Proponents of establishing a single-payer healthcare system in New York State are making a fresh set of unrealistic claims about their plan – this time by highlighting the supposed benefits for local governments.

A paper recently circulated by the Campaign for New York Health focuses on how much municipalities and school districts would pay in new taxes under the single-payer system, as compared to what they currently spend on insurance premiums.

The paper finds that local governments could save 80 percent or more of their healthcare expenses and 12 percent to 14 percent of their total spending. The authors envision local officials using this potential windfall to improve services, invest in infrastructure or reduce property taxes.

However, these findings should be viewed as wishful thinking rather than a sober assessment. The paper’s analysis is flawed and misleading in at least four ways:

• It relies on hypothetical payroll tax rates that are implausibly low – causing the paper to understate the likely tax impact and overstate the savings.
• It ignores the collateral damage for private-sector employers and individual taxpayers, at least some of which would have to shoulder higher healthcare costs as municipalities pay less.
• It discounts the risk that making the state responsible for burgeoning healthcare expenditures would leave it with less money for other priorities, including school aid and transportation funding, which could leave local governments worse off in the end.
• Finally, it disregards the financial ripple effects – on both the private and public sectors – of a massive increase in state taxes that would dwarf any savings on local taxes.

The Campaign for New York Health paper is the latest example of single-payer proponents trying to sell their plan as a free lunch – pretending that Albany could rapidly and efficiently take charge of healthcare for 20 million New Yorkers without harming anyone other than insurance executives and a minority of wealthier taxpayers.

In reality, there are risks and downsides that state lawmakers should at be aware of and take seriously. That would mean commissioning an in-depth study by impartial experts, not relying on white papers from committed advocates.

How the NYHA would work

First introduced in 1992, the New York Health Act (A. 1466/S. 3425) would abolish the state’s existing insurance system and commit taxpayers to fully covering both the medical care and long-term care of 20 million people – an open-ended expense that currently approaches $400 billion per year.

The bill calls for eliminating premiums and cost-sharing and giving consumers a free choice of doctors and hospitals. The new plan would either replace existing government programs such as Medicare or supplement them as “wraparound” coverage. 

Commercial insurance would be banned, as would private payment. Providers treating New York residents could accept reimbursement from no other source but the state plan. Their payment levels would be set through collective bargaining.

To finance this takeover, the bill calls for enacting two new taxes: one on payroll income such as salaries and wages, and the other on non-payroll income such as interest, dividends and capital gains. The legislation specifies that these taxes should be “progressively graduated” – i.e., charge higher rates on higher incomes – and that employers would pay at least 80 percent of the payroll tax. The first $25,000 of income would be exempt from the taxes, rising to $50,000 for elderly or disabled people enrolled in Medicare.

Beyond that outline, however, the bill does not specify what rates would apply to which income ranges. Those high-stakes details would be set by state lawmakers at a later date, after the single-payer bill has been passed into law.

Replacing health premiums with a system of progressive taxes would undoubtedly create both winners and losers. Some employers and individuals would save money, while others would pay more. However, it’s impossible to be certain who would fall in which category given the many questions the bill’s authors have left unanswered.

Questionable tax rates

Despite these uncertainties, the Campaign for New York Health makes the case that local governments would fall squarely in the money-saving camp.

Published in May 2026, the paper was co-authored by Cheryl Cashin, managing director for global health systems of Results for Development, a Washington, D.C.-based not-for-profit organization, and Judith Esterquest, healthcare issues specialist with the League of Women Voters of New York State.

The authors started by identifying the current healthcare costs for a sampling of larger local governments, including 13 counties, 17 cities and towns and 22 school districts. For counties, the tally included their mandated contributions to the Medicaid budget, which would be shifted to the state under the New York Health Act.

The paper then sought to compare those amounts to what the same local governments would owe in taxes under the single-payer system, by applying an estimated set of tax rates to the municipalities’ payrolls.

The authors obtained the payroll data from an independent source, the Empire Center’s SeeThroughNY database. The tax schedule, by contrast, came from in-house – a hypothetical set of rates developed in 2024 by a board member of the Campaign for New York Health, Leonard Rodberg.

It was a striking choice, because the tax rates Rodberg proposed in 2024 were dramatically lower than previous estimates – including his own work in 2021 and 2018.

The tables below show the tax schedules posited by various sources: a 2015 paper by Gerald Friedman, professor of economics at the University of Massachusetts at Amherst, a 2018 study by the RAND Corp., and 2018, 2021 and 2024 papers by Rodberg, a retired professor of urban studies at Queens College, City University of New York.

All of these estimates could well be too optimistic. Friedman and Rodberg are avowed supporters of the New York Health Act and, as such, tended to understate how much the new system would cost and, therefore, how high taxes would have to go. 

The RAND study, which was commissioned by the New York Health Foundation, is the most thorough and credible produced so far – but also made questionable assumptions about how much single-payer would save. 

As seen in the tables, however, the rates proposed by Rodberg in 2024 were outliers on the low end – and less than half as high as his own estimated rates from 2018 and 2021.

This is especially striking given that his 2024 rates factored in the cost of universal coverage for long-term care, which was added to the legislation in 2019. The proposals from Friedman and RAND were written before that amendment. (RAND considered the possibility that the system would later cover long-term care, but assumed that cost would be financed through non-payroll taxes only.)

In response to a recent query from the Empire Center, Rodberg acknowledged that his 2024 rates were flawed. He said he had adjusted them downward based on the extraordinary surge of income in 2021, when the state’s economy was bouncing back from the pandemic and Wall Street was booming.

That turned out to be a short-term phenomenon. Statewide income dropped sharply in 2022 and, though it has grown since then, did not return to its 2021 level through the four following years. Rodberg said he now believes the tax rates in his 2024 paper are “too small to provide necessary funds,” and his earlier numbers from 2018 and 2021 “are closer to what would be needed.”

Even before Rodberg’s change of heart, Cashin and Esterquest should have been aware that they were basing their analysis on unusually low tax rates. Their paper does not discuss the existence of alternate estimates.

Because of this choice, their paper likely understates how much local governments would owe in payroll taxes, and therefore overstates the possible savings compared to the status quo.

Had the paper used Rodberg’s 2021 estimated rates, its calculated tax obligations would have been about 2.1 times higher.

If that difference were applied to three sample municipalities cited in the paper, the estimated payroll tax cost for Suffolk County would have been $146 million in payroll taxes instead of $67 million; for the town of Islip, $5.6 million instead of $2.6 million, and for Brentwood school district, $34.8 million instead of $16.1 million.

To be sure, those three municipalities would still have stood to pay substantially less than the status quo – a hypothetical savings of $667 million for Suffolk, $14 million for Islip and $65 million for the Brentwood schools.

This points to another critical flaw in the Campaign for New York analysis: It misses the big picture.

Shifting costs

Like other proponents of single-payer healthcare, Cashin and Esterquest take for granted that their preferred system will operate more efficiently than the status quo – mostly by reducing administrative costs and negotiating lower prices for drugs. They predict a state-run plan would provide more care to more people at a lower cost.

They cite an estimate, also from Rodberg, that the New York Health Act would reduce the state’s total annual healthcare spending by $16.8 billion or 5 percent.

Yet they estimate that local governments would pay 80 percent to 85 percent less in taxes than they pay in insurance premiums. (Those savings would be smaller using a more realistic estimate of tax rates, but still on the order of 65 percent of 70 percent.)

The authors give three reasons why local governments would benefit disproportionately from single-payer: because they provide relatively generous benefits, typically cover retirees as well as active employees, and generally pay modest salaries that would not be subject to the highest tax rates.

However, 95 percent of the money they save would have to be made up by someone else – meaning other employers and individual taxpayers, who would do that by paying more in single-payer taxes than they currently pay in premiums.

A soaring tax burden

The Campaign for New York Health paper presents the savings for local governments as an unalloyed benefit for taxpayers:

Eliminating health insurance costs for local governments and school districts could translate into improvements in schools, infrastructure, and public services and/or lower property taxes for households and businesses, with potential ripple effects such as lower rents, lower consumer prices, and stronger local economic activity. 

However, that scenario ignores the larger context of public finance in New York State.

First, the New York Health Act would entail what is probably the largest tax increase ever contemplated by a state.

By Rodberg’s estimate, the new taxes would need to raise $172.5 billion in the first year, which is more than three times the total amount of state income tax paid in 2023.

That massive increase on the state level would dwarf any conceivable savings on property taxes at the local level.

Second, the state has a history, when its finances get tight, of either cutting aid to local governments or confiscating a portion of their revenue. Even if local governments do reap a windfall of savings from single-payer, they would be unlikely to keep it for long.

If the New York Health Act were to become law, healthcare spending would consume the lion’s share of the state budget – and become its biggest headache. Rising medical costs, which perennially outstrip inflation, would be likely to crowd out other priorities. Albany could be expected to curtail state aid for local schools and highways and law enforcement, quite possible leaving municipalities worse off fiscally than before.

Third, a single-payer plan could only save money for a majority of New Yorkers by dramatically increasing costs on the wealthier minority. While this might be politically expedient, it would be destabilizing both for the healthcare system as the economy as a whole.

If the tax structure projected by RAND were enacted into law, the top marginal non-federal rate for New York City residents would jump to more than 40 percent, which is three times higher than any other state and six times the average among the 42 states that levy an income tax. That would create a powerful additional incentive for high-income residents – a category that includes many doctors – to leave New York in favor of a lower-tax jurisdiction.

Another risk is volatility. The incomes of wealthier New Yorkers tends to rise and fall with the stock market, which means their tax payments are also subject to economic booms and busts. A health plan dependent on revenues from Wall Street bonuses could find itself short of cash during a market downturn, and state legislators would face a choice of further hiking taxes, reducing payments to providers, cutting benefits or a painful mixture of all three.

Astonishingly, the Assembly approved the New York Health Act five times, most recently in 2018, without having a serious analysis of the tax consequences, let alone the disruptive effects for the healthcare system. The best study to date, by RAND, is now eight years old and does not reflect the ramp-up in healthcare costs since the pandemic.

An update is overdue. The rosy scenarios envisioned by single-payer advocates are no substitute for a real examination of the New York’s Health Act’s considerable dangers alongside its putative benefits.

Further reading on the New York Health Act from the Empire Center:

Sticker Shock: The Impact of a ‘Single Payer’ Health Plan on New York Taxes (2022)

Ten Reasons To Oppose AlbanyCare (2021)

Do No Harm: The Case Against Single Payer Healthcare in New York (2019)

The Impact of Single Payer on New York Hospitals (2018, co-published with the Manhattan Institute)

The Case Against AlbanyCare (2016)