Impacts of A Single-Payer Health Care Proposal in New York State

There has been growing interest in single-payer proposals at the national and state levels. The New York Health Act (NYHA) is a single-payer bill that would provide health coverage to all state residents. Health benefits would be comprehensive, including all benefits covered by Medicare, Medicaid, and those mandated under the Affordable Care Act; the exception is long-term care benefits that would not be covered initially but could be added later. Patients would have no deductibles, copayments, or other out-of-pocket payments for covered benefits.

In this analysis, we use microsimulation modeling to estimate the plan’s effects compared to current law under three future years: 2022, 2026, and 2031. We analyze the impacts under a set of base case assumptions as well as alternative assumptions to illustrate key factors and the range of uncertainty in the potential impacts. Our analysis uses the RAND’s COMPARE and PADSIM models, NBER’s TAXSIM model, and the IMPLAN model. We use data from the American Community Survey, Medical Expenditure Panel Survey, and the State Health Expenditure Accounts. We estimate total health care spending, household health care payments, and taxes under the NYHA.

We estimate that the NYHA could expand coverage without substantial increases in overall health care spending. Total health care spending under the NYHA could be relatively similar initially and decrease over time if administrative costs are reduced and if provider payment rates are restrained. However, the NYHA would require new taxes and shift financing among households and businesses. New state taxes would replace premiums and out-of-pocket payments for covered benefits. After the redirection of existing federal and state health care outlays to the single-payer system in New York, we estimate the additional state tax revenue needed to finance the program in 2022 would be $139 billion, a 156-percent increase over projected total state tax revenue under current law.

These results are sensitive to assumptions about uncertain factors. Although these assumptions are reasonable, they are also highly uncertain and depend on whether federal waivers would be approved, how the state implements the program, and the extent the state can negotiate payment rates with providers. Our estimates also depend on the design of the tax schedule under the NYHA and behaviors in response to the new taxes. The NYHA would add new progressively graduated payroll and nonpayroll taxes but does not specify the rates or the degree of progressivity. Our analysis assumes one possible tax schedule that would reduce payments for the majority of residents but could lead to tax avoidance and migration among a small number of high-income households facing large tax increases.

Our results suggest that a single-payer approach has the potential to lower payments among most New Yorkers, but the results are sensitive to assumptions about uncertain factors. As health care reform progresses at the state and national levels, analyses assessing the impacts of proposals are essential to inform health policy debates by policymakers and other stakeholders.