The Price of Single Payer: A Fiscal and Economic Analysis of the New York Health Act
By: The Foundation for Research on Equal Opportunity
Authors: Avik S. A. Roy
Published: March 2017
Financed by: New York State Association of Health Underwriters
Legislation analyzed: New York Health Act
Download the Report: from the Foundation for Research on Equal Opportunity, or from our backup files below.
A report on the bill by a long-time single-payer advocate, Gerald Friedman, argues that the Act would achieve universal health coverage, reduce state health spending by over $44 billion per year, and “create over 200,000 new jobs.”
The Friedman report, however, contains critical factual and analytical flaws:
- It disregards ways in which the Act violates federal law, rendering key provisions of the Act unworkable.
- It makes exceptionally optimistic, empirically unsupportable projections of potential cost savings from a single-payer system, and fails to account for necessary spending increases.
- It does not contemplate the erosion in health care quality that may accompany single-payer health care, especially from the elimination of Medicare Advantage plans.
- And it ignores the impact of the Act’s historically high tax increases, especially on the financial services sector, and thereby on state jobs and tax revenues.
A more rigorous analysis of the Act indicates that would require $87 billion in additional annual health spending by the state, but draw in $9 billion less in tax revenues. The Friedman proposal contemplates $91 billion per year in state tax increases, but because the plan’s aspirations for cost savings would not materialize, tax increases of $226 billion in 2019 would be necessary to avoid deficit spending.
In 2015, the state collected $71 billion in tax revenues, largely in the form of personal income taxes ($44 billion), consumption and use taxes ($15 billion) and business taxes ($9 billion). New York Governor Andrew Cuomo estimates that in fiscal year 2019, the state will collect $82 billion. Hence, a $226 billion tax increase would nearly quadruple the state’s tax burden, with severe economic impact to the state.