NY Democrats Attempt to Pass Single-Payer Healthcare
Democrats from the New York State Assembly have passed a measure to force universal healthcare on the state for the fourth time in as many years. It sets the stage for embarrassment at the hands of the Republican-controlled New York Senate, who have allowed the measure to die before reaching the governor each time it’s come up.
The bill is a largely symbolic move, with zero hope of being actually passed, aimed at motivating New York’s liberal base as the Democratic Party sets its sights on the 2018 midterms.
The primary reason it will be shut down again, and every time it has come up? Cost.
The so-called New York Health Plan , passed by a vote of 94/46, aims to abolish private insurance plans in the state and provide all New Yorkers (except those enrolled in Medicaid and Medicare) with health insurance through the state government by providing publicly funded coverage, financed by existing federal funds and new taxes on the citizens of the state.
The first major flaw is that it assumes federal funds that are currently received for Medicare, Medicaid, and Child Health Plus will be available for funding. The bill states that it will “seek waivers” to accomplish this, but this is something that is most certainly not a guarantee. It is not clear in the bill’s text, but it seems likely that they will work towards a Section 1332 waiver . To get a Section 1332 waiver, a governor must gain authorization from his or her state legislature and approval from the Trump administration through executive branch agencies (HHS and, for some requests, the Treasury Department). Under the ACA, these agencies may approve a 1332 waiver request that shows that the state will cover just as many people as the ACA and with just as comprehensive coverage that is just as affordable — all without increasing the federal deficit. In other words, states must develop their own viable replacement plans.
The second issue with this doomed bill is the taxes. The bill would require massive tax increases and those increases could be as substantial as double—or possibly even quadruple—the state's current annual revenue levels. New York collected about $72 billion in tax revenue last year. According to the Foundation for Research on Equal Opportunity, a Texas-based free-market think tank, the annual price tag for the New York Health Act could be as high as $226 billion . In other words, it would require at least tripling the current tax burden in New York.
The fatal flaw in the bill is around how they plan to generate this tax revenue. The bill proposes an income tax on all employees, with employers forced to pony up 80% of the costs for their employees, and self-employed taxpayers being taxed at 100%. But critically missing is the rate at which they will be taxed; the bill leaves these numbers in the hands of the governor. Let that sink in: the Democrats in New York are attempting to pass a bill without a clear plan on how to fund it, and they are leaving it to the governor to figure out how to fund it. They know that this bill will never pass, and refused to put hard numbers in the bill because they know it will never stand through public scrutiny.
Measures such as this have been attempted in several other states, with the results being the same - it simply costs too much. In California last year, a single-payer bill died after the cost analysis came in. The projected cost was north of $200 billion, in a state with a budget of $180 billion. That meant more than doubling the state budget, paid for by at least a 15 percent increase in the state’s payroll taxes to provide the necessary revenue. Vermont's attempt to implement a single-payer health care system collapsed in 2014 because the costs were too high. Colorado voters rejected a proposed single-payer system in 2016 when faced with the prospect of increasing payroll taxes by 10 percent to meet the estimated $25 billion annual price tag.
It’s clear that state-level single-payer healthcare plans would require massive increases in tax revenue, equal to or larger than the amount of revenue consumed by every other state-level program in a single year. New York is no exception, and the Democrats just can’t seem to get that through their heads.
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