FREOPP Study: How New York’s Single Payer Health Care Bill Affects the Working Poor

Date of Release: May 12, 2021

How New York’s Single Payer Health Care Bill Affects the Working Poor

Unprecedented tax increases in the New York Health Act would impose job losses, wage reductions, and higher costs on low-income workers

WASHINGTON, D.C. – In New York state, efforts to abolish private health insurance and enact a single payer, government-run health care system have steadily advanced. In November 2020, Democrats gained a two-thirds, veto-proof majority in both chambers of the New York state legislature, raising hopes that a single payer bill—the New York Health Act—is close to passage.

But the flawed design of the New York Health Act would be felt most acutely by low-income New Yorkers, a new study finds. 

In “How New York’s Single Payer Health Care Bill Affects the Working Poor,” FREOPP President Avik Roy writes that individuals below 200% of the Federal Poverty Level (who already have heavily subsidized health insurance through either Medicaid or the Affordable Care Act) would face NYHA non-payroll surtaxes of between 6.2% and 29.5%, depending on the level of out-migration of high earners.

A group of researchers at the RAND Corporation published an optimistic analysis of the bill, concluding that it would increase employment by 2% over a 10 year period, even though the Act would require, in their estimation, approximately $1.7 trillion in new state taxes between 2022 and 2031, tripling the state’s tax burden.

The RAND analysis is based on numerous flawed assumptions, and its optimistic projections fail to account for several critical economic and legal considerations, including:

  • Negative impact of tax increases on economic growth; 
  • Out-migration of high earners, imposing a higher tax burden on those who remain;
  • Inability to deduct state and local tax increases; and
  • Illegality of banning Medicare Advantage and ERISA plans.

The RAND authors estimate that even in the optimistic scenario in which no one leaves the state, nearly half of those earning less than 139% of the Federal Poverty Level—about $17,900 for a childless adult and $36,800 for a family of four—would pay more for health care under the New York Health Act. Under the outmigration scenario, the proportion of those in this income bracket paying more would increase. However, RAND did not model the distributional effects of these scenarios.

FREOPP’s Roy writes, “Even if we take as given the RAND authors’ optimistic projections of slower growth in health care costs under the New York Health Act, the bill would be immensely destructive to the state’s core economic sectors, and significantly reduce take-home pay and employment opportunities for lower-income New Yorkers.”

FREOPP finds that the New York Health Act would lead more than 315,000 jobs to leave New York: 50,000 related to health insurance; 110,000 in financial services; 125,000 in other high-income professions; and 30,000 in the leisure and hospitality industry.

Contact: Kara Jones, Vice President, FREOPP

The Foundation for Research on Equal Opportunity (FREOPP) is a non-profit think tank focused on expanding economic opportunity to those who least have it.


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