Massive State tax increases would be needed to pay for health care costs of a government-run, single payer system. Based on analysis by the RAND Corporation, New York would immediately need an additional $139 billion in taxes each year – a 156% increase in what the State currently collects in taxes. That would quickly rise to $210 billion each year by 2031. These tax increases would be on top of the $82 billion already spent on health care each year. These estimates are based on a number of ambitious, if not unrealistic, savings assumptions and do not include the cost of long term care expenses, one of the most expensive components of the health care system. Long term care would require another $42.7 Billion in taxes. So the total increase in taxes would be more than $250 billion.
The single payer system would be funded through a premium payroll tax paid by employers and their workers, and non-payroll income such as interest, dividends, capital gains and taxable portion of pensions. As the NYHA would impose new payroll taxes, it would reduce individuals’ take-home pay, leaving less money in the pockets of most New Yorkers.
Proponents often conflate the cost of NYHA and the taxes necessary to support spending required of the NYHA. According to RAND, the cost of NYHA in 2022 is $309 billion and that cost rises to $460 billion in 2031. The NYHA effectively doubles the State budget in its first year of implementation.
The savings from a government-run system would come from “administrative efficiencies” and reducing the reimbursement rates the state pays doctors, hospitals, drug makers and other providers. It is hard to imagine state government running the health care system more efficiently than a highly regulated private sector. Moreover, hospitals today rely on increased private sector health insurance payments to subsidize inadequate payments from the state for Medicaid. Reducing, or even eliminating those subsidies will place financial constraints on hospitals forcing many of them to reduce services and force many doctors to move out of New York.
Like your health insurance? Under the NYHA, private insurance will become illegal. Today, more than half of all New Yorkers receive coverage through their employer. These individuals would lose their coverage under a government-run system, taking away the ability of employers to effectively manage their healthcare costs while still be subjected to massive tax increases. Since many large businesses and government employers collectively bargain their health benefits with organized labor, these union members would lose their right to negotiate benefits with large employers and state and local government.
The NYHA would eliminate Medicare as it exists today for seniors in New York by lumping them into a larger healthcare program run by the State. Individuals currently covered by Medicare would lose their Medicare coverage.
The NYHA would create an increase in demand for healthcare that will not be met. In fact, according to RAND, only about half of new patient demand may actually be met. A single payer system can cause long waits for appointments, doctors not taking new patients, and changes in providers’ recommendations regarding courses of treatment or constraints on technology and equipment.
Implementation of the NYHA is contingent on the State receiving waivers from the federal government to both revise the State’s current Medicaid wavier and include Medicare beneficiaries in the new system. The head of the federal Centers for Medicare and Medicaid Services has said the agency would deny waiver applications from states seeking to implement their own single payer system. It is almost certain that all of this could not be accomplished within two years of passage of the NYHA.