Legislature kills Cuomo's proposed tax on ObamaCare

By CARL CAMPANILE, March 31, 2015, 7:50pm

The state Legislature has killed a $69 million tax on health-insurance policies proposed by Gov. Cuomo to pay for the administrative costs of continuing New York's ObamaCare exchange, The Post has learned.

Cuomo's office initially said the levy — which would have cost about $25 per policy — was needed to make up for federal funds no longer available to cover operating expenses of the New York Health Exchange under the Affordable Care Act.

But lawmakers balked, arguing the new tax was counterintuitive to the goal of making health insurance more affordable.

The Republican-led state Senate didn't even consider the so-called “Exchange Tax� in its spending plan. The Democratic-run Assembly initially embraced the tax in its budget proposal but abandoned it during negotiations.

“We rejected that. Insurers would simply pass along the costs to customers,� explained Assembly Health Committee Chairman Richard Gottfried (D-Manhattan).

The lobbying arm for health insurers applauded the decision, saying the tax would have boosted medical premiums.

The industry's spokeswoman said revenues from existing state taxes on health insurance — totalling more than $5 billion and amounting to 5 percent of premiums — could easily cover the $68.9 million cost to operate the New York Health Exchange.

“We are grateful the final budget agreement looks to fund operation of New York's marketplace out of existing taxes on health care. The goal is to help ensure New York has affordable health coverage. and adding a new ‘exchange tax' would have been a bitter pill to swallow for New York families and small businesses,� said New York Health Plan Association spokeswoman Leslie Moran.

Last month, Cuomo's budget office defended the proposed tax as a “modest� and necessary surcharge. “In accordance with federal law, the executive budget proposed a modest change in health-insurance premiums — averaging less than $25 annually — to provide a dedicated and sustainable revenue source to support the continued operations of the exchange,� a spokesman for the budget division said.

New York is one of 16 states that set up their own Web-based exchanges to help residents sign up for medical coverage.

Advocates have proclaimed the Cuomo administration's implementation of ObamaCare a success, with about a million New Yorkers having signed up.