Hooked on HCRA: New York’s 20-Year Health Tax Habit

The Health Care Reform Act (HCRA) began as an effort to bring market-driven change and efficiency to New York’s hospital industry, but has evolved into little more than a mechanism for generating revenue.

HCRA’s combined surcharges on health insurance and cigarettes have nearly tripled in size over the past 20 years, and now rank as the state’s third-largest tax.

HCRA’s insurance taxes hit working- and middle-class consumers as hard as the wealthy, adding substantially to the cost of health coverage for everyone.

Two-thirds of HCRA funds now flow into the Medicaid budget, accounting for 17 percent of the state’s contribution to a program that was formerly financed with general revenues.

Other HCRA funds pay for questionable purposes that do not directly contribute to improving patient care or broadening coverage — such as subsidizing doctors’ malpractice costs and boosting health-care workers’ pay and benefits.

Belying its name, the almost $1 billion HCRA-supported Indigent Care Pool distributes money to hospitals based not on how much free care they provide to the uninsured, but mostly on how much aid they have received in the past.

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