New York’s single-payer health system could work—with tax increases
As the debate over a possible single-payer health system heats up, at least one study has shown such a model is viable in New York—with a few catches.
The New York State legislature is currently considering a bill to implement a comprehensive single-payer health plan that would provide coverage to all residents of the state, including undocumented immigrants. The model, also known as "Medicare for all," is also being touted at the federal level by Sen. Bernie Sanders, I-Vermont, who introduced a Medicare for all bill in 2017.
While the price tag of a federal Medicare for all bill rang in at an estimated $33 trillion, the New York version, the New York Health Act, would save the system $15 billion by 2031, according to a recent study from the RAND Corporation, a nonprofit think tank and the nation’s largest independent health policy research program.
“We estimate that the NYHA could expand coverage without substantial increases in overall health care spending: in the short term, health care spending would be relatively similar but would grow more slowly over the longer term than under the status quo,” the study found.
The state-sponsored single-payer health system, dubbed New York Health, would bring healthcare spending down about 3 percent by 2031, but spending would remain similar under the status quo by 2022, the study estimated. Under the current system, healthcare spending in the state is projected to hit $311 billion in 2022 and $475 billion in 2031, approximately 17 percent to 18 percent of the state’s GDP.
Reduced administrative costs would offset increases in spending stemming from coverage of those previously uninsured under the single-payer plan.
While the overall costs would decrease in the new system, it would require a major financial overhaul. Instead of paying premiums and out-of-pocket expenses for covered services, people would make tax payments to pay for the system.
In addition, New York would raise $139 billion in new state tax revenues by 2022, an increase of 156 percent from current collections, and $210 billion in 2031 to fully finance the system.
The changes would effectively shift the responsibility of paying for the system from lower-income residents, who would see their healthcare payments decline, to the highest-income residents paying the highest tax rates.
“This financing shift would entail a substantial redistribution in who pays for health care,” according to the study.
New Yorkers among the lowest household compensation rate would see average healthcare payments drop about $2,800 per person. The highest income households would see healthcare payments rise $1,700 per person on average, the study found.
These tax implications, along with other assumptions, mean that the system could work—but its success is still uncertain.
“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,” the study concluded.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."