cash-pile-notes-e1462801677497-2929726Revisions to a proposed single-payer health plan for New York State would add tens of billions dollars to the already enormous price tag – and further hinder the state’s ability to control costs going forward.

The updated version of the New York Health Act (A. 5248/S. 3577) was unveiled Monday by the bill’s chief sponsors, longtime Assembly Health Chairman Richard Gottfried of Manhattan (photo) and newly installed Senate Health Chairman Gustavo Rivera of the Bronx.

The major changes include:

  • Adding immediate coverage for long-term care.
  • Exempting income under $25,000 from new single-payer taxes.
  • Guaranteeing up to two years’ of unemployment benefits for displaced workers.
  • Mandating that government employers continue financing health benefits for retirees living out-of-state.
  • Establishing a dispute resolution process for fee negotiations with doctors, hospitals, nursing homes and other health-care providers.

Like the previous version – which passed the Assembly in each of the past four years – the bill would create a single state-run and state-financed health plan for all 20 million New Yorkers. It would replace all private insurance and replace or supplement existing government plans, such as Medicare and Medicaid. It promises to cover all medical bills with no copayments or deductibles, no restrictions on choice of providers and no prior authorizations.

On top of using all existing state and federal health-care funding, the plan would require two new taxes – one on payroll income, and the other on non-payroll income such as interest, dividends, capital gains and the taxable portion of pensions. The bill does not specify the rates and brackets, leaving those details to be determined later during a transition period.

There is no official estimate of the cost. An analysis by the RAND Corp., commissioned by the New York State Health Foundation, projected that the state would need to hike taxes by $139 billion, or 156 percent of total state revenues.

RAND also projected potential tax rates and brackets that would roughly triple the state’s top marginal tax on income – to more than 30 percent – and make it an outlier compared to the rest of the country.

Those estimates now require significant upward revision.

Long-term care: The bill previously called for coverage of nursing homes and home care for the elderly and disabled to be added later, after a period of study. The revised bill would include that coverage as soon as the plan launches, at an uncertain date after passage. RAND projected that adding long-term care would require an additional $18 billion to $22 billion a year in tax revenue.

Low-income taxpayers: The revised bill specifies that income under $25,000 would be exempt from the new single-payer-related taxes. This would assure that people currently on Medicaid (which has no premiums) and the Essential Plan (which costs no more than $20 a month) are not financially worse off because of single-payer. However, it also means exempting roughly one-third of the state’s population from the new taxes, and increasing the relative burden on middle- and high-income New Yorkers.

Displaced workers: The single-payer bill previously called for providing job training to the estimated 50,000 insurance industry workers who would be put out of work by single-payer. The new bill adds the promise of up to two years’ worth of unemployment benefits for all displaced workers – including those formerly involved in insurance billing on behalf of providers.

Retirees: Like the earlier version, the bill calls for a study of how to incorporate employer-provided retiree health benefits into the single-payer plan. For government retirees living out-of-state, however, the revised version specifies that their employers must continue providing all existing benefits. In-state government retirees are to be automatically enrolled in the new state plan; their employers would still be responsible for any existing benefits that go beyond what the state plan provides.

Dispute resolution: Under the proposed single-payer system, the state would be responsible for paying virtually all medical fees received by doctors, hospitals, nursing homes and other providers – giving it enormous power over roughly one-fifth of the economy. The previous bill called for the state to negotiate fees with provider groups as if bargaining a labor contract. The new bill adds a process for resolving disputes – including, if necessary, the appointment of a three-member “fact-finding” panel (with appointees “mutually acceptable” to both sides) that would make specific recommendations. If that fails to break the impasse, the health commissioner is supposed to “order a resolution to the negotiations based upon the findings of fact and recommendations submitted by the fact-finding board.”

This could be the most consequential amendment of all. The state’s ability to drive a hard bargain on provider fees would be crucial to controlling health costs in the long term. 

The proposed dispute-resolution rules – which are reminiscent of the state’s Taylor Law governing labor relations with public employees – would appear to tie the hands of state officials at the bargaining table. In effect, three members of a fact-finding panel could potentially dictate enormous expenditures of state funds – and the bill makes no mention of considering whether those costs would be affordable for the state and its taxpayers.

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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