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Pass N.Y. Health Act to Ease Budget Problems
Versions of this commentary were published by the Syracuse Post-Standard, Daily Orange (Syracuse University), Albany Times Union, and Poughkeepsie Journal.
by Howie Hawkins, January 24, 2018
Gov. Andrew Cuomo said last September that a state single-payer public health plan would be a “good idea.” But he said nothing about it in his state of the state and budget messages.
A state “Medicare for All” system would save $2.7 billion to insure state employees, which would take a big bite out of the $4.4 billion deficit the state faces.
Instead, Cuomo proposes an austerity budget that is $2.7 billion less than was projected to maintain existing levels of services. He plans to cover the rest of the deficit with about $1.7 billion in “revenue enhancers”: new taxes on opioids, internet sales, the windfall profits of private health insurers due to federal tax changes, and conversions from non-profit to for-profit insurers, ending or deferring several business tax credits, and drawing on legal settlement funds.
The New York Health Act has passed the Assembly twice and is one vote short of passage in the Senate. It would provide universal health care for all New Yorkers for all medically necessary services with no out-of-pocket expenses (premiums, co-pays, deductibles).
The single public payer would be funded by payroll taxes on employers and employees that is progressively graduated by wage income. Progressive taxation of income from capital gains, dividends, and interest would also contribute, as would federal funds now received by New York for Medicare, Medicaid, Family Health Plus, and Child Health Plus.
98 percent of New Yorkers would pay less for health care than they do now. The state’s economy would save $45 billion annually on health care costs. The savings would come from the reduced administrative costs of a single-payer system and the curbing of monopoly profiteering by drug and medical device companies.
After the bill is enacted, the governor will submit a specific revenue proposal to the legislature. Economist Gerald Friedman has done a cost analysis and revenue proposal based on the progressive taxation provisions of the bill. Friedman finds that the employer payroll tax would average 8 percent of payroll.
Using that 8 percent of payroll compared to the current cost of health insurance for state employees, New York State would save $2.7 billion.
Local governments would also save. For example, the City of Syracuse would save $80 million a year ($42 million for city employees, $38 million for school employees). Onondaga County would save $152 million a year ($54 for county employees, $98 million from Medicaid).
Those savings are more than enough to cover Syracuse’s recurring structural deficit of at least $15 million a year. The savings will improve the tax climate for Onondaga County especially, where current health care expenditures of $171 million ($73 million for employee insurance, $98 million for Medicaid) are 122 percent of the county property tax levy of $140 million. With those savings, Onondaga County could both improve services and cut property taxes.
All local governments would see big savings. As Albany city treasurer Darius Shahinfar has noted, “For taxpayers, we have an enormous hidden health care 'tax' in our property taxes. And the truth is this hidden tax is bleeding property taxpayers dry. . . . Astonishingly, health care costs are nearly half of our city tax bill, a quarter of our school district's tax bill and more than the entire amount in a county tax bill.” He said that with passage of the New York Health Act “every taxpayer in every municipality in New York would see similar, massive savings.”
With so many upstate cities, towns, and counties in fiscal distress despite our highest-in-the-nation property taxes, the New York Health Act would enable the governor to claim credit for two of his stated policy goals: relieving local government fiscal problems and cutting property taxes.
Private businesses will also benefit. For example, Yorkville Sound is a manufacturer of musical instruments, audio amplifiers, loudspeakers, and related professional sound reinforcement equipment. It is an international company based in Toronto, Canada, with branches in the UK and Sweden, all countries with single-payer public health care plans that cover their employees.
But Yorkville’s U.S. branch in Buffalo finds buying insurance for employees an expensive burden. With 18 employees and a $1.2 million payroll in its Buffalo branch, Yorkville has calculated that under the New York Health Act its annual health care costs would be reduced from $159,312 to $54,904, saving the company $104,408 annually.
Employers spend a median of 12.8 percent of payroll on health insurance in New York State. By lowering the burden of employee health care on business to 8 percent of payroll, the New York Health Act would make businesses in New York more competitive by cutting the top driver of the growing costs of doing business in New York. Investment would be drawn to New York to take advantage of the reduced cost of hiring workers. Management and entrepreneurial energy would be freed from the time and expense of choosing, purchasing, and administering health insurance plans.
Providing health care for public employees is also the top driver of the growing costs of government. It creates unnecessary friction between government and public-employee unions over contract renewal terms.
A single-payer public health plan will lower the costs of government and doing business in New York. Since Cuomo agrees that single payer is a “good idea,” he should incorporate it into his legislative and budget agenda.
Howie Hawkins of Syracuse was the Green Party candidate for governor in 2014.