How single payer health care harms the working poor

Over at the FREOPP website, I’ve published a new analysis on how New York’s single-payer health care bill, the New York Health Act, would impose economically devastating tax increases and harm the working poor.

The New York Health Act has been sponsored in the New York Assembly every year since 1992 by Assemblyman Richard Gottfried. It would impose significant tax increases on the working poor, under a model developed by the RAND corporation. RAND researchers estimate that under the NYHA, 45% of New Yorkers near or under the Federal Poverty Level would face higher costs than under current law.

Indeed, the 45% figure is the optimistic scenario in which high-earning New Yorkers remain in the state, despite the NYHA’s confiscatory tax increases. According to the RAND researchers, if 0.5% of New York tax filers flee the state—a more likely outcome than not—the combined federal, state, and local capital gains tax rate will need to exceed 100% for the NYHA to balance its budget.

The tax rates in the NYHA will have to increase over time, even if the high earners stay, because health care costs will grow at a faster rate than the state’s economy—even if you assume, as the RAND researchers do, that the New York economy continues to grow at the rate it has in the past.

We estimate that the New York Health Act would more than 315,000 jobs to leave New York: 50,000 in health insurance; 110,000 in finance; 125,000 in other high-income professions; and 30,000 in the leisure and hospitality industry. That is a floor, not a ceiling, on job losses.

The NYHA faces significant legal obstacles as well. The RAND authors assume that New York has the legal power to abolish private Medicare Advantage plans, serving 1.5 million New Yorkers, and also self-insured employer plans, serving another 5.4 million. The U.S. Supreme Court has repeatedly ruled that states lack this power.

Nonetheless, now that Democrats control veto-proof two-thirds majorities in both the New York Assembly and the New York Senate, single-payer advocates believe that the New York Health Act is closer to passage than ever before. We shall see.