By Bill Hammond and Chris Pope

The debate about a proposed single-payer health plan for New York State has mostly focused on its potential cost. But far less attention has been paid to the radical impact it may have on hospitals and physicians across the state.

To fill in the blanks, a forthcoming report by the Manhattan Institute and the Empire Center explores how different single-payer reimbursement methodologies would affect hospital revenues. It finds that such systems would dramatically change the financial outlook for many institutions – with some of the state’s best-regarded hospitals paying an especially heavy price.

Currently, hospitals collect their revenue from dozens of health plans, each of which pays different amounts. Hospitals with reputations for the highest quality or dominant market positions can both attract more privately insured patients and command higher rates. This is how flagships such as New York-Presbyterian and Memorial Sloan Kettering Cancer Center can afford top-notch personnel and cutting-edge equipment.

Under single-payer, by contrast, all patients would become entitled to exactly the same coverage. This would likely therefore result in a radical redistribution of resources. Hospitals currently serving poorer patients would generally gain revenue, while hospitals currently serving wealthier, better-insured patients would generally see their revenue diminished.

To estimate the likely impact, our study assumed that a state-run reimbursement system would resemble Medicare rates – which are designed to account for variation in the cost of delivering equivalent medical services across the state.

In one scenario, we assumed hospitals would charge all patients at current Medicare levels, as proposed by Sen. Bernie Sanders’ Medicare for All bill. Under this method, 77 percent of the state’s hospitals would lose money and 23 percent would gain. Overall statewide hospital funding would be slashed by 17 percent, or $10 billion per year.

In Western New York, Niagara Falls Memorial Medical Center and Mount St. Mary’s Hospital would gain about $114 million each. But losses would hit Roswell Park Comprehensive Cancer Center ($61 million), Kaleida Health ($59 million) and Erie County Medical Center ($52 million).

Under a second scenario, we assumed the state would boost Medicare rates enough to keep total hospital funding level. Under this method, two-thirds of hospitals would come out ahead. But one-third of hospitals would still be worse off. In Western New York, losers in this second scenario would include BryLin Hospital (a cut of $2.3 million or 15 percent) and Jones Memorial Hospital in Wellsville ($2.1 million or 6 percent).

In either scenario, hospitals taking the largest losses would face significant layoffs, diminished quality of care and the possibility of closing completely.

Bill Hammond is the health policy director at the Empire Center for Public Policy, and Chris Pope is a senior fellow at the Manhattan Institute, fiscally conservative think tanks.

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

You may also like

NY must prune its bloated Medicaid program — and focus on improving low-quality care

The coronavirus pandemic exposed a fundamental imbalance in New York’s approach to health policy: Albany spends too much money on its bloated Medicaid plan but neglects the public-health programs that used to be the Health Department’s main focus — Read More

A Corona Commission for New York

New York is finally ahead of the coronavirus, but its outbreak stands as a world-wide horror story. A sophisticated city was caught unprepared and suffered some of the worst levels of infection and death. The need for an investigation is clear. The harder question is who can credibly take the lead. Read More

New York, beware Warren’s Rx

Elizabeth Warren is an unabashed believer in wealth redistribution, so it was predictable that her Medicare for All plan would hit high-income individuals and large corporations with trillions in tax hikes. More surprising are the two other targets she chooses to soak: states that spend most heavily on Medicaid, and employers that offer the costliest health benefits. Read More

Blame Cuomo for New York’s Medicaid crisis

When it comes to New York’s latest Medicaid mess, the buck stops with Gov. Andrew Cuomo. Read More

What is ailing New York’s hospitals? They’re taking in lots of money but operating in the red

These should be boom times for New York’s hospitals, whose collective revenues have been surging by the billions for several years. Read More

Banishing Profit Is Bad for Your Health

Eliminating profit from an entire sector of the national economy would be unprecedented. But the example of New York, on a smaller scale, shows why it is a recipe for dysfunction. Read More

Slay the single-payer myths

It’s hard to take Medicare for All seriously when its proponents keep saying deeply unserious things. The latest case in point comes from Rep.-elect Alexandria Ocasio-Cortez, the progressive firebrand from the Bronx. Read More

How single-payer would disrupt NY’s hospitals

At stake is not only the quality of care for 20 million New Yorkers, but also the fate of a fifth of the economy and the livelihoods of 1.2 million health workers. Read More