New York Health Act will cost less, cover more
Sally Pipes’ recent Another Voice asserts that the New York Health Act involves a “government-run” health care. She misinterprets the proposal, which is for a government bill-paying program, like Medicare and Medicaid, with continued private provision of health care. Doctors and hospitals will continue to operate as they do now independently of government.
The suggestion that “government-run insurance schemes have proven to be inordinately expensive” is completely backward. Rather, it is private insurance that is “inordinately expensive,” both within the United States and between the U.S. and other countries. Traditional Medicare operates at an overhead rate of 2 percent, a fraction the rate of private health insurers.
Overall, health care spending per capita in the U.S. with its private insurance system is 2.5 times our partners in the OECD (the association of affluent capitalist countries) and 2 times the spending in Canada. Yet we have shorter life expectancy, and a higher proportion of our population is regularly unable to receive health care than in these countries with government-run insurance.
The taxes needed for the New York Health Act are less by billions of dollars than the “taxes” that we now pay to private insurers. The greater efficiency of a government-run system would allow us to pay less while covering more.
Providers will be better off under the New York Health Plan. Reimbursements will be set at the Medicare rate plus 5 percent. While this is less than providers now receive from private insurance, the difference is the extra expense for billing and insurance related activities that they will save under the plan. And Medicaid providers will be fairly compensated at rates equal to those of other health care providers.
Economics Professor, University of Massachusetts at Amherst