With all the buzz over the past year about the United States moving to a Medicare-for-all type of health care system, what has not been talked about nearly as much are the different paths we as a country could take to get there.
While Medicare-for-all bills in Congress have made headlines, far less attention has been focused on legislation that would create state-based publicly financed health care systems.
It’s entirely possible, maybe even likely, that a state could lead the way. That’s exactly what happened in Canada back in the 1960s. It wasn’t federal lawmakers in Ottawa who got the ball rolling up there. It was the premier of Saskatchewan, thousands of miles to the west.
If that’s how it takes off here, which state will be our Saskatchewan?
It very possibly could be New York.
The New York State Assembly passed a bill in June that would provide comprehensive coverage for all New Yorkers. Although the bill, the New York Health Act, has not yet passed the Senate, it got a big boost a few days ago when the RAND Corporation, a global nonprofit policy think tank, released a study showing that the state’s residents, millions of whom are either uninsured or underinsured, would get better coverage—and pay less for it—if the bill became law. Overall, RAND said, the state would save an estimated $15 billion annually after 10 years compared with what it would spend under the current system.
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Not only would most New Yorkers save money, their coverage would be considerably more comprehensive. Almost all health care services, including dental and vision, would be covered. (Long-term care is not currently in the bill, but the RAND study said it could be included and still cost less than the status quo after ten years.) Out of pocket spending would be cut in half.
According to RAND, much of the savings would come from lower administrative costs. Because of our current mix of public and private payers, the United States spends far more on health care administration than any other developed country. RAND found that the New York Health Act would reduce administrative costs by $23 billion. That’s to a large extent what would enable the state to cover everyone and provide them with richer benefits. RAND said the state would actually spend $9 billion more on care than if the current system is still in place.
The results of the study came as welcome news to the bill’s sponsors, Assembly Health Committee Chair Richard Gottfried and State Sen. Gustavo Rivera.
“This is an important validation of the New York Health Act by one of the most prestigious analytical firms in the country,” Gottfried said in a statement. “RAND shows we can make sure every New Yorker gets the care they need and does not suffer financially to get it, save billions of dollars a year by cutting administrative costs, insurance company profit, and outrageous drug prices, and pay for it all more fairly.”
Rivera said he believes the savings and benefits would actually be greater than what RAND estimates. He also noted that RAND found that the bill would also create new jobs in the state.
Under the bill’s public financing of coverage, premiums that individuals and corporations now pay would be in the form of taxes. As Vox reporter Dylan Scott noted in a recent analysis of the RAND study, the “new tax payments would almost perfectly replace the premiums that people and their employers pay right now for private health insurance.”
While the great majority of New Yorkers would pay less for coverage if the law is enacted, people with incomes in the top 10 percent likely would pay more. As Jodi Liu, the associate policy researcher at RAND who led the study, noted, the progressive nature of the funding mechanism will not be without detractors. “One of the biggest challenges could be the design of the tax schedule, as policymakers seek a balance between affordability for lower- and middle-income households and potential tax avoidance behaviors by higher-income households.”
The RAND study was commissioned by the New York State Health Foundation.
