentage shall be thirty-seven hundredths of one percent, and provided 25 further, however, that for the taxable years beginning on and after 26 January first, two thousand twenty-nine, no such tax shall be imposed. 27 (c) All the other provisions in section fifteen hundred ten of this 28 article as amended from time to time, other than subdivision (b) of such 29 section, shall apply to the tax imposed by this section. In no event 30 shall the tax imposed under this section be less than two hundred fifty 31 dollars. 32 § 5. Subdivision 2 of section 2807-j of the public health law, as 33 amended by section 41 of part B of chapter 58 of the laws of 2005 and 34 paragraphs (b), (c), (d), and (e) as amended by section 50 of part B of 35 chapter 58 of the laws of 2009, is amended to read as follows: 36 2. (a) The total percentage allowance for any period during the period 37 January first, nineteen hundred ninety-seven through December thirty- 38 first, nineteen hundred ninety-nine and on and after January first, two 39 thousand, for a designated provider of services applicable to a payor 40 shall be determined in accordance with this subdivision and applied to 41 net patient service revenues. 42 (b) The total percentage allowance for each payor, other than govern- 43 mental agencies, or health maintenance organizations for services 44 provided to subscribers eligible for medical assistance pursuant to 45 title eleven of article five of the social services law, or approved 46 organizations for services provided to subscribers eligible for the 47 family health plus program pursuant to title eleven-D of article five of 48 the social services law, and other than payments for a patient that has 49 no third-party coverage in whole or in part for services provided by a 50 designated provider of services, shall be: 51 (i) the sum of (A) eight and eighteen-hundredths percent, provided, 52 however, that for services provided on and after July first, two thou- 53 sand three, the percentage shall be eight and eighty-five hundredths 54 percent, and further provided that for services provided on and after 55 January first, two thousand six, the percentage shall be eight and nine- 56 ty-five hundredths percent, and further provided that for services

A. 1927 4 1 provided on and after April first, two thousand nine, the percentage 2 shall be nine and sixty-three hundredths percent, and further provided 3 that for services provided on and after April first, two thousand twen- 4 ty-four, the percentage shall be twenty-two and sixty-one hundredths 5 percent, and further provided that for services provided on and after 6 April first, two thousand twenty-five, the percentage shall be sixteen 7 and ninety-six hundredths percent, and further provided that for 8 services provided on and after April first, two thousand twenty-six, the 9 percentage shall be eleven and thirty-one hundredths percent, and 10 further provided that for services provided on and after April first, 11 two thousand twenty-seven, the percentage shall be five and sixty-five 12 hundredths percent, and further provided that for services provided on 13 and after April first, two thousand twenty-eight, the percentage shall 14 be zero percent, plus (B) twenty-four percent, provided, however, that 15 for services provided on and after July first, two thousand three, the 16 percentage shall be twenty-five and ninety-seven hundredths percent, and 17 further provided that for services provided on and after January first, 18 two thousand six, the percentage shall be twenty-six and twenty-six 19 hundredths percent, and further provided that for services provided on 20 and after April first, two thousand nine, the percentage shall be twen- 21 ty-eight and twenty-seven hundredths percent, and further provided that 22 for services provided on and after April first, two thousand twenty- 23 four, the percentage shall be twenty-two and sixty-one hundredths 24 percent, and further provided that for services provided on and after 25 April first, two thousand twenty-five, the percentage shall be sixteen 26 and ninety-six hundredths percent, and further provided that for 27 services provided on and after April first, two thousand twenty-six, the 28 percentage shall be eleven and thirty-one hundredths percent, and 29 further provided that for services provided on and after April first, 30 two thousand twenty-seven, the percentage shall be five and sixty-five 31 hundredths percent, and further provided that for services provided on 32 and after April first, two thousand twenty-eight, the percentage shall 33 be zero percent, and plus (C) for a specified third-party payor as 34 defined in subdivision one-a of section twenty-eight hundred seven-s of 35 this article the percentage allowance applicable for a general hospital 36 for inpatient hospital services pursuant to subdivision two of section 37 twenty-eight hundred seven-s of this article; 38 (ii) unless (A) an election in accordance with paragraph (a) of subdi- 39 vision five of this section to pay the allowance directly to the commis- 40 sioner or the commissioner's designee is in effect for a third-party 41 payor, and in addition (B) for a specified third-party payor an election 42 to pay the assessment in accordance with section twenty-eight hundred 43 seven-t of this article is in effect. 44 (c) If an election in accordance with subdivision five of this section 45 is in effect for a third-party payor and in addition in accordance with 46 section twenty-eight hundred seven-t of this article for a specified 47 third-party payor, the total percentage allowance factor shall be 48 reduced to eight and eighteen-hundredths percent, provided, however, 49 that for services provided on and after July first, two thousand three 50 the total percentage allowance factor shall be reduced to eight and 51 eighty-five hundredths percent, and further provided that for services 52 provided on and after January first, two thousand six, the total 53 percentage allowance factor shall be reduced to eight and ninety-five 54 hundredths percent, and further provided that for services provided on 55 and after April first, two thousand nine, the total percentage allowance 56 factor shall be reduced to nine and sixty-three hundredths percent and

A. 1927 5 1 further provided that for services provided on and after April first, 2 two thousand twenty-four, the percentage shall be seven and seventy-one 3 hundredths percent, and further provided that for services provided on 4 and after April first, two thousand twenty-five, the percentage shall be 5 five and seventy-nine hundredths percent, and further provided that for 6 services provided on and after April first, two thousand twenty-six, the 7 percentage shall be three and eighty-six hundredths percent, and further 8 provided that for services provided on and after April first, two thou- 9 sand twenty-seven, the percentage shall be one and ninety-three 10 hundredths percent, and further provided that for services provided on 11 and after April first, two thousand twenty-eight, the percentage shall 12 be zero percent. 13 (d) The total percentage allowance for payments by governmental agen- 14 cies, as determined in accordance with paragraphs (a) and (a-1) of 15 subdivision one of section twenty-eight hundred seven-c of this article 16 as in effect on December thirty-first, nineteen hundred ninety-six, or 17 health maintenance organizations for services provided to subscribers 18 eligible for medical assistance pursuant to title eleven of article five 19 of the social services law, or approved organizations for services 20 provided to subscribers eligible for the family health plus program 21 pursuant to title eleven-D of article five of the social services law, 22 shall be five and ninety-eight-hundredths percent, provided, however, 23 that for services provided on and after July first, two thousand three 24 the total percentage allowance shall be six and forty-seven hundredths 25 percent, and further provided that for services provided on and after 26 January first, two thousand six, the total percentage allowance shall be 27 six and fifty-four hundredths percent, and further provided that for 28 services provided on and after April first, two thousand nine, the total 29 percentage allowance shall be seven and four hundredths percent and 30 further provided that for services provided on and after April first, 31 two thousand twenty-four, the percentage shall be five and sixty-three 32 hundredths percent, and further provided that for services provided on 33 and after April first, two thousand twenty-five, the percentage shall be 34 four and twenty-two hundredths percent, and further provided that for 35 services provided on and after April first, two thousand twenty-six, the 36 percentage shall be two and eighty-two hundredths percent, and further 37 provided that for services provided on and after April first, two thou- 38 sand twenty-seven, the percentage shall be one and forty-one hundredths 39 percent, and further provided that for services provided on and after 40 April first, two thousand twenty-eight, the percentage shall be zero 41 percent. 42 (e) The total percentage allowance for payments for services provided 43 by designated providers of services for which there is no third-party 44 coverage in whole or in part shall be eight and eighteen-hundredths 45 percent, provided, however, that for services provided on and after July 46 first, two thousand three the total percentage allowance shall be eight 47 and eighty-five hundredths percent, and further provided that for 48 services provided on and after January first, two thousand six, the 49 total percentage allowance shall be eight and ninety-five hundredths 50 percent, and further provided that for services provided on and after 51 April first, two thousand nine, the total percentage allowance shall be 52 nine and sixty-three hundredths percent and further provided that for 53 services provided on and after April first, two thousand twenty-four, 54 the percentage shall be seven and seventy-one hundredths percent, and 55 further provided that for services provided on and after April first, 56 two thousand twenty-five, the percentage shall be five and seventy-nine

A. 1927 6 1 hundredths percent, and further provided that for services provided on 2 and after April first, two thousand twenty-six, the percentage shall be 3 three and eighty-six hundredths percent, and further provided that for 4 services provided on and after April first, two thousand twenty-seven, 5 the percentage shall be one and ninety-three hundredths percent, and 6 further provided that for services provided on and after April first, 7 two thousand twenty-eight, the percentage shall be zero percent. This 8 paragraph shall not apply to patient deductibles and coinsurance 9 amounts. 10 (f) The total percentage allowance for patient deductibles and coinsu- 11 rance amounts shall be the same percentage allowance applicable to 12 payments by the primary third-party payor covering the patient in each 13 case determined in accordance with paragraphs (a), (b) and (c) of this 14 subdivision. 15 (g) The total percentage allowance for secondary third-party payors 16 under coordination of benefits principles shall be the same percentage 17 allowance applicable to payments by the primary third-party payor in the 18 case determined in accordance with paragraphs (a), (b) and (c) of this 19 subdivision. 20 § 6. Subdivision 2 of section 2807-s of the public health law, as 21 added by chapter 639 of the laws of 1996, subparagraph (ii) of paragraph 22 (b) as amended by chapter 1 of the laws of 1999, paragraph (c) as 23 amended by section 15 of part A-3 of chapter 62 of the laws of 2003, 24 subparagraph (ii) of paragraph (c) as amended and subparagraph (iii) of 25 paragraph (c) as added by section 31 of part B of chapter 58 of the laws 26 of 2005, and subparagraph (iv) of paragraph (c) as added by section 21 27 of part A of chapter 58 of the laws of 2007, is amended to read as 28 follows: 29 2. (a) The regional percentage allowance for any period during the 30 period January first, nineteen hundred ninety-seven through December 31 thirty-first, nineteen hundred ninety-nine for all general hospitals in 32 the region applicable to a specified third-party payor, and applicable 33 to related patient coinsurance and deductible amounts and to secondary 34 third-party payors under coordination of benefits principles, shall be 35 the following, and shall be applied to inpatient hospital net patient 36 service revenues: 37 (b) the result expressed as a percentage of: 38 (i) for each region, the amount allocated to the region in accordance 39 with subdivision six of this section, divided by 40 (ii) the total estimated nineteen hundred ninety-six general hospital 41 inpatient revenue of all general hospitals in the region, excluding (A) 42 an estimate of revenue from services provided to beneficiaries of title 43 XVIII of the federal social security act (medicare), (B) an estimate of 44 revenue from services provided to patients eligible for payments by 45 governmental agencies, patients eligible for payments pursuant to the 46 comprehensive motor vehicle insurance reparations act, the workers' 47 compensation law, the volunteer firefighters' benefit law, and the 48 volunteer ambulance workers' benefit law, and self-pay patients, (C) 49 from general hospitals providing graduate medical education in the 50 aggregate an amount equal to the amount specified in subparagraph (i) of 51 this subdivision, other than the components of such amount allocable to 52 payors specified in clause (B) of this subparagraph, and (D) an estimate 53 of revenue reductions related to negotiated reimbursement in nineteen 54 hundred ninety-seven with specified third-party payors which shall be a 55 uniform statewide percentage estimated reduction.

A. 1927 7 1 (c) (i) The regional percentage allowance for the periods January 2 first, two thousand through June thirtieth, two thousand three, for all 3 general hospitals in the region applicable to specified third-party 4 payors, and applicable to related patient coinsurance and deductible 5 amounts, shall be the same regional percentage allowance calculated 6 pursuant to paragraph (b) of this subdivision for the period January 7 first, nineteen hundred ninety-nine through December thirty-first, nine- 8 teen hundred ninety-nine. 9 (ii) The regional percentage allowance for the periods July first, two 10 thousand three through December thirty-first, two thousand five, for all 11 general hospitals in the region applicable to specified third-party 12 payors, and applicable to related patient coinsurance and deductible 13 amounts, shall be the same regional percentage allowance calculated 14 pursuant to paragraph (b) of this subdivision for the period January 15 first, nineteen hundred ninety-nine through December thirty-first, nine- 16 teen hundred ninety-nine multiplied by one hundred eight and nineteen 17 hundredths percent. 18 (iii) The regional percentage allowance for the periods January first, 19 two thousand six through June thirtieth, two thousand seven, for all 20 general hospitals in the region applicable to specified third-party 21 payors, and applicable to related patient coinsurance and deductible 22 amounts, shall be the same regional percentage allowance calculated 23 pursuant to subparagraph (ii) of this paragraph for the period January 24 first, two thousand five through December thirty-first, two thousand 25 five multiplied by one hundred one and thirteen hundredths percent. 26 (iv) The regional percentage allowance for periods [~~on and after~~] July 27 first, two thousand seven through March thirtieth, two thousand twenty- 28 four, for all general hospitals in the region applicable to specified 29 third-party payors, and applicable to related patient coinsurance and 30 deductible amounts, shall be the same regional percentage allowance 31 calculated pursuant to subparagraph (iii) of this paragraph for the 32 period January first, two thousand six through June thirtieth, two thou- 33 sand seven. 34 (v) The regional percentage allowance for periods April first, two 35 thousand twenty-four through March thirtieth, two thousand twenty-five, 36 for all general hospitals in the region applicable to specified third- 37 party payors, and applicable to related patient coinsurance and deduct- 38 ible amounts, shall be the same regional percentage allowance calculated 39 pursuant to paragraph (b) of this subdivision for the period January 40 first, nineteen hundred ninety-nine through December thirty-first, nine- 41 teen hundred ninety-nine multiplied by ninety-seven and seventy-one 42 hundredths percent. 43 (vi) The regional percentage allowance for periods April first, two 44 thousand twenty-five through March thirtieth, two thousand twenty-six, 45 for all general hospitals in the region applicable to specified third- 46 party payors, and applicable to related patient coinsurance and deduct- 47 ible amounts, shall be the same regional percentage allowance calculated 48 pursuant to paragraph (b) of this subdivision for the period January 49 first, nineteen hundred ninety-nine through December thirty-first, nine- 50 teen hundred ninety-nine multiplied by seventy-three and twenty-nine 51 hundredths percent. 52 (vii) The regional percentage allowance for periods April first, two 53 thousand twenty-six through March thirtieth, two thousand twenty-seven, 54 for all general hospitals in the region applicable to specified third- 55 party payors, and applicable to related patient coinsurance and deduct- 56 ible amounts, shall be the same regional percentage allowance calculated

A. 1927 8 1 pursuant to paragraph (b) of this subdivision for the period January 2 first, nineteen hundred ninety-nine through December thirty-first, nine- 3 teen hundred ninety-nine multiplied by forty-eight and eighty-six 4 hundredths percent. 5 (viii) The regional percentage allowance for periods April first, two 6 thousand twenty-seven through March thirtieth, two thousand twenty- 7 eight, for all general hospitals in the region applicable to specified 8 third-party payors, and applicable to related patient coinsurance and 9 deductible amounts, shall be the same regional percentage allowance 10 calculated pursuant to paragraph (b) of this subdivision for the period 11 January first, nineteen hundred ninety-nine through December thirty- 12 first, nineteen hundred ninety-nine multiplied by twenty-four and 13 forty-three hundredths percent. 14 § 7. This act shall take effect immediately; provided, however, that 15 the amendments to section 2807-j of the public health law made by 16 section five of this act shall not affect the expiration of such section 17 and shall be deemed to expire therewith; provided further, however, that 18 the amendments to section 2807-s of the public health law made by 19 section six of this act shall not affect the expiration of such section 20 and shall be deemed to expire therewith.

Enacts the Health Care Tax Reform Act

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