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As President Trump and the Republican Congress threaten the health care coverage of millions of Americans, New York State could create a universal health care system that would save residents tens of billions of dollars — if the Legislature passes it.
Governor Andrew Cuomo’s office estimated earlier this month that if the Affordable Care Act were repealed, 2.7 million people in New York State would lose their health insurance coverage, most in New York City. That figure, the state Health Department says, includes 1.9 million people who would lose the Medicaid coverage extended above the poverty level by Obamacare; 586,000 enrolled in the state Essential Plan, which covers people making somewhat more than the maximum for Medicaid; and 220,000 who bought private insurance through the state’s Obamacare exchange.
Congressional Republicans’ proposals to privatize Medicare and convert Medicaid to finite block grants to states could cut off even more people. More than 3.4 million New Yorkers were on Medicare as of October 2016, according to the federal Centers for Medicare & Medicaid Services, while more than 6.4 million were receiving Medicaid or federally funded Children’s Health Insurance Program benefits.
“As bad as so many things were in our health care system, it is all about to get a lot worse,” Assembly Health Committee chair Richard Gottfried says. As bad as the repeal of Obamacare would be, he adds, “I think what they’re going to do to Medicaid and Medicare is probably going to do more damage.”
Gottfried has an alternative: He is planning to introduce the New York Health Act, a bill which would create a state health care system he deems “basically an improved version of traditional Medicare, but also like the Canadian system.” It would be “funded entirely by broad-based taxes based on ability to pay.”
The Assembly passed an earlier version of the bill with solid majorities in 2015 and 2016, but it didn’t get even a committee hearing in the Republican-controlled state Senate.
The problems people have complained about with Obamacare — fast-rising insurance premiums, high deductibles, and “narrow networks,” in which people’s coverage is limited to a small number of medical providers — are problems inherent in the private insurance system, Gottfried says. Congressional Republicans’ most concrete idea to replace Obamacare has been to let out-of-state insurance companies sell across state lines, which they say would increase market competition.
But major insurers in New York such as Aetna, UnitedHealthcare, and most Blue Cross plans are based outside the state. What the GOP really wants, Gottfried argues, is to let companies from states with minimal consumer protections sell coverage without having to meet other states’ requirements. That boils down to “we’re going to let people from out of state, from states that have garbage insurance laws, sell you garbage, and we’re going to pretend that that’s going to give you wonderful health coverage.”
In contrast, if New York set up its own Medicare-style system, it would eliminate so much in administrative costs that it could provide essentially free medical care to everyone — no copays, no deductibles — and people would still be able to choose their own doctors.
Health care costs now consume one-sixth of New York State’s gross domestic product, University of Massachusetts economics-department chair Gerald Friedman wrote in a 2015 analysis of Gottfried’s proposed “New York Health Plan.” The study estimated that it would reduce total health care costs in the state by almost 25 percent, by $71 billion out of $287 billion projected for 2019.
Most of those savings would come from lower administrative costs: about $28 billion in insurance-company expenses and profits, $21 billion for medical providers, and $2 billion for employers. Physicians in the U.S. spend “one-sixth of their work hours on administration, including bill processing,” the study said, four times as much as Canadian doctors do under that nation’s single-payer system. The rest of the savings would come from negotiating lower drug prices and reducing fraud.
Friedman estimated that it would cost $26 billion to provide health care to people without insurance, reduce out-of-pocket costs and barriers to access for those who have insurance, pay doctors more than they now get from Medicaid, and help displaced insurance-company workers find new jobs. That would leave the state with a net savings of $45 billion.
The study projected that the New York Health Plan system would be financed by a tax surcharge, beginning at 9 percent on income over $25,000 a year and going up to 16 percent on income over $200,000. Employers would have to cover four-fifths of that, an amount Friedman wrote would be “much less than businesses and governments currently pay for health insurance.”
When Vermont abandoned its effort to create a state single-payer system in 2014, Governor Peter Shumlin said it would require prohibitively high tax increases, 11.5 percent on businesses and up to 9 percent on individuals. Shumlin’s plan was more costly because it “wasn’t really a full-blown single-payer system,” Gottfried responds. As New York’s tax base is much stronger than Vermont’s “overwhelmingly rural and small-business economy,” he says, “We don’t have to look at anything like the tax rates that Vermont thought they had to face.”
For almost every New Yorker, Gottfried contends, the taxes that would pay for a single-payer system “would be substantially less than we now spend on premiums and out-of-pocket expenses.”
Medicare’s administrative costs are generally estimated at around 2 percent of its total expenditures. Medicaid’s are higher, the Friedman study said, because it has to “police eligibility” and has been partially privatized through managed-care programs. The Affordable Care Act mandated that no more than 20 percent of revenue from individual policies it subsidized could go for expenses other than medical care.
Setting up a state single-payer system would be fairly simple, Gottfried says. People would be automatically enrolled, the state already has a bill-paying system in place, and revenue-raising mechanisms such as a payroll tax are already used for Social Security and Medicare. Still, he believes the process would take two to three years, even though Medicare started paying claims only 11 months after it was enacted in 1965. Technology has advanced dramatically since then, but bureaucracy has grown too.
The political obstacles are another story. “I don’t reasonably foresee the Senate seeing the light this session,” Gottfried says. “I believe the more we pass the bill in the Assembly and the more support we build up, the more New Yorkers will see it as something that is really achievable”— and that will either cause incumbents to change their minds or inspire voters to unseat opponents.
State Senate Majority Leader John J. Flanagan (R-Suffolk), Health Committee Chair Kemp Hannon (R-Nassau), and committee vice-chair David Valesky (D-Syracuse, a member of the Republican-allied Independent Democratic Conference) did not return phone calls from the Voice or respond to a list of questions about the issue.
The state’s two largest health care unions have both lined up behind the bill. The New York State Nurses Association has advocated a single-payer system for more than 25 years; Gottfried credits them with giving him the idea for the bill. 1199SEIU United Healthcare Workers East said in a statement that it “unequivocally supports” the aim of providing comprehensive, universal health coverage, and that “a single-payer plan would eliminate administrative waste and allow for precious resources to be invested in the provision of health care for our state’s residents.”
Governor Andrew Cuomo has not endorsed the measure, but a statement from the state Department of Health implied that he hasn’t closed the door. The state “is committed to ensuring that all residents have access to the best possible health care and insurance options,” it said.
Gottfried says some health policy people in the administration have told him privately that “a state single-payer plan is the only thing that makes sense.” He hopes that Cuomo follows the pattern he did on same-sex marriage, which he backed once he saw there was a broad base of support, and “when he came on board, that was very potent.”
If the federal government cuts off millions of people’s access to health care, however, that could force the issue. If that happens, Gottfried says, “if a state wants to fill in the gaps and protect its people, the only way a state is going to be able to afford that is by going to a single-payer system.”
“Passing the single-payer health care law would be a critical step in ensuring that every New Yorker has access to affordable and quality health care, while saving taxpayers millions of dollars,” Bronx State Senator Gustavo Rivera, the ranking Democrat on the Health Committee, said in a statement to the Voice. “In a time when Republicans in Congress are working to repeal, not replace, the Affordable Care Act and when they could potentially decimate the Medicaid and Medicare programs, our state has the responsibility to ensure health coverage for all New Yorkers. Therefore, I will continue to cosponsor this bill, as health care is a right and not a privilege.”