RAND: Universal Coverage Feasible in New York Under a Single-Payer Program

Posted August, 10 2018 by Amanda Dunker

The New York Health Act would create a single-payer public program that provides health coverage for all New Yorkers.  Last week, RAND released a report finding that the bill is financially feasible. This is a big deal because single payer efforts in other states have floundered due to cost concerns. The savings weren’t huge – the researchers estimated total health spending would only decrease by 2-3 percent. But the program would provide universal health coverage in New York, which many have believed would cost much more than our current system.

The researchers estimated that individuals making between $13,350 and $133,500 (or households of four making between $27,610 and $276,100) will spend less of their income on health care under the New York Health Act.

A single-payer system would mean providers, like hospitals, doctors, and pharmacies, get paid directly by one state program. Patients would not pay anything when they receive care. Instead they would have to pay a new tax based on income. Employers and employees would split it, as they do now with premiums. The RAND researchers found that most New Yorkers would save money by paying the tax because they would no longer pay for premiums, deductibles, or co-payments.

Single-payer is one of two models of achieving universal health coverage. The New York Health Act is most similar to the models used in the United Kingdom and Canada. In those countries, most care is paid for through one government program. Private insurance still exists to supplement the national program, but it is a small part of their health care systems. Like Canada’s system, care under the New York Health Act would still be delivered by the private sector (in the United Kingdom care is largely delivered at public clinics and hospitals).

The Affordable Care Act (ACA) was based on the other model for achieving universal coverage, one that includes a bigger role for private insurance. In those countries, people get subsidies to buy coverage, benefits are standardized, and there are penalties for people who do not purchase insurance. Private insurers collect premiums and pay providers. Insurers are not allowed to deny coverage to people with pre-existing conditions. The ACA helped New York cut the number of people without insurance in half, to only 5 percent of the population. That’s a great achievement, but closing that gap is important.

A benefit of a single-payer program is that it would be much simpler for consumers and providers. Its simplicity is one reason the RAND researchers found it would reduce spending overall. Private insurers offer dozens of plans with slightly different benefits and with different fee schedules, which makes billing very complex. Providers also have to develop administrative systems for dealing with many sources of payment. Those costs would go away. The state would still be responsible for some administrative costs but our existing public programs have relatively low administrative costs compared to private insurers.

The RAND researchers also found that the system would save money because the program would have more purchasing power than any private insurer or even large programs like Medicaid. That should mean better prices for things like medication, for the same reason that places like Costco that sell bulk goods can charge less.

Details are incredibly important in health care, as any consumer who’s dealt with a claim denial or billing error can explain. That means there is still a lot of work to do before New York can realistically develop this single payer program. However, the new report means there is new energy for figuring out those details. To learn more about the bill, check out the Campaign for New York Health’s website.

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