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Costs of New York Health Care Reform Proposals Detailed

July 21, 2009

The New York governor’s office has released a key report that evaluates the cost and coverage implications of four health reform proposals.

The long-awaited report, written by the Urban Institute, was commissioned by New York state legislators to provide a road map to extending health coverage to the 16 percent of New York residents who are uninsured.

The report analyzed four choices: a single-payer option called Public Health Insurance for All; the New York Health Plus proposal by Assembly Health Committee Chairman Richard Gottfried; a public-private partnership that simplifies and expands existing public programs and reforms the commercial market; and the free-market Freedom Plan, which relies on regulatory flexibility and tax credits.

The report suggests that a single-payer option for New York might be one of the lowest-cost routes to universal coverage. A more incremental “building block” approach favored by New York Gov. David Paterson was not as economical.

Given the size of New York state and its large uninsured population, the report presents key data that officials from the Obama administration have eagerly awaited. Health care advocates said that there were good reasons why federal officials are said to have pressed New York state to release its overdue report.

“There are clearly important lessons New York has for the national conversation, and it is good this is out in time to be part of that debate,” said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York.

All New Yorkers would be covered by three of the proposals: Public Health Insurance for All, New York Health Plus and the public-private partnership. The Freedom Plan leaves 13.3 percent of New Yorkers uninsured, a small reduction from the current 15.8 percent uninsured.

Public health insurance programs, which currently cover 21.4 percent of the population, would continue to serve significant numbers of New Yorkers under all four proposals, ranging from 100 percent under Public Health Insurance for All to 21.7 percent under the Freedom Plan.

“The report shows how important publicly sponsored health coverage is for health care reform,” Gottfried said in a statement.

The Urban Institute analysis shows that government spending increases under all four plans: by 202 percent under the single-payer proposal (total $86.3 billion); 119 percent under New York Health Plus (total $62.5 billion); 25.3 percent under the public-private partnership model (total $35.8 billion); and 9.6 percent under the Freedom Plan (total $31.3 billion).

But the report also notes that a single-payer system achieves complete coverage with the lowest aggregate change in health care spending ($2.4 billion) and the greatest cost to government per newly insured ($21,287 annually).

The report notes that redistribution of health care spending is inherent in all health care reforms. Public Health Insurance for All and New York Health Plus would increase government spending while generating savings to individuals and employers.

Under the Public Health Insurance for All option, the state’s entire health care system would be funded through government spending.

Total government health care spending would increase by $57.7 billion. But employer spending on health care would be eliminated, saving employers $33.3 billion in aggregate. Individuals would save $22 billion.


Filed by Barbara Benson of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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