One New York: An Agenda for Shared Prosperity

(Rochester & Genesee Valley Area Labor Federation)

James V. Bertolone, President, Rochester & Genesee Valley Area Labor Federation

This is my second article on the Fiscal Policy Institute's proposed economic agenda to reverse the negative economic trends in Upstate NY and improve economic conditions throughout the state. In this article I will focus on two more items from FPI's report that negatively affect businesses and citizens of our state: Workers Compensation and Health Care.

I have written before on those that feed off the workers comp system to the detriment of employees and injured workers. Those groups, with the Insurance companies at the center, have given us a system where employer costs are the highest in the nation, while injured worker benefits, as a percentage of payroll, are the lowest of all 50 states. Governor Spitzer, as Attorney General, recovered over $2 billion dollars from some of the insurance companies due to their fraudulent actions regarding workers comp. These insurance companies, some from out-of-state, also control the Insurance Rating Board that recommends employer rates for workers comp. This is akin to the fox guarding the hen house.

The insurance industry has funded, with Employers worker's comp dollars, major publicity and lobbying campaigns to sell to the public that high costs are due to fraudulent claims. Every reputable study refutes those claims finding that 2% or less of costs are due to fraud from workers and/or providers in the system. No one should be surprised that the highly profitable insurance industry would spend millions to protect their soaring profits.

Simple investigative work by FPI, released in a New York Times Story of 1/25/07 shows that Employers are short changing workers comp to the tune of $500 Million to $1 Billion annually. By comparing the workers covered by unemployment insurance from payrolls to those covered by workers comp it was found that about 20% of workers were not covered by workers comp. The unemployment coverage should be roughly equal to workers comp coverage. This means according to FPI and the New York Times businesses are picking up 15% to 20% higher workers comp premiums thanks to their fellow business men and women.

Last July, the State’s then insurance superintendent, Howard Mills, denied a request by insurers to increase workers comp premiums, saying "The insurers’ efforts to fight fraud, both claimant and employer fraud, can be said to be anemic at best." Clearly the evidence establishes that the largest reason for high costs to employers of workers comp are the fraud of other employers and the insurance companies fraud and excessive profits and not the injured workers.

To reduce employer costs and taxes in this state one must address the cost of health care. Public employee health care for police, firefighters, teachers, social workers, parole officers, maintenance workers, etc obviously impacts taxes. Nationally, health insurance premiums rose 87% from 2000 - 2006. These costs are on business that pay all or part of health care and workers. Businesses that provide health care to employees pay a health premium surcharge of over 8% to cover the uninsured.  Having that cost paid for by the state would be an added state fiscal burden, but would reduce employers’ costs that provide their workers health care coverage and take away a disincentive to hiring workers.

The best solution is a universal single payer system. We have lost good manufacturing jobs due to the cost of health care to Canada as well as other first world democracies. Until we come to our senses on a National level, other states have enacted universal systems of which the Wisconsin Plan seems to be working the best. The Business Alliance’s Unshackle Upstate gives little attention to health care other than cutting Medicaid for the poor and having middle class seniors pay their own nursing home costs. I am not sure what the Business Alliance thinks is the middle class and why they believe that "middle class" seniors can afford $60,000 to $70,000 a hear for a nursing home.

Cuts to the Poor's health care would only provide savings for a few years with costs increasing by double-digits annually. Recent figures released by our government and reported by the Associated Press state that in just one generation, health care costs went from one dollar out of ten dollars of total spending in America under Ronald Regan to one dollar out of 6 dollars today. This is madness.

It is not surprising that these major costs to our taxes and health care in New York got little play in Unshackle Upstate when Excellus gave the Business Alliance tens of thousands of your health care premium dollars to promote the legislative agenda of Unshackle Upstate.