The Detail behind New York’s Proposed Single-Payer Plan

We need to take a step back and examine the details about the proposed single payer plan, the New York Health Act, which the New York State Assembly has pushed for many years and that has gained renewed interest since the mid-term elections.  The State Senate has never taken up the bill.  With all branches of state government under Democratic control in 2019, proponents of a single-payer health system see opportunity.   However, such an approach is less opportunity and more bureaucracy.

The New York Health Act, which passed the New York State Assembly  repeatedly, assumes unreasonable concessions and cooperation by the federal government, continued and deepening reduction of reimbursement rates to healthcare providers, disentanglement from various state laws and regulations, essentially the elimination of an entire industry – commercial insurers – and sharply increased taxes for both employers and employees.

This is why the Suburban Hospital Alliance has joined forces with the Realities of Single Payer, a coalition led by the New York Health Plan Association.  Members of the coalition, which include businesses, chambers of commerce, physicians, and insurers all oppose the New York Health Act.

The RAND Corporation’s  assessment of the New York Health Act, which was commissioned by the New York State Health Foundation, has been referenced by proponents and opponents frequently since its release in July 2018.   Among the many assumptions that the report advances to assure the single-payer plan’s feasibility is one that assumes growth in provider payment rates would be restrained.  This is troublesome not only for providers, but should worry patients as well.

Under a true single-payer system, hospitals would lose the ability to negotiate for reimbursement rates with commercial insurers.  Currently, hospitals rely upon these negotiated contracts to offset the much lower rates that Medicare and Medicaid – public payers – reimburse hospitals.   On average, Medicare pays 94 cents for each dollar of care provided and Medicaid pays 74 cents for each dollar of care provided, according to analyses conducted by the Healthcare Association of New York State (HANYS).  This state hospital association calculated these shortfalls from the  publicly available reports that hospitals are required to file with state and federal agencies.

A single-payer system likely would benchmark reimbursement for all services at these inadequate levels and seek to restrain growth over time.  The fallout is obvious – elimination of services, staff reductions, no money to invest in community benefit projects related to social determinants of health, no upgrades to already inadequate physical infrastructure.  Many of New York’s hospital buildings are the oldest in the nation.

Hospitals earned the right to negotiate reimbursement rates with commercial insurers way back in 1997 when New York State de-regulated healthcare reimbursement and touted the benefits of a free market and competition.  That led to a variety of insurance plan products – some more generous than others – depending upon the hospital’s market position and bargaining power and patients’ willingness to pay premiums commensurate with the depth and breadth of coverage.  A public payer environment eliminates flexibility in insurance plan design, which would impact affordability and access to some services for patients.  More appropriately, the goal of the hospital industry is to increase access to healthcare services for all and finally achieve universal healthcare insurance coverage.

As advanced technologies and procedures, expensive pharmaceuticals, the increasing financial burden of chronic diseases, and patient demand drove up overall healthcare costs, including insurance premiums, New York State worked hard during the past decade to expand insurance coverage and healthcare access for New Yorkers of all income levels.   The Children’s Health Insurance Program (CHIP) ensures that just about every child in New York State has good insurance coverage and a more recent program, the Essential Health Plan, ensures that low-income working adults, who are not eligible for Medicaid, can purchase very affordable and comprehensive health insurance.   New York’s uninsured rate has dropped from 10 percent in 2013, when the state’s health insurance marketplace opened, to five percent at the close of the 2017 enrollment period in December.  That is a remarkable 50 percent reduction.  We are getting closer to universal healthcare coverage.  New York State is demonstrating that it is an achievable goal, even in the absence of a single-payer model.

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