Another Health Insurance Premium Tax Proposal

The continued fallout from the abrupt shutdown of New York’s Health Republic has led to NY State Senator David Valesky’s (D-Oneida) proposed “guaranty fund” to protect consumers and medical providers in cases of insurance company failure. As reported on Syracuse.com (NY Must protect…) this proposal is in response to the estimated $200 million in unpaid medical claims following Health Republic’s demise.

Valesky’s proposal would impose a one-time assessment of insurers which would not be allowed to be passed on to policy holders in the form of increased premiums. However, we ask, where else does a health insurance company generate revenue other than from policy holder’s premiums? This is one of many issues we have with this proposed fund.

As described in the Empire Center’s blog DFS in denial on health plan collapse New York regulators failed to address the glaring red flags and actually reduced Health Republics requested rate increases. Just six months ago, prior to closing its doors, Health Republic had submitted a rate increase for 2016. Through the Department of Financial Services rate review process they again reduced the rates Health Republic requested.

This was the second year in a row that the financially troubled insurer saw its rates reduced by DFS. This action, along with the continued un-kept promises for additional funding made by the Obama Administration, led to the insurers insolvency, the non-payment of claims for provided services, and the scramble by unwary consumers to secure qualified (and significantly more expensive) health insurance elsewhere.

It’s important to note that the Federal government helped create Health Republic through loans available under the ACA to establish new non-profit “Co-Op” insurers. New York State then added to Health Republic’s debt load in the form of more loans which now will never be repaid.

The Federal government funded the company; the State government approved the rates; and now private insurers (who consistently pay their claims using ever increasing premium collected form policy holders) are going to be forced to pay these debts. Someone please tell Senator Valesky we think we’ve found another use for the $5 billion bank settlement funds.

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