02 Aug Single-Payer Option Feasible For New York – With $139 Billion in New Taxes
MedicalResearch.com Interview with:
Dr. Liu
Jodi L. Liu, PhD
Associate policy researcher
RAND Corporation
MedicalResearch.com: What is the background for this study? What are the main findings?
Response: The New York Health Act (NYHA) would create a state-based single-payer plan called New York Health.
The NYHA has been proposed in the New York State Assembly for many years. New York Health would provide all residents with comprehensive health benefits with no cost sharing and create new taxes to help fund the program.
In this study, we used microsimulation modeling to analyze the impact of the NYHA on outcomes such as health care utilization and costs. We estimate that total health care spending could be similar or slightly lower if administrative costs and provider payment rates are reduced. The program would require substantial new taxes and would shift the types of payments people make for health care.
After the presumed redirection of federal and state health care outlays to New York Health, we estimate that the new taxes revenue needed to finance the program in 2022 would be $139 billion.
MedicalResearch.com: Could some higher-income individuals move to neighboring states to avoid the new taxes, especially since they are likely to have health coverage?
Response: The literature suggests that individuals may change their behaviors to avoid taxes, which could include changing investment decisions or moving out of the state. Any tax avoidance behaviors would critically depend on the tax schedules for the new payroll and nonpayroll income taxes proposed in the NYHA. The legislation does not specify the tax rates. Although the legislation calls for progressively graduated taxes, the degree of progressivity is not specified.
As nonpayroll income is concentrated in a small share of the wealthiest in the population, we estimate that even a small amount of tax avoidance by this population could substantially reduce the funding base and tax revenue.
MedicalResearch.com: What should readers take away from your report?
Response: Our results suggest that the single-payer option has the potential to reduce health care payments for the majority of New Yorkers, but our findings depend on assumptions about uncertain factors. Substantial new taxes would be needed to finance the plan.
MedicalResearch.com: What recommendations do you have for future research as a result of this work?
Response: Future research on the financing plan should assess tax schedule designs that balance affordability for lower- and middle-income households and tax avoidance behaviors particularly by higher-income households. Other areas that would benefit from additional research are mechanisms the state could employ to reduce provider payment rates, and how changes in provider payment rates affect the supply of health care services. Further work to improve our understanding of the demand for long-term care services and supports would also be useful.
MedicalResearch.com: Is there anything else you would like to add?
Response: Overall health care spending under the NYHA depends critically on whether the state is willing and able to lower provider payment rates and administer the plan efficiently. The financing of the plan depends on the federal government’s willingness to approve waiver agreements that allow federal funds for current health care programs to be redirected to the single-payer plan, and the extent of tax avoidance in response to new taxes.
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Last Updated on August 2, 2018 by Marie Benz MD FAAD