The Obstacles Facing Single-Payer in New York are Precisely Why People Want It

The rationale for single-payer healthcare in New York State is also the biggest obstacle to its passage: Our healthcare system is a fractured, complicated, costly mess.

Simplifying that tangle of public and private insurance, in-network and out-of-network coverage, deductibles and yearly maximums, employer plans and self-insurance is a primary argument for the New York Health Act that Manhattan Assemblyman Richard Gottfried has sponsored for decades. The system’s complexity creates inefficiencies and drives up administrative costs, Gottfried argues, and that contributes to the fact that many people who have health coverage cannot actually afford the premiums and fees it entails.

Gottfried’s has bill has passed the Assembly last year for four straight years and, with Bronx Sen. Gustavo Rivera as its sponsor and a new Democratic majority in the State Senate, now stands its best chance yet of becoming law.

“We have solid majorities in both houses of the legislature, of people who are on record supporting the bill as co-sponsors or having voted for it or having said in their election campaigns that they are voting for it,” Gottfried told City Limits. “Senator Rivera and I are planning on having our respective houses pass the bill.”

The odds of passage might be better than ever but they are still long. Governor Cuomo said during his re-election campaign that he supported the goal of single-payer healthcare, but worried about New York trying to set up its own system in the absence of a national one, and about absorbing the costs of transitioning $160 billion in taxing and spending into the state budget. That would be big legislative lift in a slow year, and with election reform, criminal justice reform, rent regulations, reproductive rights and more on the agenda, 2019 is likely to be chock-full of major legislation.

“I wouldn’t call it dead in the water,” Bill Hammond, director of health policy at the Empire Center for State Policy, says of the health act. “But I think you’ve seen a lot of evidence—sort of indirect evidence from the leadership in Albany–that they’re not including this on their short list. There was sort of a flurry of articles after the election where leaders gave interviews talking about what their top priorities would be in 2019 and I don’t think there was a single article along those lines where the New York Health Act was discussed as something that could get done right away.”

It’s not just the price tag that weighs the single-payer bill down. Critics on the right have pointed to risks like the low likelihood of the Trump administration granting the waivers that would allow Medicare and Medicaid money to be rolled into the plan, and the possibility that companies that choose to self-insure might sue if the state forces them into a one-size-fits-all system. Perhaps the biggest political challenge comes from within the progressive Democratic coalition, where public-sector unions have voiced concerns that the bill would undercut generous health benefits they have won through collective bargaining.

In different ways, all those challenges—the Medicare and Medicaid systems for which waivers would be needed, the self-insured companies who might sue and the union plans that are worried about change—reflect the very complexity Gottfried’s plan is intended to solve. Right now, about 8.6 million New Yorkers are covered by Medicare, Medicaid or the Children’s Health Insurance Program. By some estimates, half of New Yorkers get health insurance from large companies that self-insure. The Municipal Labor Committee, which has expressed some of the doubts about Gottfried’s plan, represents more than a million healthcare users.

Gottfried, however, remains determined. He says he and Rivera are “working with various stakeholders that have raised concerns about one particular provision or another to see if we can accommodate their concerns and we are also working with the Cuomo administration to get a sense of what their concerns are and whether we can accommodate them.”

“But the core principals of the bill are not in play,” the 47-year legislative veteran says. “That’s not what we’re looking at changing.”

Consumer cost is the focus

Even after the Affordable Care Act, more than a million people in New York lack health insurance. But their tally has been halved in the past four years, and New York State boasts the 14th highest coverage rate in the country at 94.3 percent; our 5.7 percent uninsured rate compares with 17.3 percent of Texas and 2.8 percent of Massachusetts, according to the Census Bureau.

The case for the New York Health Act is not primarily about covering the uninsured, although that is a clear aim of the bill. Rather, it’s about the fact that, as Gottfried told the City Council last week, “Just about every New Yorker – patients, employees, employers, and taxpayers – is burdened by a combination of rising premiums, skyrocketing deductibles, co-pays, restrictive provider networks, out-of-network charges, coverage gaps, and unjustified denials of coverage.”

Those purchasing insurance on the individual market via the state’s exchange have seen premium increases that averaged 16.6 percent, 14.5 percent and 8.6 percent over the last three years. The United Hospital Fund reports average monthly individual premiums in New York grew from $431 in 2014 to $525 in 2017, a jump of 20 percent. And medical costs play a huge role in personal bankruptcy, even for people with job-based health insurance. “Medical billing is a huge problem for the consumers we serve,” says Elisabeth Benjamin, the vice president of health initiatives at the Community Service Society of New York (a funder of City Limits). “The New York Health Act would go a long way to resolving medical debt for our consumers.”

Gottfried has sponsored a single-payer bill since 1992, when it passed amid a flurry of interest in healthcare generated by the presidential campaign before falling out of favor. It came back in style a few years after the Affordable Care Act delivered only partial progress toward universal, affordable care. The Health Act passed the Assembly this year for the fourth session in a row, and by a margin of 45 votes. It has never passed the Senate, which has been controlled by Republicans for virtually all of Gottfried’s nearly five decades in Albany.

The Health Act, or Health Plan, would cover every New York resident, feature no network restrictions, deductibles, or co-pays and include “comprehensive outpatient and inpatient medical care, primary and preventive care, prescription drugs, laboratory tests, rehabilitative, dental, vision, hearing, etc.,” according to the latest legislative memo.

The state would negotiate pay rates for doctors and other providers. Coverage would be funded by a payroll tax (with employees paying no more than 20 percent of that fee and employers footing at least 80 percent of the bill) and a progressive tax “on other taxable income, such as capital gains, interest and dividends,” according to the legislative memo. Significantly, the memo notes that “a specific revenue plan, following guidelines in the bill, would be submitted to the Legislature by the governor.”

Foes cite risks, price-tag

When the Rand Corporation analyzed the bill earlier this year, it found that it would reduce health expenditures in the state by 2 percent over 10 years, if administrative savings are found and provider payments decrease. Which are big ifs. “Although these assumptions are reasonable, they are also highly uncertain and depend on how the state implements the program, and whether the state can successfully negotiate payment rates with providers,” Rand wrote.

The analysis also found that companies currently paying for healthcare would likely pay less, and companies that don’t presently provide healthcare would pay more, under the plan. While the tax system to support the plan has yet to be proposed, Rand examined a likely structure and found that people in the bottom 90 percent of incomes were likely to pay less and high-income people more under the Act.

Since the whole point of the plan is to shift money from the private market into a public one, the Act entails a massive increase in state spending and taxation. Rand estimated the plan would require $139 billion in new taxes, but now that the sponsors have added a provision for long-term care, the price-tag is estimated at $159 billion. That would represent a huge jump in the state’s budget, currently $170 billion.

Opponents of single-payer focus both on the size of that estimated price-tag and the risks that it will be even larger. Those risks matter because they are what will determine whether the total paid by New Yorkers on healthcare—through today’s premiums, co-pays and deductibles or through tomorrow’s taxes—increases or decreases under the Act.

There are multiple potential pitfalls. It’s possible that the federal government won’t issue a waiver to allow Medicare, Medicaid and CHIP payments to go directly to a trust fund where they’ll be used to pay for their recipients’ costs in the single-payer system. It’s possible that doctors—who will be able to bargain collectively under the bill—and hospitals, who wield a lot of political muscle, will resist the state lowering the payments they get (or, Hammond says, that the reimbursement payments will decrease so much that it throws hospitals into crisis). It’s possible wealthy residents will flee the higher taxes needed to pay for healthcare, forcing the state to raise or expand taxes to find the required revenue. And it’s possible companies that self-insure will sue in federal court to block the plan, alleging that the New York Health Act violates the Employee Retirement Income Security Act of 1974 by interfering with their provision of benefits to their employees.

But for Hammond, the intellectual voice of the state’s “stop single-payer” movement, those risks are secondary to his basic objection to a state takeover of healthcare. “I just find it amazing that people contemplate going down this road. Right now everything else in the state budget comes after school aid and healthcare. If we have single payer, school aid is going to take a backseat,” he says. “A 4 percent uptick in healthcare costs is going to be a multimillion-dollar deficit.”

Other healthcare battles?

Opponents of the act are concerned about more than the budget numbers, however. They’re leery of defining healthcare as a right—arguing that what’s at stake here is not a right to healthcare but the obligation to pay something for it. They believe the cost signals sent by the current system are useful, and they are concerned what will happen to healthcare demand if there are no gatekeepers to treatment.

Benjamin rejects the idea that demand will run amok under single payer. After all, are people really going to crowd into clinics for unnecessary colonoscopies just for the hell of it? “People aren’t gate crashing the healthcare system. Most people try to use care properly,” she says. Where there is excessive use in today’s system, the problem is provider-driven: duplicative testing, unnecessary tests, bizarre billing. (On this reporter’s recent annual physical, a nurse asked him if he’d felt depressed at all over the past year, and he said no. The bill for that little Q&A was $88. Now that was depressing.)

The New York Health Act could solve those and other problems, its proponents insist. But there are ways short of single payer of addressing some of the concerns behind the Act.

The state’s 1.1 million population without health insurance is comprised of three groups: Undocumented immigrants, people who cannot afford insurance with the current subsidy structure, and folks who are eligible for public healthcare but for hard to discern reasons have not signed up. Each bucket presents a chance for incremental reform.

“Our perspective is the New York Health Act cannot be implemented next year,” says Benjamin. “And assuming it’s not implemented next year, there’s a lot of steps that need to happen. There are some things we can do right now this session to give people relief.” That includes a state-funded plan for covering immigrants (at $532 million a year, that’s a big deal, but nothing like the cost of single payer) or a state premium assistance program to make sure insurance truly is affordable to everyone. “Both of these other things will help ease that transition to a single-payer program,” Benjamin says.

Indeed, while the Health Act has drawn much of ink in recent weeks, there are other health policy issues on the table in Albany and City Hall this coming year. Addressing problems with the state’s funding of indigent care by hospitals is a priority for influential pols and advocacy groups. Another concern is the Trump administration’s tightening of public-charge rules that might punish immigrants for seeking health services. And there’s the roll-out of the state’s Social Determinants of Health initiative to partner hospitals with community-based organizations around addressing deep causes of health disparities. Efforts to improve maternal health, Cuomo’s bid to end the AIDS epidemic and other initiatives will also play out in 2019.

The New York Health Act, of course, looms largest. Perhaps because of that, some players are treading very carefully around the debate. Asked to discuss the politics around the bill, one consultant told City Limits, “I can’t be anywhere near this at all.” And a healthcare research entity declined to discuss the bill, even on deep background, out of concerns for the sensitivity of the topic. There could difficult choices next year for healthcare advocates on whether to shoot for single-payer or settle for incremental change.

A dose of confidence, and patience

Gottfried shrugs off worries about the federal waiver or lawsuits under ERISA. While it’d be handy for the feds just to send the state a big check covering all their Medicare and Medicaid recipients, there are workarounds if Washington refuses. New York could form a Medicare managed care plan, for example, to accept those payments from the federal government and apply them to a single-payer system. And since the projections are that companies now providing healthcare will see savings under the Act, Gottfried says, the chances of an ERISA lawsuit materializing are slim.

Unions aren’t the only potential opponents. Hospitals have expressed some anxiety about the bill, Gottfried acknowledges, but he says the Health Plan will be a better deal for them, too—even as it depends on negotiated payment rates to help control costs. “The bill includes language that guarantees that healthcare services are paid for reasonably and enough to cover the cost of providing the care,” he says. “Hospitals have no such guarantee today.”

As for the public-sector unions who have expressed concerns—and it is important to note that some other unions are fully in support of the bill—they’ve raised two objections, according to Gottfried. One, they don’t want the quality of their really good healthcare plans to change. And two, since they now pay nothing toward their healthcare, the unions don’t want their members to face the 20 percent employee premium share the bill contemplates.

“I have been stressing to them is that far from losing any benefits they will be getting much broader and stronger benefits than they now have,” Gottfried says. On the premium issue, there’s been a back and forth. Gottfried’s latest proposal is that the law include a requirement that public-sector employers pay no less a share of premiums than they do now. The unions haven’t responded to that pitch, he says.

Other workers will also be affected by the bill, which will effectively outlaw private health insurance in New York, an industry that employs some 25,000 New Yorkers. Gottfried says the bill includes provisions for training and transition costs for those workers. “It is certainly not their fault that their work overwhelmingly involves stopping people from being reimbursed for their healthcare.”

This week, Rivera was named chair of the Senate Health Committee. It was unclear if that will boost the chances of passage for the Health Act that he’s sponsoring. Rivera did not specifically mention the Act in his statement about the new chairmanship, but did say he would not stop “my efforts to continue building a stronger, more efficient healthcare delivery system that treats healthcare as a right for the 20 million New Yorkers we serve.”

While he expects passage this year, Gottfried says he doesn’t see it happening during the budget process. It will have to wait until later in 2019. After all, “There’s a raft of bills that don’t have price tags or threaten major economic powers in the state like ours does.”