With Dems Controlling Both Houses in NY, Single-Payer System Possible

Contributor : Valerie Pillo - Market Analyst

Publish date: 07 Jan, 2019

A plan to implement a single-payer system in New York got new life after Democrats won the Senate in the November 2018 election and, if enacted, could drastically reshape healthcare for New Yorkers. It’s a top priority for lawmakers as they begin a new two-year session Jan. 9.

The Democratic-led state Assembly passed legislation for four straight years to enact the New York Health Act single-payer system, but it never got out of committee in the Republican-controlled Senate. Now the tide could change as many of the newly elected Democratic senators are progressives who support universal healthcare. Both houses plan to submit legislation for the system in January.

Proponents of the bill include State Sen. Gustavo Rivera, D-Bronx, who said the single-payer system would reduce costs, increase spending on care, offer full coverage to residents, and be fiscally responsible. Rivera also said it would provide negotiating power with drug companies.

“This will fundamentally change the way we deliver healthcare,” Rivera said during a recent The Max & Murphy radio show on WBAI 99.5 in New York City.

Rivera, who is the newly minted chairman of the Senate Health Committee, said hearings will be held throughout New York state this session for residents to hear about the legislation and how it would impact them.

“We want to make a good-faith effort to make sure people know what the bill is and is not,” Rivera said.

While the concept has its supporters, there are plenty of critics as well. Democratic Gov. Andrew Cuomo has never committed to supporting the bill, and it’s not on his top 20 priority list for 2019. In December 2018, public-sector unions demanded a carve-out so they can keep their current health insurance arrangements. Numerous hospital associations and insurance associations also have spoken out against a single-payer system.

Even supporters can’t deny the elephant in the room. Cost.

  • A Rand Corp. study found a single-payer system would call for $139 billion in new tax revenue by 2022, which is 156 percent more than currently collected in an already highly taxed state.
  • The study indicated health plan and provider administrative costs would be reduced, but, according to the analysis, it would save only $15 billion by 2031.
  • New payroll taxes and taxes on nonpayroll income such as interest, dividends, and capital gains would have to be implemented to earn this kind of revenue.

What about hospitals and insurance companies? Under a single-payer system, everyone would be covered by the same plan at the same reimbursement level. Affluent and specialty hospitals would lose money, while those that treat poorer patients with higher government funded coverage would gain revenue. There would likely be massive layoffs for health insurance companies and a significant economic impact.

New York will likely face similar challenges as Vermont. After several years of pushing a single-payer system, Vermont Gov. Peter Shumlin dropped the plan in December 2018, citing the large tax increases required to operate the system.

“This is not the right time” for enacting a single-payer system, Shumlin said in a statement.

Under the proposed Vermont model, businesses would have endured a double-digit payroll tax, and there would have been up to a 9.5 percent premium assessment on individuals. Additionally, businesses didn’t want to be required to pay for a single-payer plan and maintain employer-sponsored health plans.

“These are simply not tax rates that I can responsibly support or urge the Legislature to pass,” the governor said. “In my judgment, the potential economic disruption and risks would be too great to small businesses, working families, and the state’s economy.”

The Vermont plan also would have included several exemptions, including large companies with self-insured plans, and Medicare would have operated separately unless the state had a waiver.

If New York passes the bill and it's signed into law, the state would still need to request a federal waiver if it wants to redirect all federal, state, and health insurance exchange funds used for Medicaid, Medicare, and marketplace tax credits to a single-payer system. As long as there is a Republican in the White House, a waiver is unlikely. That means the 2021 legislative session would be the earliest the state could get a waiver.

Even with a Democratic majority in both houses, a single-payer system will still be a tough sell. A single-payer system is a costly, complex concept that may be too much of a risk even for New York.

Valerie E. Pillo is a Market Analyst for Market Access Insights and specializes in the physician realm, among other topics. Her work appears regularity in Health Plan Analysis and Market Overviews. Follow her on Twitter @ValeriePilloDRG

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