RAND Report on Single Payer for New York Raises Major Concerns

August 6, 2018

The RAND Corporation last week released its analysis of the New York Health Act (NYHA), a single payer proposal that passed the New York State Assembly, but has yet to be acted upon in the Senate. The report was commissioned by the New York State Health Foundation (NYSHealth). While the report pointed out some positive aspects of the bill—namely, providing universal coverage for New Yorkers and setting all-payer hospital reimbursement rates that are higher than current Medicare and Medicaid rates (assuming the State can afford them)–the report’s findings raise significant concerns about NYHA’s cost and likely impact on New York’s academic medical centers and specialty hospitals. RAND estimates that NYHA will cost New York taxpayers—both employers and individuals—$139 billion in 2022, thereby requiring a 156% increase in State taxes that could crowd out spending on all other State budget items.

In a letter to members, GNYHA President Kenneth E. Raske said, “the massive cost of implementing and maintaining NYHA is prohibitive. And we are already deeply concerned about a potentially huge income drain on New York: the new Federal limitation on state and local tax (SALT) deductibility.”

As for NYHA’s impact on New York’s academic medical centers and specialty hospitals, Mr. Raske said, “These institutions have achieved their world-class status through rigorous competition and the recruitment of the very best physicians and other clinicians. In order for them to continue delivering cutting-edge patient care, invest in medical research, and train tomorrow’s doctors, they must continue to receive adequate payments that offset losses from Medicare and Medicaid, which they currently receive from commercial insurers.”

GNYHA believes that operating under NYHA’s regulatory framework while counterparts in other states face no such economic restraints would put New York’s academic medical centers and specialty hospitals at a disadvantage. This would not only impact advanced patient care, but also have implications for economic development.

Finally, Federal “budget neutrality” rules would prevent New York from obtaining the necessary Federal waiver to make NYHA a reality. The Trump Administration recently made clear that no waivers would be granted for state single payer health care proposals. This calls into question the ability of the State to take over the Medicare program from the Federal government (a waiver that has never been granted before) and, thus, the ability of the State to actually afford to set all-payer rates on behalf of Medicare and Medicaid beneficiaries that are higher than current reimbursement rates.

GNYHA’s member letter, which highlights key elements of the report, can be found here. The RAND/NYSHealth report Brief can be found here.