New York Business Groups to Governor Hochul: No New Health Care Costs
As employers prepare for the annual open enrollment season, New York businesses are again faced with higher health insurance costs caused by the continued rising cost of health care. To make matters worse, several proposals passed by the Legislature during the 2024 session will further increase the cost of their health insurance. Driving up the cost of coverage hurts employers and their employees, and these bills that add costs should be rejected.
Health care costs for employers in New York are among the highest in the nation due, in part, to measures imposed by government including taxes, mandated benefits and restrictions on cost sharing. New York has more than 70 mandated benefits that require coverage of more than three dozen types of treatments or services. These mandates fall squarely on the shoulders of small and medium sized businesses and their employees because large businesses primarily self-insure, and therefore, are exempt from most state regulations by federal law. During the recently completed Legislative Session, lawmakers approved nearly a dozen bills that would require coverage of new mandated benefits or place restrictions on cost sharing, which will lead to higher premiums for small businesses and individuals who purchase insurance in the marketplace.
In isolation, the impact of measures that would add new coverage benefits or expand existing requirements may seem minimal. However, the collective cost of added coverage requirements and limits on cost sharing, coupled with existing mandated benefits, significantly drives up health care costs for employers and falls disproportionately on small and medium-sized businesses. At the end of August, the Department of Financial Services, who reviews and approves health insurance rate increases, released the Approved 2025 Rate Actions. The average rate increase for 2025 is 12.7% in the individual market and 8.4% in the small group market. These rate increases are a direct result of mandated benefits passed by the Legislature and signed into law.
Year-after-year, the cost of health insurance ranks as the most burdensome problem for small businesses in New York, according to the National Federation of Independent Business’s Small Business Problems and Priorities report. It is crucial that the state refrain from adding to this burden at the same time our small business owners are being overwhelmed with rising costs across the board and are uncertain about the future of their businesses.
Employers pay the lion’s share of the health care dollar. More than 55 percent of insured individuals in this state under the age of 65 receive coverage through an employer, with New York businesses paying on average over 70 percent of the premium. Legislation under consideration by the Governor to enact additional coverage mandates will translate into higher health care costs for employers, particularly small businesses, and exacerbate the challenges they face in continuing to provide coverage to their employees.
Increasing energy, labor and housing costs present significant obstacles to our economic competitiveness. Higher health care costs will put even more pressure on employers and discourage new companies from opening, expanding or moving here.
It should be a nonstarter for Albany lawmakers to continue adding to the already steep cost burdens placed on New York businesses. Solutions need to focus on controlling those costs and improving the state’s affordability, not piling up more costs on employers. Governor Hochul should reject making health care more expensive and veto these bills when they reach her desk.
Chelsea Lemon, Director of Government Affairs, The Business Council of New York State
Ashley E. Ranslow, NY State Director, National Federation of Independent Businesses
