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Study finds New York state’s proposed single-payer system financially feasible

The plan would provide comprehensive health coverage to millions of New York residents, including undocumented immigrants.

A proposed single-payer health care system in New York state is economically viable and could insure a million people currently without coverage, according to a study from RAND Corp. released Wednesday. (PHOTO CREDIT: Erik McGregor/Pacific Press/LightRocket via Getty Images)
A proposed single-payer health care system in New York state is economically viable and could insure a million people currently without coverage, according to a study from RAND Corp. released Wednesday. (PHOTO CREDIT: Erik McGregor/Pacific Press/LightRocket via Getty Images)

A proposed single-payer health care system in New York state is economically viable and could insure a million people currently without coverage, according to a study from RAND Corp. released Wednesday.

The analysis, which looks at the New York Health Act, was commissioned by the New York State Health Foundation. It makes a number of charitable assumptions about the institution and implementation of the single-payer system, but ultimately concludes the plan would be a cost-effective way to provide health insurance to all New York residents, including undocumented immigrants, while also lowering costs.

According to the study, after moving to a single-payer system, spending in New York would remain the same through 2022 and 3 percent lower — about $15 billion less — by 2031.

The plan would cover comprehensive outpatient and inpatient care, primary and preventative care, prescription drugs and laboratory tests, rehabilitative care, and dental, vision, and hearing on top of all benefits currently required by state insurance law. The bargaining power of the state could also result in prescription drug cost savings, according to the RAND analysis.

Like Sen. Bernie Sanders’ (I-VT) national Medicare for All proposal, the New York Health Act would require tax increases but eliminate any cost-sharing, such as co-pays, premiums, or deductibles, providing health care free at the point of service.

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In Wednesday’s study, RAND assumes a progressive taxation plan, with the wealthiest New Yorkers facing the highest tax hikes. Under the plan, households making $27,500 or less in 2022 would be taxed 6.1 percent of their payroll and 6.2 percent of non-payroll income. Those making between $27,501 and $141,200 would be taxed 12.2 percent of their payroll and 12.4 percent of non-payroll income, and those making $141,200 or more would be taxed 18.3 percent of their payroll and 18.6 percent of non-payroll income.

As Politico New York noted Wednesday, people making $150,000 a year would see a tax increase from 6.45 percent in 2017 to 18.3 percent under the Health Act. New Yorkers making less than $105,000 per year, however, could save an average of $2,800 per year under the state’s proposed system.

“There would be a large shift in health care payments from premium payments and out-of-pocket payments in the status quo to predominantly tax payments under the NYHA,” the authors of the RAND study write. “This financing shift entails a substantial redistribution in who pays for health care.”

The bill’s chief sponsor, Assemblyman Richard Gottfried (D) cheered the study’s conclusions in a statement.

“RAND shows we can make sure every New Yorker gets the care they need and does not suffer financially to get it; save billions of dollars a year by cutting administrative costs, insurance company profit, and outrageous drug prices; and pay for it all more fairly,” he said.

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Gottfried also highlighted the benefits of a single-payer system for people who already have insurance but still don’t have the coverage they need.

“In New York, there are people who are severely underinsured, people with deductibles they can’t afford and restrictive provider networks,” he reportedly said.

There are several hurdles to actually implementing the plan in New York, as RAND notes. For starters, the state would need to obtain a waiver from the Trump administration to implement the system, which Centers for Medicare & Medicaid Services Administrator Seema Verma has said she will reject.

Additionally, the study highlights the danger that wealthy New Yorkers and corporations in the state could leave New York due to the increased taxes to pay for the plan, a possibility that could threaten the assumed funding structure.

The RAND study comes two days after a study from the Koch-backed Mercatus Center concluded that a national single-payer Medicare for All system would reduce the amount the U.S. spends on health care by more than $2 trillion, and as single-payer has become increasingly popular in the Democratic Party.

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The policy has been particularly popular in New York, where Alexandria Ocasio-Cortez, who has been an unabashed supporter of Medicare for All, recently toppled Rep. Joe Crowley (D-NY) in his congressional primary.

Additionally, actress-turned-activist Cynthia Nixon, who is challenging Gov. Andrew Cuomo in the upcoming Democratic primary, recently endorsed a single-payer system. Cuomo has not done the same.