Dubbing it not only “bad fiscal policy,” but also “bad health care policy,” the New York Health Plan Association has joined a civil suit against state officials over the use of insurance assessments for programs unrelated to the industry.

Earlier this month, the New York Insurance Association filed suit in State Supreme Court in Albany, challenging the use of 332 assessments, which by state law are levies paid by insurers to be used solely for the New York State Insurance Department (NYSID), but are allegedly being used for other purposes, the group said.

The New York Health Plan Association, a trade group representing health plans covering nearly 7 million New Yorkers, now concurs with those allegations.

“These assessments, paid only by New York based insurers, drive up the cost of health care in our state,” said Paul Macielak, the association’s president and chief operating officer, said in a statement. “That is bad news for small businesses and families who are finding it increasingly difficult to afford health insurance coverage in New York.”

The association said that since the 2000-2001 budget year, the NYSID’s budget has more than quadrupled and the amount of sub-allocations has increased by more than 22 times. Of the department’s $555.5 million budget for fiscal 2009-2010, only $138 million represented actual operating expenses, meaning that 57% of its budget represented funding for programs unrelated to its operating expenses.

Macielak said these programs should receive funding from New York’s General Fund from all taxpayers, not insurers.

“This is a classic case of robbing — or taxing — Peter to pay Paul,” he said. “It’s bad fiscal policy and, because continuing to raise the cost of health care in New York is directly counter to the goal of expanding insurance coverage, it’s bad health care policy too.”