Study Says Single-Payer Insurance Is Possible
There is little chance single-payer health insurance will become reality in New York despite a third-party report that says the idea is feasible.
The Rand Corp. released a study recently that showed a single-payer plan could expand coverage and result in a 3.1 percent decrease in total health care spending in New York state by 2031 if a series of conditions and assumptions are met, such as receiving a waiver from the federal government to allow such a system to be implemented and negotiating payment rates with health providers that would meet cost assumptions in the study. The federal government has already said it won’t issue the waivers after seeing California’s proposed single-payer system, which includes a waiver to redirect all federal, state and Affordable Care Act tax credits to the California plan.
Seema Verma, federal Centers for Medicare and Medicaid Services administrator, indicated waivers similar to the ones California is asking for won’t be approved.
“Our analysis finds that a single-payer approach in New York could expand coverage while reducing total health spending, assuming the state is able to negotiate modest reductions in the growth of provider payment and trim administrative expenses,” the study concludes. “While these assumptions are reasonable, they are also highly uncertain and depend on issues such as providers’ bargaining power, the state’s ability to administer the plan efficiently, and the federal government’s willingness to grant waivers to the state.”
Rand Corp. officials were contracted by the New York State Health Foundation to study the New York Health plan, which would provide coverage to all residents of New York state. Health benefits would include all benefits covered by Medicare, Medicaid, Child Health Plus and those mandated under the Affordable Care Act (ACA) with the exception of long-term care benefits that would not be covered initially but could be added later. Patients would have no deductibles, copayments, or other out-of-pocket costs at the point of service for covered benefits.
The program would be financed through a new trust with funds from the federal government in exchange for federal financing for current health programs if federal waivers are approved, current state funding for health care programs and revenues from two new graduated state taxes: a payroll tax paid jointly by employers (80 percent) and employees (20 percent), and a tax on income not subject to the payroll tax, such as interest, dividends and capital gains.
The New York Health Act is estimated to reduce the number of uninsured to zero because all state residents would be covered by the state plan or by primary coverage from other federal programs. Health care spending would decrease by 1 percent in 2022 and fall by about 3 percent by 2031 when compared to health care spending now. Over 10 years ending in 2031, the act is projected to save $80 billion, or 2 percent, on total health care spending in New York state.
While total health care spending would decrease, state spending on health care would increase about 500 percent, with state spending on health care increasing from $34.1 billion to $172.5 billion in 2022.
In addition to costs, the study estimates there will be more congestion in the health care system that leads to longer wait times for appointments, providers not accepting new patients or changes in providers’ recommendations about treatments. The Rand study estimates a 10 percent increase in demand for hospital care and a 15 percent increase in demand for physician services, with the expansion in quantity of hospital and physician services only increasing half as much as the increase in demand for care.
State Assemblyman Richard Gottfried, D-Manhattan, is the sponsor of A. 4738, which would create a single-payer health plan in New York state. The legislation was approved 99-46 in the Assembly, with state Assemblymen Andrew Goodell, R-Jamestown, and Joseph Giglio, R-Gowanda, both voting against the legislation. The legislation was not voted on in the state Senate.
Single-payer health care has been a hot-button issue since U.S. Sen. Bernie Sanders, D-Vt., made it a central point in his presidential campaign last year. In addition to Gottfried’s bill in the Assembly, gubernatorial candidate Cynthia Nixon has made advocacy for a single-payer health plan a central part of her challenge to Gov. Andrew Cuomo while Marc Molinaro, the Republican candidate for governor, has already said he will veto single-payer legislation if it is ever approved by the state Legislature.
The push for single-payer is also at odds with the Cuomo administration’s opposition to President Donald Trump’s 2017 tax reform. Cuomo and other state officials have argued that the federal tax reform’s cap on state and local tax deductions, known as the SALT deduction, disproportionately affects high-income New Yorkers and could force them to move out of the state, taking a large chunk of the state’s tax revenue with them. The RAND study doesn’t try to hide the fact that the high-wage earners will pay more under the New York Health Act. Those earning over $150,000 could see their state tax rate increase from 6.45 percent to 18.3 percent — the only way that the plan could keep costs low or even for low-income and middle-class users is by increasing the share borne by those with high incomes.
“Our analysis assumes one possible tax schedule that would reduce payments for the majority of residents but could lead to tax avoidance and migration among a small number of high-income households facing large tax increases,” the study states. “Our results suggest that a single-payer approach has the potential to lower payments among most New Yorkers, but the results are sensitive to assumptions about uncertain factors, such as the state’s ability to reduce provider payment rates and administrative expenses, and the response of high-income residents facing new taxes.”