New York weighing new tax on health insurance

Over the last several years, the amount of money people pay for their health insurance has been a major point of contention, and was in fact a big driver behind the passage of the Patient Protection and Affordable Care Act. Now, the state of New York wants to implement a new tax that would further increase those costs, and those in the health insurance industry have responded negatively to the plan as a consequence.

The office of New York Gov. Andrew Cuomo recently released its proposed executive budget for 2015-16, and included within it a tax on health insurance premiums, according to a report from the Albany Business Review. Though the tax would add less than $25 to the average person's health coverage premiums, and would be used to fund the continued operation of the state's health insurance exchange, it has nonetheless been criticized roundly for increasing coverage costs, at least among policy providers.

Bob Hinckley, chief strategy officer for the state's second-largest health insurer, told the publication that while the state is doing more to improve access to health care, it is simultaneously making it more expensive for residents to obtain it, the report said. This may be particularly burdensome for employers, however, who face the tough choice of either passing even a relatively small tax onto their workers, or covering it themselves and potentially racking up thousands of dollars in added costs annually. Furthermore, if the tax is implemented, it is conceivable that the tax rate could be increased in the future to generate higher revenue for the state, but higher health insurance premiums for its users.

What's at stake?
Experts also say that even if health care costs are increasing more slowly than they once did, they're still increasing at a rate which may be of concern to individuals and businesses alike, the report said. Some are concerned that these mounting costs could lead to large amounts of people nationwide losing their jobs, as companies of all sizes make hard decisions about how best to address these rising costs.

Meanwhile, Cuomo's proposed budget includes some other issues related to health care, the report said. For instance, the state would increase spending on Medicaid by 3.6 percent out of the state budget, and 5.6 percent overall (thanks to federal money).

Health insurance companies will need to keep a close eye on the ways in which various states react to the ins and outs of the ACA over the next several years, because many are still adjusting their operations to be more responsive to the issues the law creates.