By Billy Wharton for Counterpunch

New York State Comptroller Thomas DiNapoli recently completed an audit of the city of Newburgh, New York. What he discovered set off budgetary alarms –a $6.3 million deficit. “Newburgh’s financial problems are severe,” said DiNapoli. “This is a very serious budget imbalance that could have severe consequences for the city if it goes unaddressed.” According to the Comptroller, inexperienced city officials who offered unrealizable estimates of the city’s tax revenues are the source of the problem. However, a review of Newburgh’s finances reveals something far more enlightening.

The city’s 2008 budget report identified one main source of rising costs – healthcare. Benefits for public employees made up 26% of the budget in part because the cost of healthcare has skyrocketed since 2000 when it stood at a little more than $2 million. In 2008, this rose to, you guessed it, $6.23 million. An increase of 215% and almost exactly the same as the expected budget shortfall for this fiscal year.

Of course, Newburgh could not just eliminate all its healthcare costs. However, the financial crisis makes the city a perfect case study for the need for a single-payer healthcare system. As the activist group Healthcare-Now emphasized in its “Win-Win” campaign, a federally administered health program would provide significant fiscal relief to state and local governments.

Instead of footing the entire bill for healthcare coverage, cities such as Newburgh would only have to pay the federal payroll tax for their employees. Healthcare-Now describes the result as “big money savings in a time of fiscal crisis for governments.”

Politicians in the New York State Senate were thinking the same way when, in June 2009, they passed a resolution urging the state’s Congressional representatives to support HR 676, the single-payer bill. The State Senate resolution estimated the passage of such reform legislation at the Federal level would yield $10 billion in savings to New York residents, businesses and governmental bodies.

Sadly, there will be no fiscal relief for Newburgh. New York Democrats in the US Congress overwhelmingly supported the watered-down Patient Protection and Affordable Care Act. This bill promises to do little to reduce the skyrocketing costs of healthcare and may, in fact, multiply the burden on state governments by increasing the number of people eligible for Medicaid.

Sharp budget cuts are now the likely outcome of Newburgh’s budget crisis. The cuts will be difficult to swallow in a city with a high amount of poverty and crime rates double that of New York City. It didn’t have to be this way. A single-payer system of healthcare would have eased the budgetary pain while providing healthcare to everyone. Instead, the private insurance companies will grow fat by bankrupting local governments.

Billy Wharton is a writer and activist whose articles have appeared in the Washington Post, the NYC Indypendent, Spectrezine and the Monthly Review Zine.