saltbae-0-300x200-4195286A statewide single-payer health plan that passed the Assembly three years in a row is due to make its annual stop at the chamber’s Health Committee on Tuesday morning.

This time around, lawmakers have a new reason to be wary: Due to recent changes in the federal tax code, the already exorbitant cost of single-payer for New York taxpayers has gotten even steeper.

Sponsored by longtime Assembly Health Chairman Richard Gottfried (D-Manhattan) the New York Health Act (A. 4738-a) would commit Albany to paying 100 percent of medical costs for all 20 million of the state’s residents – adding hundreds of billions of dollars to the state budget.

To cover those costs, the bill would impose two new taxes—one on payrolls, and another on non-payroll income such as interest, capital gains and other investment proceeds.

Previously, both of those levies would have been fully deductible from federal taxes, mitigating their bite for many New Yorkers. But federal tax changes enacted in December capped the deduction for state and local taxes, known as SALT, at $10,000 per year—a limit that a significant fraction of the state’s residents already exceed.

The new policy does not affect payroll taxes, which remain deductible. But the cap would apply to the New York Health Act’s proposed tax on non-payroll income—increasing the net cost to taxpayers by 10 percent to 37 percent, depending on their income bracket.

The dollar amounts involved are impossible to estimate, because the bill text leaves details of the tax hikes to be determined later. But they are sure to be large.

Even single-payer supporters acknowledge, based on the dubious estimate of a single economics professor, that such a plan would require the state to raise an additional $92 billion a year in revenue. That’s the equivalent of a 118 percent hike in every tax the state currently collects. Since the plan specifies no cost controls—and promises to cover every visit, test, procedure and prescription with no referrals, no restrictions on choice of provider and no copayments or deductibles—the real price tag is likely to go far higher.

Proponents have argued that the tax hikes would be offset by the savings on private insurance premiums that New Yorkers and their employers would no longer have to pay. But employer-sponsored benefits are fully deductible, while one of the two proposed taxes no longer would be, adding billions to the net impact.

Another cause for concern is the lack of any Congressional Budget Office-style cost-benefit analysis the plan’s feasibility, by the Health Department or anyone else. Such a step would be routine in Congress and in many other states, and should be a minimum precaution in this case.

As it happens, the New York State Health Foundation has commissioned such a study by the RAND Corporation, with the results expected to be published this summer. Given that single-payer would disrupt the coverage of every New Yorker and fundamentally restructure 20 percent of the state’s economy, waiting to hear from outside experts is the least lawmakers should do.

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

New York’s health benefits remain the second-costliest in the U.S.

New York's health benefit costs increased faster than the national average in 2020, leaving it with the second-least affordable coverage in the U.S. The state's average total cost f Read More

The Health Department’s FOIL Responses Signal an Indefinite Wait for Pandemic Data

The quest for comprehensive data on New York's coronavirus pandemic hit a bureaucratic roadblock this week Read More

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s State Share of Medicaid Spending is Due to Jump 22 Percent This Fiscal Year

The state share of Medicaid spending is projected to jump 22 percent under the recently approved state budget, an unusually steep one-year jump for what is already one of New York's biggest expenditures. Read More

New York’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards

New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More

Proposed minimum staffing law could push some nursing homes to employ fewer licensed nurses

Some New York nursing homes are likely to scale back their use of higher-trained personnel if proposed minimum staffing ratios become law, according to a review of existing employment patterns. Read More

New York’s ‘Bluest’ Counties Have the Lowest COVID Vaccination Rates for Older Residents

New York's bluest counties are posting the lowest coronavirus vaccination rates for older residents, a striking contrast with the pattern in the U.S. as a whole. The disparity appea Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!