Why Albany needs a CBO

by Bill Hammond |  | NY Torch

House Republicans took justifiable heat for passing their Obamacare replacement bill so hastily, without full public hearings or an up-to-date analysis by the Congressional Budget Office.

But that process looked like a model of cautious deliberation next to the Assembly’s handling of the New York Health Act, which would establish a statewide single-payer plan.

The bill, sponsored by longtime Assembly Health Chairman Richard Gottfried of Manhattan (photo), would seek to end the current health coverage of all 20 million New Yorkers and enroll everyone into a single plan managed by Albany and paid for by taxpayers – at a cost of tens, if not hundreds, of billions of dollars. The consequences within state borders would far outstrip anything being debated in Washington.

Yet the Assembly voted 94-46* to approve this massive legislation on Tuesday without having subjected to it to a public hearing since January 2015. And the closest thing to a CBO score available was a two-year-old paper from a University of Massachusetts economist who’s an unabashed promoter of single-payer.

It was hardly the kind of independent, nonpartisan analysis lawmakers should have before moving to upend one-sixth of the state’s economy.

Under Gottfried’s proposal, all New York residents would be automatically and fully covered to see any doctor, go to any hospital, and fill any prescription without paying a dime in premiums, copayments, or deductibles. There would be no more employer-provided benefits, Medicaid and Medicare would be absorbed into the state plan, and private health insurance would be effectively banned.

Despite the massive expansion of coverage, the 2015 paper by UMass economist Gerald Friedman argued that Gottfried’s proposal would result in even bigger savings – supposedly by eliminating insurance administration and negotiating lower drug prices, among other things. Ultimately, Friedman claimed, the state’s overall health spending would shrink by $45 billion.

A close look at those findings shows that they are based on highly dubious assumptions – including a gross overestimate of current administrative costs, and a gross underestimate of administrative costs under a single-payer system.

On Tuesday, though, single-payer supporters in the Assembly cited Friedman’s paper as evidence that they were doing the right thing.

Unfortunately, Albany has no independent, nonpartisan body like the Congressional Budget Office to provide dispassionate analysis and fact-check far-fetched claims.

Even by Friedman’s dubious estimates, the state would need a $92 billion tax hike – much more than doubling the current state tax burden – to offset the private insurance premiums that people would no longer be paying. The real price tag would almost certainly be far higher.

It’s true that other single-payer systems in other countries, such as the United Kingdom and Canada, manage to provide universal coverage at much lower costs than in the United States. However, they accomplish that not simply by cutting out paperwork and drug prices, but by paying far lower amounts to doctors, nurses and hospitals and by limiting expensive care – constraints that go unmentioned by single-payer supporters in Albany.

Gottfried’s bill is not likely to go anywhere in the Republican-led Senate this year. But the Senate version has 30 Democratic cosponsors, which is expected to grow to 31 after a special election this month. That puts it within a single vote – and a governor’s signature – of becoming the law of the state.

*Updated to reflect final vote