A little-noticed change to the New York Health Act has big implications for the bridge-and-tunnel crowd.

Under the latest version of the single-payer bill—which has broad support from Democrats in the Legislature—hundreds of thousands of commuters from other states would face the replacement of their current health insurance with a Medicaid-like plan funded with tax dollars and managed by Albany.

A change made to the bill last May—which was overshadowed by the pandemic—provides that the new state-run health plan would cover everyone “employed or self-employed full-time in the state” in addition to 20 million New York residents.

As with many other parts of the bill, pivotal details are left to be filled in later, including the definition of “full time.”

Another unanswered question is the fate of commuters’ spouses and children. Many of them currently rely on employer-sponsored family coverage that would cease to exist, but the bill does not explicitly make them eligible for the New York plan.

As before, commuters and their employers would be subject to the steep new payroll tax that’s necessary to finance the single-payer plan in lieu of what’s currently paid in premiums. Self-employed commuters would also face an additional tax on their non-payroll income.

The legislation does not specify the rates or brackets, but the two new levies would need to raise an estimated $139 billion, more than doubling the revenue from all current state taxes combined.

Previously, the legislation took for granted that out-of-state commuters would continue to rely on commercial insurance—and allowed them and their employers to claim the cost of that coverage as a credit against New York’s single-payer taxes.

However, that credit is available only for employees who are ineligible for state coverage, so full-time commuters would no longer qualify under the revised bill.

The new taxes are meant to be levied on a progressive scale, imposing higher rates on higher incomes. By design, many lower-income individuals and their employers would save money compared to the current cost of private insurance, while higher income people will pay more than the status quo—in some cases, substantially more.

Employers who don’t currently offer health benefits to all or part of their workforce would also face a significant new cost.

The dividing line between winners and losers is impossible to determine precisely without more details on the tax rates and brackets. On average, however, commuters earn higher incomes than resident employees and therefore are more likely to come out behind financially.

Another possible issue will be finding out-of-state doctors, hospitals and pharmacies willing to do business with the state-operated plan, whose reimbursement rates are yet to be established. New York-based providers will have no choice but to accept what the state pays, but providers elsewhere could choose not to participate—as they often do with other government health plans, such as Medicare and Medicaid, as well as private insurance.

Overall, single-payer would alter the cost-benefit equation of traveling into New York for work—creating a new incentive for higher-income commuters and their employers to relocate out of state.

The complexities surrounding commuters add to a long list of risks and downsides to enacting New York Health Act. The bill would disrupt the existing coverage of every New Yorker, send the state’s tax burden to unprecedented heights and put one-fifth of the state’s economy under the direct control of a state government notorious for mismanagement and corruption.

Yet the proposal appears closer than ever to becoming law. It passed the Assembly in four of the past six years and recently gained 33 cosponsors in the Senate—where 32 votes are enough for approval.

Commuters aren’t represented electorally in Albany. But they—along with resident New Yorkers—have a lot at stake in what happens next.

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

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