With Obamacare under GOP attack, New York could fight back with a single-payer plan

New York may be the first states to escape the Trumpcare threat by offering a single-payer option to all residents

By Amanda Marcotte

Senior Writer

Published May 9, 2017 8:59AM (EDT)

Health care activists   (Getty/Kevin Hagen)
Health care activists (Getty/Kevin Hagen)

Last week the House of Representatives passed a bill that would repeal the Affordable Care Act, cutting taxes by $1 trillion for the wealthiest Americans and potentially resulting in as many as 24 million people without health insurance by 2026. Senate Republicans are currently working on their own version of the bill, and while it's expected to be less severe than the House plan, the end result will almost certainly be similar: tax cuts for the rich, with millions of people losing coverage.

Understandably, there's panic across the country at the prospect of soaring premiums and loss of coverage. But while Democrats in Washington can do little to save health care when Republicans control both Congress and the White House, Democrats who hold power in state capitals can take steps to save local residents from disaster. State governments are free to offer their own health care plans — and one popular option being considered in many blue states is a single-payer, Canadian-style system, sometimes called "Medicare for all."

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New York is probably the state in the country that's closest to creating a single-payer system, although it's not alone. The New York Health Act, which would enroll every New Yorker in a state-run insurance program, has passed the New York State Assembly and is two votes short of being passed in the state's Senate.

“It really does seem that the worse things get in D.C., the more pressure there is on Albany to protect New Yorkers from these terrible policies," said Katie Robbins, the executive director of the New York metro chapter of Physicians for a National Health Program, in a phone conversation. "We’re seeing a tremendous surge in interest in what the New York Health Act would do for New Yorkers.”

The bill, introduced by Assemblyman Richard Gottfried who represents a district in midtown Manhattan, is ambitious but appealing.

“The bill would create a single-payer system in New York state that would provide universal, complete health coverage to every New Yorker without financial obstacles to care," Gottfried explained over the phone. "No deductibles, no co-pays, no restricted provider network or out-of-network charges." 

Also, he argued, it would be a lot fairer than the current private insurance system, which charges the same amount for a plan "whether you a multimillion-dollar CEO or the receptionist or the janitor." Instead, the bill "would be funded through a broad-based, progressively graduated tax based on ability to pay," by way of a combination of taxes on capital gains and payrolls.

The fact that this plan would be funded by raising taxes might make it sound like a nonstarter politically. But Gottfried argued that "almost all New Yorkers would pay less than they currently do" because they would be able to replace their current plans with this more affordable state-based plan. 

Gerald Friedman, an economics professor at the University of Massachusetts Amherst, agreed. In 2015 he wrote an analysis of the proposed bill and concluded that a single-payer system would save money across the board by reducing health care spending.

“One [advantage] is that a single-payer plan will allow providers to economize on the costs of handling the billing and insurance-related expenses," Friedman argued. 

There are a lot of different numbers flying around in the world of health care policy analysis, but one thing is certain: Government-run single-payer systems, such as Medicare, spend less money on administrative costs than private insurance systems do. As Ezra Klein detailed in The Washington Post in 2009, 5 percent to 6 percent of Medicare spending goes toward things like billing and other administrative matters. In private insurance, it's from 7 percent to 30 percent.

Doctors and hospitals spend a lot of money wrangling with insurance companies, Friedman said. By eliminating that aspect, a single-payer system would reduce the amount that hospitals and doctors have to charge.

Robbins of the New York physicians' organization also pointed out it would reduce the amount of energy that doctors must expend on dealing with insurance companies. “It can be a real nightmare to deal with the paperwork that they require," she said. And doctors "are really burning out on this system that is so dominated by private health insurance."

The American Medical Association, however, officially opposes single-payer health care. Polling data on doctor opinion is sadly not very good on this subject, though a 2009 poll conducted by the Mount Sinai School of Medicine in New York found that 73 percent of doctors favored some sort of government-provided health insurance that patients could opt for.

One major political obstacle to the adoption of a single-payer plan is that the one state that has tried it, Vermont, watched the experiment go up in smoke. The governor concluded in 2014 that the state would have to raise taxes too much to pay for the program. It may well have ended up saving many Vermonters money, but concern was widespread that taxes would be too high for others.

Single-payer advocates, however, feel that New York might have better luck because since it is bigger and richer.

"We are a large state," Gottfried said. "To the extent that there are benefits from economies of scale, we have that. We are also a state that has a tremendous concentration of wealth. While there are certainly a lot of poor people in New York, there are also a lot of wealthy people. So our ability to fund a program with a lighter burden on working people is partly because of the substantial number of upper-income New Yorkers.”

The sheer size of the state — with almost 20 million residents — would greatly increase the bargaining power of its single-payer system, Friedman argued. New York has more people than the Netherlands, which has an inexpensive universal system of coverage. Putting all New Yorkers on one system, Friedman argued, would give the government leverage over the health care system — and that leverage could be used to lower prices.

Critics of the New York Health Act, primarily conservative analyst Avik Roy of the Foundation for Research on Equal Opportunity, have argued that the tax increases necessary to fund a single-payer plan would run employers out of the state. Both Friedman and Gottfried argued the opposite, saying that a single-payer system would save employers money by ending their obligation to pay for employees' health insurance.

"It will make New York an employment magnet," Gottfried said, arguing "a level playing field" would be created for small businesses, which often struggle to attract the best workers as they can't afford to provide the same level of benefits as larger companies do. 

“People who are looking to build a new business may flock to New York, and I hope they do," he argued. 

The biggest obstacle to a single-payer system has always been political resistance more than economic fears. Voters tend to fear change, and shifting from an employer-based system to a government-run system scares people. Hostility toward "big government" has turned people away from the idea, even if they understand this will ultimately cost less money.

But the political calculus has changed dramatically in the past few months. Republicans in Congress continue to threaten to strip people of their health care protections (such as essential health benefits) or throw them off their insurance entirely.

In this environment of fear, the major advantage a single-payer system offers is the security. If New York can pull this off, it will be the one state in the country where voters feel that their health care is safe from market manipulations, job loss or the Republican determination to get rid of Obamacare at any cost. Voters in other states are bound to notice.

By Amanda Marcotte

Amanda Marcotte is a senior politics writer at Salon and the author of "Troll Nation: How The Right Became Trump-Worshipping Monsters Set On Rat-F*cking Liberals, America, and Truth Itself." Follow her on Twitter @AmandaMarcotte and sign up for her biweekly politics newsletter, Standing Room Only.

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