Is RAND’s Single Payer Report Overly Optimistic?
The RAND Corporation’s recently released report titled “Estimating the Effects of a Single Payer Proposal in New York State” provides a less biased analysis of the underlying costs of a government run single payer system. Many of its assumptions, however, are aspirational, if not unrealistic, and the report fails to address a number of unique features of New York’s health care delivery and financing system. If those assumptions are unattainable and if New York factors are more accurately reflected, the impact will likely be far more significant, exceeding even the already exorbitant projected tax burden of $139 billion. Some of the more glaring issues are:
- The savings rely heavily on the assumption that health care provider reimbursement
under single payer will grow at the rate of current Medicaid and Medicare spending,
representing a significant cut in reimbursement for doctors and hospitals currently
serving the commercially insured population. The report fails to acknowledge that most
New York hospitals currently rely on the commercially insured population to cross
subsidize the losses from government programs, such as Medicaid and Medicare. New
York’s hospitals will either refuse the rate cuts or suffer severe financial hardship,
resulting in closures and a reduction in the quality of health care in the state.
- The report fails to account for any loss of insurance industry jobs. Other reports estimate
the job loss to be as much as 150,000 employed New Yorkers. The loss of those jobs will
result in a loss in both state and local tax revenue further adding to the cost of a single
- RAND’s analysis assumes the same federal funding from Medicare, Medicaid and the
Affordable Care Act. That assumption is based entirely on New York obtaining a waiver
from the federal government. The waiver is highly unlikely with this administration and
without it, federal funding will be severely diminished.
- For single payer to proceed as envisioned in New York, it would require an act of
Congress to change federal law. Without a Congressional act, the law would likely be
challenged and at risk is nearly half of the population currently receiving health benefits.
Without half of the currently covered population in the “single payer system”, the savings
are unattainable and the taxes will be far greater.
- The report relies on the assumption of a continuation of the existing New York health
care taxes, accounting for over $5 billion. Those taxes include an insurer premium tax, a
covered lives assessment and the Health Care Reform Act surcharge. Those taxes are
assessments on commercial health insurance. If commercial health insurance is
eliminated, those taxes will have to be added to the cost of single payer.
- Medicaid cost sharing by counties ($8 billion) will no longer be collected under single
payer. The loss of these revenues will necessitate billions more in higher taxes.