Josh Mason's Fair Share testimony to the Senate

Josh Mason is the Policy Director of the New York Working Families Party

Good morning Chairman Hannon, Chairman Seward, and distinguished members of the Senate Health and Insurance Committees. Thank you for giving the Working Families Party the opportunity to testify here today on behalf of the Fair Share bill introduced by Senator Spano.

Traditionally in the United States, most working-age people have gotten health insurance through their employer. For four or five decades after the Second World War, the system of employer responsibility worked well. But in recent years, it has begun falling apart.

• In 1990, 75 percent of New Yorkers had private health coverage. Today, barely 60 percent do.
• Over those same 15 years, the proportion of New Yorkers on Medicaid and Family Health Plus nearly doubled, from 12 percent to 21 percent.
• But despite that huge expansion in public programs, the number of uninsured New Yorkers increased by half a million, from 2.2 million to 2.7 million.
• Most sobering of all, just five years ago, in 2001, 28 percent of people with incomes between $20,000 and $40,000 were uninsured at some point during the year. Last year, 41 percent were.
  

In short, a large and increasing proportion of working New Yorkers can no longer rely on their employers for health insurance. I don't think I have to tell you how frightening it is to be without health coverage, and how devastating it can be to family's finances and if they need serious health care while uninsured.

When we are talking about the uninsured, we are talking about working families. 80 percent of uninsured New Yorkers are workers or the dependents of workers. Eighty percent of uninsured workers in New York work full-time. Ninety percent have household incomes over $20,000. Our safety net does a reasonable job providing health care for the very poor. It is those in the middle who fall through.

Today, in New York, we spend $100 billion per year on health care. Approximately half of that is spent by government, and that proportion is rising each year. And of the half that is still spent privately, an increasing proportion comes from workers rather than businesses. Without anyone planning it, we are already moving from a system of employer sponsored insurance to a semi-public system - but an exceptionally inefficient, spotty and unreliable one.

Over the past dozen years, New York has in many ways been a leader in health policy. You and your colleagues in the Assembly have passed a number of important reforms, expanding eligibility for Medicaid, creating new public programs like Child Health Plus and Family Health Plus, encouraging employer coverage through Healthy New York, passing one of the nation's first Managed Care Bill of Rights laws, deregulating hospital and insurance rates - the list goes on. For the most part, these have been solid, well-designed reforms, and they have significantly expanded New Yorkers'’ access to health care, especially to public health programs. Yet at the end of the day, not only have they not solved the problem of the uninsured, we have half a million more uninsured than we did 15 years ago.

The reason is simple: you cannot fix the problems with an employment-based health system if the employer is not part of the equation.

Health care reform in New York has yet to address the central paradox of our system. We rely on employers as the primary source of health benefits, but we do nothing to ensure that employers actually provide them.

Without a floor on employer spending on health benefits, further reforms of the public and private health insurance systems will not be able to reduce costs or expand coverage, but will simply facilitate the continued shift of health care spending away from employers.

Let me talk briefly about Fair Share.

As you know, it is a requirement that businesses with over 100 employees spend at least $3 per hour on health benefits.

To most businesses, Fair Share says, "Keep doing what you'’re doing." Forty percent of New York businesses already pay at least $3 per hour for health benefits. They will not have to pay anything under Fair Share - in fact, they will benefit, because their competitors will have to come up to their level, and they will no longer bear as much of the cost of Medicaid recipients and the uninsured.

Another 30 percent of New York businesses pay between $2 and $3 per hour. For them, Fair Share would involve a modest cost increase.

Finally, there is the relatively small group of employers we call "low-road" businesses, which have a low-skill, high-turnover, poverty-wage business model. These businesses will have to significantly increase their spending.

We have worked with a number of economists to quantify the impact of Fair Share. One of them is Ken Thorpe, the chair of the department of health policy at Emory University and a former Deputy Assistant Secretary for Health Policy in the U.S. Department of Health and Human Services. He is a widely respected health economist who has done work for the Pataki administration among many other clients across the political spectrum.

Professor Thorpe found that the Fair Share bill would require $4 billion dollars in additional health care spending by businesses, resulting in an estimated 510,000 currently uninsured workers gaining coverage and 300,000 workers currently enrolled in Medicaid and Family Health Plus shifting to employer plans.

Based on current Medicaid costs, the public would save $1.5 billion from the reduction in public program enrollment. And the public would save approximately $500 million more from a reduction in costs of uncompensated hospital care for the uninsured. So at least half the costs of Fair Share are not new costs, they are costs currently being borne by the public.

The remaining $2 billion is new spending. As we said before, there is no free lunch. If we are serious about dealing with the problem of the uninsured, someone is going to have to pay for it. We think it makes sense, both practically and morally, for that someone to be those large businesses that are currently spending the least on health benefits.

Fair Share will not solve the problem of the uninsured - it will provide coverage for only 20 to 25 percent of them. But it will change the dynamic that has undermined previous efforts at reform. It will end the race to the bottom, and protect good employers from being undercut by those that fail to provide decent benefits. And it will stop the shifting of health costs from the private to the public sector.

We do need to control costs. But it's impossible to have a rational discussion of costs as long as some businesses are passing those costs off to someone else, and while our current system is falling apart. Fair Share will help hundreds of thousands of New Yorkers gain health insurance, provide peace of mind to millions more, and save the public nearly $2 billion. It may not be the final answer, but it is a big - and achievable - first step.