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Lawmakers and health care union call for tax on insurance companies

New York state lawmakers along with a major health care union on Monday called for a 9.3% tax on insurance companies that shift profits out of state, with the revenue earmarked for fund distressed healthcare providers and boost frontline care.

The tax proposal, however, is being challenged by business organizations and health insurers as harmful to the state’s economy and constitutionally questionable.

The measure, backed by State Senator Tim Kennedy and Assemblyman Erik Dilan, would impose a 9.3% tax on dividends, payments or loans transferred out of New York by a nonprofit health insurer. for-profit as well as for-profit and non-profit. HMOs that offer individual, small group and large group market coverage.

In doing so, lawmakers are targeting the $40 billion in combined profits that major insurance companies have made since the start of the COVID-19 pandemic, while hospitals and health care systems have struggled.

“By passing this important policy, we would ensure that critical health care dollars stay in New York as we rebuild from the COVID-19 pandemic — and that if out-of-state health insurers choose to take those profits elsewhere, they’re gonna pay a price,” Kennedy said.

Money generated from the tax would be used to help struggling health systems that have been stretched by the ongoing public health crisis. The levy has the backing of 1199SEIU, a powerful and politically key union made up of healthcare workers.

However, other business and health care interests urged lawmakers to reject the tax, arguing its cost would be passed on to the patient.

New York Health Plan Association President and CEO Eric Linzer called the tax unconstitutional and a violation of the Commerce Clause.

“Furthermore, health insurance taxes are already too high for New Yorkers, totaling more than $6 billion a year, adding well over $1,000 to premiums for the average family, and the State has enough surplus if it wants to increase hospital funding,” Linzer said.

The New York State Business Council, meanwhile, also called it unenforceable.

“This bill is particularly dangerous to the business environment in New York because it signals to businesses across the country that New York is prepared to target and overtax specific industries,” the organization wrote in a memo. ‘opposition. “This dividend and transfer tax is an unprecedented double taxation of income and would not go unnoticed across the country. no business here.”