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Health Systems & Reform
ISSN: 2328-8604 (Print) 2328-8620 (Online) Journal homepage: https://www.tandfonline.com/loi/khsr20
Political Economy of Reform under US Federalism:
Adopting Single-Payer Health Coverage in New
York State
Ashley M. Fox & Yongjin Choi
To cite this article: Ashley M. Fox & Yongjin Choi (2019): Political Economy of Reform under US
Federalism: Adopting Single-Payer Health Coverage in New York State, Health Systems & Reform,
DOI: 10.1080/23288604.2019.1635414
To link to this article: https://doi.org/10.1080/23288604.2019.1635414
© 2019 The Author(s). Published with
license by Taylor & Francis Group, LLC.
Accepted author version posted online: 25
Jun 2019.
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Publisher: Taylor & Francis & InternationalBank for Reconstruction and Development / The
World Bank
Journal: Health Systems & Reform
DOI: 10.1080/23288604.2019.1635414
Political Economy of Reform under US Federalism: Adopting Single-Payer
Health Coverage in New York State
Ashley M. Foxa* PhD and Yongjin Choia
a Rockefeller College of Public Affairs and Policy, University at Albany, SUNY, Albany, New
York, United States
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ABSTRACT
The US remains the only high-income country that lacks a universal health financing
system and instead relies on a fragmented system with the largest segment of the
population receiving health insurance through private, voluntary employer-sponsored
health insurance plans. While not “universal” in the sense of being mandatory and tax-
financed, through a series of reforms, the US has managed to provide some form of
health insurance coverage to 90% of the population. Yet, the high cost of this system,
the insufficient coverage afforded to many, and continued concerns about equity have
led to calls for a national health insurance program that can reduce costs across the
board while providing high-quality coverage for all. Given the policy gridlock at the
national level, the states have often sought to achieve universal health financing on
their own, but these bills have met with little success so far. Why has the ideal of states
as “laboratories of democracy” failed to produce policy change towards national health
insurance? This article examines the prospects for the New York Health Act, a single-
payer bill that would create a universal health financing plan for all New York State
residents. Applying the Political Economy of Health Financing Framework, we analyze
the politics of health reform in New York State and identify strategies to overcome
opposition to this policy proposal. We find that while a clear political opportunity is in
place, the prospects for adoption remain low given the power of symbolic politics and
institutional inertia on the reform process.
Keywords: Universal health coverage; single-payer; New York Health Act; political
economy
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INTRODUCTION
Low- and middle-income countries around the world are embracing the drive for universal
health coverage (UHC). Target 3.8 of SDG 3 is aimed at achieving UHC by 2030 through
financial risk protection and improved access to quality essential health-care. Early estimates
from the World Health Organization (WHO) suggest that average coverage for UHC has
increased roughly 20% from 2000 to 2015.1 Yet, even as many low- and middle- income
countries are rapidly expanding risk pools, reducing fragmentation and realizing efficiency
gains through single payment systems, the United States has the ignominious status of being
the only industrialized country that has failed to provide universal financial protection and
service coverage/access as a right of citizenship.2 While the uninsured rate in the US has
shrunk from 17.8% to 10.2% since the adoption of the Affordable Care Act in 2010, the
proportion of the public that is “underinsured” is estimated to be as high as 45% in 2018.1
Most Americans (56%) get their health insurance coverage from a private, employer-
sponsored health insurance plan, with another 7% paying the full cost of health insurance on
the “individual” market, which is notoriously expensive.3 Although the United States system
most closely resembles a regulated multi-payer system, single-payer or national health
insurance has frequently been the reform of choice advanced by certain advocates for
universal health coverage, including the group Physicians for a National Health Program, an
organization representing 15,000 American physicians.
Why has the United States continued to rely on private, employer-sponsored coverage
and failed at attempts to unify its health coverage system into a universal financial protection
for all? If this cannot be achieved at a federal level, can individual states do better? This
paper examines the political factors that have both impinged upon and facilitated
comprehensive health financing reform at a state level, by examining one case: the example
of New York State. Applying the Political Economy of Health Financing Framework, we
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analyze how interest group politics, bureaucratic politics, budget politics, leadership politics
and beneficiary politics interact to create both opportunities and obstacles to health reform.
We then identify strategies that may be deployed by the health reform team to overcome
these hurdles, and suggest some broader conclusions for the United States.
BACKGROUND
The present employer-sponsored health insurance coverage system in the US is largely the
result of an historical accident that made employer-sponsored coverage tax exempt and a
series of failed attempts at instituting universal health financing over the previous century.
Whereas by 1940, no Western European country was without a government health insurance
system at least for low-wage workers,4 in the United States, the failure to adopt national
health insurance, abandoned in order to ensure the passage of Social Security as part of the
New Deal in 1935, is widely viewed as a missed opportunity that has enabled the current
employer-sponsored coverage to proliferate and dominate.2
While the Affordable Care Act (ACA) of 2010 further filled in the gaps in coverage,
the policy largely preserved the fragmented character of the health system built upon a
foundation of employer-sponsored coverage provided by private health insurance companies.
In spite of its rather limited scope and the fact that key foundations of the ACA have their
roots in conservative reform bills and policy ideas (i.e., the HEART Act and individual
mandate, and the Romney health reform in Massachusetts),5 almost as soon as it was passed,
Republican efforts to repeal and replace the bill began. However, in spite of a unified
Republican government following the 2016 elections, and over eight years of posturing on
the issue, Republican efforts to repeal and replace the act fell flat due to internal divisions
within the party.1,6
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More recently, Bernie Sanders’ popular though ultimately unsuccessful presidential
primary bid had the consequence of re-popularizing Medicare-for-All (i.e., single-payer
national health insurance) as a viable health reform proposal. Following the failure of
Republican repeal and replace efforts, Sanders strategically launched his Medicare-for-All
bill (S.1804), which immediately received 16 Democratic co-sponsors in the 115th Congress
(2017−2018).7 Commentators quickly noted that Democrats’ position on Medicare-for-All
would become a litmus test for their democratic credentials in the midterm and presidential
elections, a prediction that has largely played out in practice. Medicare-for-All, single-payer
health care, a “fringe” idea that was quickly shoved off the table when the Affordable Care
Act was proposed, has therefore come back as a policy idea that has made its way into the
mainstream political discourse by 2019. An additional Medicare-for-All (H.R.1384) bill has
also been proposed at the national level in the House of Representatives by Representative
Pramila Jayapal in February 2019.8
Federalism and state-based health reform in the US. Given the challenges of adopting
comprehensive health reform at the national level, states have often attempted comprehensive
health financing reform, especially in the shadow of failed federal efforts.9 In contrast with
federal structures that seek to “hold together” diverse sub-national units, the federal structure
in the US has been described as a “coming together” of previously independent units.10
Among the supposed benefits of federalism is the diversity that it permits to the different sub-
national units, so that state policy may better reflect the preferences of the electorate in that
state. Indeed, research on public opinion in the US has found a much closer fit between
citizen opinion and state policy as compared with citizen opinion and federal policy.11 States
are also said to function as "laboratories of democracy," a metaphor popularized by US
Supreme Court Justice Louis Brandeis in New State Ice Co. v. Liebmann, to describe how
states may experiment with novel social and economic policies “without risk to the rest of the
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country.”12
Yet, states have been no more successful than the federal government at adopting
universal health financing reforms, though not for lack of trying. Vermont, California,
Colorado, and Hawaii have all tried to varying degrees at adopting a single-payer health
system but so far no state has succeeded at moving towards a more comprehensive health
financing reform that reduces the role of ESI. Single-payer proposals have failed to advance
past committee, have stalled out in upper chambers, have been rejected in ballot initiatives,
or, in the case of Vermont, were adopted but ultimately not implemented.9
Research has found that failed national health reform efforts often breed state-level
reform efforts in the US. After Clinton’s failed reform effort in 1992, a number of states
moved to expand health insurance coverage at a state level, though none were successful at
adopting a single-payer plan.9 This is in contrast with Canada, whose single-payer system
started in Saskatchewan Province in 1947 and later expanded nationally by 1984.13,14 Other
states have taken less dramatic approaches than single-payer. For instance, Massachusetts
adopted a major health financing reform in 2006 that later served as a model for the ACA.15
Maryland adopted all-payer rate setting, a key cost control mechanism, in 1976 and has held
onto it since.16 But these reforms still leave the US quite far from comparable OECD
countries on key features of universal coverage.17
However, the state as laboratory metaphor cuts both ways—while those on the left see
the states as workshops where bold policy ideas can be tested and brought to the federal level,
those on the right have looked at the states as means by which overreaching federal policy
can be constrained.18 Given the tradition of “states’ rights,” many Republican states are now
using the state waiver process to enact reforms that advance a conservative take on health
policy, with work requirements, premiums and co-payments serving as the price for
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cooperation with the Medicaid expansion.19 Thus, while some states have used federalism to
go beyond federal reform in moving towards universal financing, others have used it to try to
claw back coverage, under the cloak of states’ rights, and reject federal pressure towards
more redistributive and comprehensive health reform. Building on previous case studies of
the politics of state health reform efforts,15,20–22 we examine the factors that contribute to state
policy innovation in health reform. Below we describe New York State’s current bid to be the
first state in the US to adopt universal health financing reform.
THE NEW YORK HEALTH ACT: A SINGLE-PAYER PLAN
The New York Health Act (A. 4738/S. 4840) would create “New York Health,” a single-
payer system covering every New Yorker without deductibles, co-pays, or restricted provider
networks.23 The most recent version of the bill passed the New York State Assembly in
2018, however, it was blocked in the Senate. The same bill has made it out of committee and
passed the Assembly four other times, first in 1992, and subsequently in each of the last three
Assembly sessions (2015, 2016, and 2017). The new version of the bill currently under
consideration again in the Assembly as of March 2019 would go even further than previous
versions by including long-term care as a benefit for all. Though the financing is not
specified in the bill, an economic analysis of the bill by the Rand Corporation found that a
payroll tax (to be shared 20% by employees and 80% by employers) combined with
nonpayroll taxes could raise enough revenue to pay for the plan while reducing costs below
the current cost of health insurance premiums.19
While previously being unable to pass the Senate, the bill for a single-payer system
now faces political dynamics that are different from previous sessions, because the
composition of the Senate has changed. Whereas previously the bill could be reliably blocked
in the Senate by a group of eight Democrats that caucus with Republicans known as the
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Independent Democratic Caucus (IDC), the tables have now decisively turned. Bolstered by
the “Blue Wave” that brought voter turn-out to a record high in November of 2018, the IDC
members were voted out of office and the Senate is decisively in the hands of Democrats,
which now controls the Senate 39 to 22.24–26 The bill has support not only from the Health
Committee members in the Assembly, but also from the bill’s co-sponsor and chair of the
Senate Health Committee, Gustavo Rivera.
Yet, challenges to adoption still remain. Democrats are not universally supportive of
the single-payer New York Health Act, with many preferring more incremental steps to
achieving universal coverage including building on the ACA or introducing a public option
(e.g., a Medicaid or Medicare buy-in). Governor Cuomo has argued that this issue is better
left to the national stage and has not supported the bill. Opponents of the bill including the
insurance industry and certain business interests have begun to mobilize creating a website
named the “Realities of Single Payer,” which advances arguments that are common red
herrings against single-payer. Below we elaborate on both the obstacles and opportunities for
the New York Health Act applying the Political Economy of Health Reform Framework to
identify strategies that the health reform team could undertake to address obstacles as well as
likely opposition strategies.
METHODS/APPROACH
This study uses a process tracing approach to reconstruct and systemically describe key
events drawing on evidence from policy documents, transcripts of public hearings, media
reporting and interviews with stakeholders involved in the policy process.27 Open-ended
interviews were conducted with a purposive sample of key stakeholders [N=5] including
policymakers, legislators, and representatives of advocacy groups that have been key leaders
on the New York Health Act beginning in January 2019 and continuing to present. The
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interviews were conducted jointly by both authors. Detailed notes were taken at the time of
interview and cleaned and compared following each interview. Information from the
interviews were triangulated with other available materials with the goal of identifying the
positions of key actors and stakeholders and identifying key barriers to support for policy
change.28 In addition to interviews with stakeholders, the authors engaged in participant
observation at a number of events including not only advocacy events, but also events
organized by opposition groups and panels with different viewpoints represented. The
authors are also engaged in a separate textual analysis of the transcripts from six public
hearings held on the NY Health Act in 2014 comprised of 187 testimonies and were able to
attend a recent public hearing held on the bill in Albany. These additional sources of
information informed the analysis as well as news media reporting on events. The project
received University of Albany IRB approval under protocol #5276.
The Political Economy of Health Financing Reform Framework draws on
observations regarding the politics of health financing reform in LMICs (see Campos &
Reich and Sparkes et al., this issue). The Framework identifies six categories of influences on
health financing reform decision-making: Interest group politics; leadership politics; budget
politics; bureaucratic politics; beneficiary politics; and external politics. The framework takes
the vantage point of the health reform change team and examines common political factors
faced by reform teams whose goal is to reform health financing towards universal coverage.
Reform teams can be defined as the technical entities that design policies and build networks
of support within government.29 While the Framework describes the common challenges
faced in implementing health reforms, in this case the framework is applied to explain the
adoption of health reform. Therefore, the perspective the analysis takes is from the point of
view of a reform team largely comprised of legislators and a coalition of advocacy groups.
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Whereas implementation tasks are delegated to the bureaucracy, policy adoption is initiated
in legislative health committees. We believe this is a reasonable extension of the framework
because it is extremely unlikely that a thoroughgoing reform of health financing in the US
would be initiated by the bureaucracy. Rather, change of this nature must come from the
Legislature. Moreover, we view our effort to apply the framework here as an initial validation
of its applicability to the adoption phase of the reform cycle. Below we apply the framework
to analyze the politics of health reform in New York State. In doing so, we identify both the
sources of opposition and both actual and potential strategies of the reform team to overcome
these sources of opposition.
RESULTS
Interest group politics
Interest group politics poses perhaps the most formidable challenge to the New York Health
Act, particularly opposition from the private health insurance industry. The New York Health
Act proposes not only to create a single-payer insurance system that would be likely to put
health insurance companies out of business, but additionally the Act would bar the sale of
private insurance in New York that duplicates any New York Health benefit. Providers would
be barred from seeking or accepting additional payments for any New York Health service.23
This stipulation would further reduce the potential alternative role that insurance companies
might play in the future in offering supplementary and complementary insurance plans.
The insurance industry and other opposition groups are already mobilizing and have
created a website called the Realities of Single Payer that declares it provides neutral, factual
information about the “realities” of the NY Health Act. However, the framing of the “facts”
are far from value-neutral and instead aim at conveying single-payer as a threat that will raise
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costs and lead to rationing of care. One particularly damning and oft-repeated “fact” that the
opposition has deployed is the statement that the total state budget will be doubled from the
present $170 billion to nearly $400 billion through the need to raise nearly $200 in new tax
revenue to finance the new government administered health plan (other estimates range from
$139 billion projected in the RAND report to $250 billion cited by business groups).30,31 As
stated on the Realities of Single Payer website: “Advocates claim it will not cost New
Yorkers more to cover all individuals under the NY Health Act, but massive state tax
increases would be needed to pay for health care costs of a government-run, single payer
system. The estimated new tax increases needed range from $139 billion to as much as $226
billion.”32 The media also repeats this point in its reporting on the bill.
Of course, this statement is both true and misleading. The budget will increase
because health care will become tax financed. But according to the projections of
commissioned studies on the financing of reform, the overall costs to finance the single-payer
plan will decrease as the tax revenue required to pay for health coverage for New Yorkers
will be less than the current amount paid through insurance premiums, deductibles and co-
pays.19,33 Whether intentionally or not, this tactic draws on the concept of loss aversion,
which has been shown to be more powerful in swaying people’s attitudes and behaviors than
highlighting equivalent gains.34 The idea that people may end up paying more in taxes is a
frightening specter that is easy to exploit to boost opposition to the bill. Additionally, loss of
choice and increased wait times are further caricatures of single-payer that are easily
exploited to dampen support, even though cross-national comparisons do not bear this out.35
Thus, the strategy of the opposition is to paint the reform team as unrealistic and fiscally
irresponsible.
The insurance industry has legitimate cause for concern. In 2019, there would be over
300,000 workers employed in health care administration in New York and over 26,000
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employees of health insurers.27 The Friedman Report, one of the two commissioned
economic reports on the New York Health Act, estimated that “as many as half of the health
care administrative workers and most of the health insurance workers would be displaced by
the New York Plan, resulting in as many as 150,000 newly unemployed workers.”27,p.24 This
estimate is based on the assumption that six health-care provider employees handle insurance
billing for every worker in the insurance industry. While the report goes onto note that the
displacement would be balanced out by the creation of positions due to the increased demand
for health care workers, the jobs created would not likely be for the same skill set as those
displaced.
In addition to the insurance industry, which comprises a large portion of the website’s
backers, other organizations oppose the bill, including a series of business groups, Chambers
of Commerce, networks of health care providers as well as conservative think-tanks and
advocacy groups such as the Empire Center and Unshackle New York.36 Although the
RAND report suggests that 70% of businesses would benefit or be unaffected by the NY
Health Act, the report acknowledges that small businesses that do not currently offer
insurance would end up paying more since they would need to pay the payroll tax, which is
not substitutable with current premiums. Small businesses are not presently exempted under
the NY Health Act.
Unions are another organized interest group that is somewhat divided over single
payer in New York.37 Some have openly endorsed it while others are silent or on the fence.
Still others, including some New York City public sector unions, have been openly
antagonistic due to concerns about the possibility of either reduced benefits or higher costs
from a payroll tax where the full premiums of members are currently covered by the state.37
Union opposition to single-payer largely stems from concerns about the loss of negotiation
power that might come from decoupling health care from employment. They are also
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concerned that the incentive of joining unions could be curtailed if members no longer had
the advantage of generous health plans.37
Though certain health provider groups have openly joined the opposition to single-
payer (see Realities of Single Payer website for full list of members), it is unclear where
providers as a whole stand. Straddling the union and provider category, the New York State
Nurses Association is a strong supporter of the New York Health Act as are nursing
associations across the country.20 While recent polls of members of the American Medical
Association show a majority support for single-payer,38,39 a key concern among some
providers, particularly specialists, is likely to be how reduced reimbursement rates might
impact their bottom lines and incomes. The Rand Report modeled two scenarios, one in
which provider payments remained relatively high due to favorable negotiations between the
state and providers and one in which they were more reduced. In a scenario in which provider
payments stayed the same as well as administrative costs and pharmaceutical payments, the
NY Health Act would lead to a 7.2% increase in health care spending, whereas under an
alternative scenario with reduced costs in these areas, health care spending would fall by
11.5% by 2022.19 According to UMASS study, New York Health would cut $71 billion from
the cost of care in New York, which could be used raise payment rates for Medicaid and
Medicare providers to rates comparable to commercial insurance.23 Nevertheless, some
legislators have raised concern that if providers face reduced pay, they could opt to leave the
state, exacerbating the possibility of a provider shortage thereby increasing wait times.
On the side of single-payer proponents is a coalition of advocacy groups including the
Campaign for New York Health, and Physicians for a National Health Plan, among others.
The Campaign for New York Health is a 501c4 organization that represents a state-wide
coalition dedicated to passing and implementing legislation for universal health care in New
York State. It represents over 150 community and labor organizations made up of nurses,
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teachers, patients, doctors, union members, business leaders, faith and immigrant rights
community, progressive political organizations, health care advocates and providers.40 In
total, it lists 656 endorsers on its website.41 While proponents appear to be mostly a cohesive
group, as in previous single-payer efforts, if single-payer were to be watered down in some
way, this could become a source of division among advocates. For instance, whereas
supplementary and complementary plans exist in many countries with universal health
coverage, single-payer purists stress the importance of prohibiting these types of plans in the
US context.42 There may also be disagreements over whether complementary and alternative
therapies should be covered,43 as well as over whether a system that does not integrate
Medicare would truly be considered a single-payer system and whether a system with some
cost sharing (i.e., co-pays or coinsurance) would be acceptable. Thus, the reform team is also
constrained by the need to maintain the progressiveness of the reform.
Leadership politics
While leadership alone is not sufficient to pass legislation, without it, a bill is unlikely to
succeed. If the New York Health Act passes, it will be largely thanks to the tireless effort of
a single policy-entrepreneur—Assemblymember Dick Gottfried. He has sponsored the New
York Health Act in the Assembly since 1992 and has been championing single-payer for the
last 27 years. As described in an article in the Nation, “he can recite the pros and counter the
cons in his sleep.” Representing District 24 (Hell’s Kitchen- and Chelsea-area) Gottfried is
the second longest serving Assemblymember in New York State history, having been
continuously re-elected for two year terms since 1971.44,45 Assemblymember Phil Steck, also
on the Assembly Health Committee, and Senator Gustavo Rivera (head of the Senate Health
Committee) have also championed the bill making the case in town halls and other venues.
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In spite of this strong leadership in the legislature, in policy adoption, ultimate
authority does not rest with key champions. In the context of New York State, much like the
national level, there are at least three veto points that could curtail legislative adoption. A
veto player is a political actor who has the ability to stop a change from the status quo.46
While the Assembly has shown quite consistent support for the bill, it is yet to pass the
Senate. Even if it passes both chambers, it must be signed by the Governor. While it is
unlikely that Governor Cuomo would veto a single-payer bill if it were passed in the
Assembly and the Senate given the negative valence that this would imply (voting against
one’s own party), the Governor has made clear that he believes that this is an issue that
should be decided at a national level. He also plays into the fear tactics of the opposition by
portraying the New York Health Act as budget busting. For instance, speaking at a primary
debate against progressive challenger Cynthia Nixon in 2018, Cuomo stated that “the
projected cost to transition to a single-payer system would be about $200 billion, more than
the current $170 billion state budget.”30 He questioned how that could be done on a short-
term basis without doubling the tax burden.
Within the two Chambers (Assembly and Senate), it is unclear how much support
single-payer might have. The Realities of Single Payer website shows the vote counts and
specific Assemblymembers that have voted for the NY Health Act in the past. In 2018, there
were 91 yes and 46 no votes with similar margins in previous years. In the Senate, while
there are 39 Democrats to 22 Republicans, it is unclear what the level of support is among the
Democrats, though in the 2017 session, the Senate was one vote shy of passing the health
bill.47 Even within the Assembly’s health committee, there are members with doubts about
the bill given concerns about their constituent’s reactions to the large tax increases required
to finance the reform and whether they could effectively convey the cost savings from
reduced private expenditure.
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Budget politics
Most of the opposition to single-payer centers on the budgetary aspects of the proposal. As
one stakeholder pointed out at a recent single-payer event—the rights framing of single-payer
has largely been successful—the public mostly now agrees that health care is a human right.
Where the divisions lie is in convincing the public that a single-payer plan, which requires
tax-financing and a large increase in the size of government, is the only path to achieving
health care as a human right. Opponents point to the large tax increases required, i.e., “single-
payer would at least triple New York State taxes,” as opposed to the evidence of cost-savings
from the elimination of private health insurance premiums.32 Confusion and
misrepresentation about how tax financing would work and the net effect on citizens and
businesses give force to the opposition’s arguments.
But a few other aspects of budgetary politics create both opportunities and constraints
for the New York Health Act. First, there have been two independent economic analyses of
the Act,19,33 which have both been used both as evidence that the act can succeed at reducing
costs while covering everyone, while at the same time illustrating the large tax increase that
this will require. Moreover, the fact that costs might increase for certain high-income New
Yorkers have been given disproportionately negative attention.48
In fact, the Rand Report shows the financing strategy will shift what is currently a
highly regressive private financing system to a steeply progressive tax financing system. For
instance, the Rand Report finds that for individuals making over 1,000% of FPL
(approximately $150,000 a year) the proportion of compensation spent on health care
payments would increase modestly from 23% to 25%. But for individuals earning more than
2,000% of FPL ($267,000 for a single individual), their contribution would increase from
24% of income to 36% of income. The share of compensation spent on health care would
steeply decrease for all other income groups. In fact, the lowest income bracket (<139% FPL)
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would move from paying 35% of their compensation towards health care to 17%. As
summarized in the Times Union: “The New York Health Act would reduce overall health
care spending by 15%, or $45 billion per year, and over 98% of state households would
spend less on health care than they currently spend.”30
However, the present legislation does not specify the exact financing of the plan, as,
in New York State, this is accomplished separately in New York State through a budget bill.
While this has advantages in terms avoiding budgetary politics in the adoption of the bill, it
also opens potential for the bill to be delayed and possibly stall out during implementation as
occurred in Vermont.20 The current proposal requires the Governor to develop a plan that
would be based on a payroll tax with an 80% employer contribution and 20% employee
contribution and taxes other taxable income (e.g., interest, dividend, etc.).23 These are the
assumptions that the RAND report used to derive its estimates, though specific brackets and
rates would be set during an implementation period and would likely require Gubernatorial
support.23
Financing of the New York Health Act was not considered as part of the budget
process that governs New York State, but presumably, if adopted, the ultimate budget would
be set through this process. Given the power the Executive has over the budgeting process in
New York,49 this could pose a challenge. The health budget in New York State is controlled
by the health unit of the Division of the Budget (DOB). The DOB is part of the Executive
Branch, acting as the fiscal advisor of the Governor, who has openly opposed single-payer at
state level. New York State’s budget process is rather unique in terms of the amount of
control that it gives to the Executive Branch.50
An additional idiosyncrasy of New York’s budget also creates both opportunities and
constraints for reform. New York is one of 18 states where the counties contribute to
Medicaid through a funding formula that requires the state’s 62 counties to pick up 13% of
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the total cost of Medicaid, which is far more than counties in other states pay, if they pay
anything at all.51 Referred to by former House Representative John Faso (R) as the
“Medicaid mandate,” single-payer proponents, including Assemblymember Phil Steck, a
member of the Assembly Health Committee, have pointed to the ways that state single-payer
could lead to a reduction in local property taxes.52 This reduction in property taxes has not
been factored into current projections of cost savings to tax payers, but as a state with one of
the highest property taxes in the country, this is certainly a potential selling point for the NY
Health Act. Given that Trump’s tax reform bill (the Tax Cuts and Jobs Act) also reduced the
amount of state and local tax (SALT) deduction allowable for taxpayers of high-tax states
like New York, this could be a selling point for New Yorkers living in high property-tax
areas. The tax bill implemented a cap of $10,000 in deductions where previously, there was
no limit.53 This hits high-income, high-property tax parts of New York (like Westchester
county) particularly hard since those who stand to gain from deducting their property taxes
tend to be those who have expensive homes in prosperous communities, giving further
impetus to other means of reducing property taxes including single-payer.
Beneficiary Politics
Beneficiary communities include the general public—voters, citizens and even non-citizens.
Symbolically, the purpose of universal health financing is to transform health care from a
commodity purchased by consumers in a market framework to a guaranteed right of citizen-
beneficiaries in a political framework. As representatives of citizens, legislators are
ultimately accountable to the will of the public. Beneficiary support for single-payer is often
judged through public opinion polls, which signal citizen preferences to representatives.
Public opinion polls generally show majority support for single-payer (as high as 60%),
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especially when presented as Medicare-for-All.6 Medicare remains an extremely popular
universal social insurance program, often referred to as the third rail of politics due to its
untouchable status. Majorities have supported for more government involvement in health
care in public opinion polls for decades.54,55 However, citizen preferences are very mutable
based on how information is presented and susceptible to scare tactics when presented with
cost of universal health coverage in terms of tax increases to pay for it. For instance, a single-
payer referendum in Colorado ended in defeat after the ballot text began with the words
(required by state law) “[s]hall state taxes be increased by $25 billion.”23
Beneficiary politics is contentious because while some beneficiaries may see their
benefits increase or improve, for others there is the possibility of a decrease in benefits or the
possibility of exclusion (i.e., for non-citizens). This fear of loss (or loss aversion) is a central
strategy that opponents of single-payer play upon. The Myths & Facts Sheet on the NY
Health Act sponsored by the Realities of Single Payer website claims that “citizens in both
Canada and the United Kingdom, the only two countries with true single payer systems,
report long wait times for care, have higher rates of hospital mortality, and are increasingly
dissatisfied with their country’s health care systems,” assertions that are not cited and are
based on questionable facts, including conflating the British National Health Service with
single-payer models.32 In fact, comparative studies drawing on research from the
Commonwealth Fund’s National Health Systems Study have found no inherent tendency of
single-payer systems to have longer wait times or higher dissatisfaction than the US.35
Though for the majority of beneficiaries, the amount they pay in payroll taxes is estimated to
be less than the amount they currently pay in premiums, for some beneficiaries, they may end
up paying more either because they were not paying anything before or if they fall in the
highest income brackets due to the progressive tax financing proposed.
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Yet there is also reason to believe that if single-payer were adopted, the public would
come to support the bill and retrenchment would be unthinkable, as has been the case with
Medicare and Social Security, which have been described as the “third rail” in American
politics due to their untouchable status.56 A recent article has declared Medicaid the “new
third rail” in American politics, a view evidenced by the failure of recent repeal and
replacement efforts.57
Bureaucratic Politics
While bureaucrats are often not part of the policy design process, they are tasked with
implementation of policies that are adopted. As bureaucrats are often the key actors
responsible for implementing a health policy, the practicalities and technicalities of reform
keep them up at night. Bureaucrats may be concerned about how health reform may affect
their authority, budget, personnel, and work load.
New York has been a leader in increasing health insurance coverage for its residents
through creative means and in implementing the Affordable Care Act. The state has used the
1115 Medicaid Waiver process to expand coverage and reduce costs and may be loath to
move towards a model that might make those reforms redundant or diminish their
contribution. For instance, through two waivers, New York has moved its Medicaid
population onto private managed care plans transitioning them away from traditional fee-for-
service Medicaid. New York State was one of only two states that implemented the
“Essential Plan,” an option under the ACA that allows Medicaid buy-in for lower income
working New Yorkers up to 200% of FPL. The state shares the cost of the program with the
federal government 50-50 and the cost to citizens to enroll ranges from 0-$20 per month per
person depending on income grade and provides similar coverage to Medicaid. Almost
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800,000 New Yorkers had enrolled as of January 2019. Presently only 4.9% of the state
population remains uninsured.58
Given the success of these innovative solutions to reduce insurance coverage gaps, the
urgency of the case for health reform may appear low and the projections of the likely cost
savings fraught with questionable assumptions embedded in the modeling. Indeed, the RAND
report of necessity makes quite a few assumptions including federal waivers for Medicaid,
Medicare, and ACA, the full implementation of the New York Health Act in all three years,
the status quo scenario of the ACA continuation, the 6% of administrative rate in the
spending for health care services, on which to base its claims. Moreover, moving back to a
government-managed reimbursement model from a managed care model might be seen as a
step backward in terms of all the work they have put into the redesign effort.
External Politics
While in the US context, external donors are not a major influence on policymaking, in the
context of a federal system, state-led health reform runs up against the federal barriers and
the politics of national health reform. There are divisions among single-payer proponents
over whether state-based reform is the right avenue to pursue or if efforts are better placed on
national political pressure. The case against state-led reform largely rests on the practicalities
of advancing reform at a state-level. The three major barriers to state-led reform include:
1. The necessity of waivers from the federal government to change elements of
Medicare and Medicaid provision.
2. The specter of ERISA (The Employee Retirement Income Security Act of 1974)a
3. How to treat out-of-state insurance and non-residents that work in the state
If waivers are not adequately attained, the state risks losing federal dollars and must come up
with more self-financing. If ERISA is enforced, companies that self-insure cannot be
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compelled to pay a payroll tax towards the state health plan. If private insurance claims from
out-of-state plans continue to need to be processed, this undermines the administrative cost
savings from the plan. In New York, the problem of non-residents that work in the state is
especially acute since over 1.5 million people living in Connecticut and New Jersey are
employed in New York City.59 Would non-residents be compelled to pay the payroll tax but
not get the benefit of the insurance? Could they buy-into the program? How will New York’s
insurance be received outside the state?
Critics of state-led reform point out that these types of practical considerations
constitute serious reasons to doubt the viability of state-led single-payer. Moreover, if single-
payer might be passed at a national level, why bother with state-level reform? The New York
Governor has said the bill is “a very exciting possibility [if it is] not incongruous to what the
Federal government would do to us.”23 Given the current federal political climate, if there is
no substantial change in government in the 2020 elections, the likelihood of getting waivers,
and certainly of passing national Medicare-for-All, is highly improbable.
DISCUSSION
Applying the Political Economy of Health Financing Reform framework reveals numerous
obstacles for reform, but also many opportunities and strategies that proponents might pursue
in New York State. Interest group, leadership, budget, beneficiary, bureaucratic and external
politics each raise pressures and challenges that must be addressed. Examining the main
sources of opposition above, a recurrent theme is the contentiousness that tax financing raises
for reform. For high-profile, redistributive reforms such as national health insurance, the
powerful actors that stand to lose materially from financing reform (particularly private
health insurance companies), have used various strategies, including “insider” and “outsider”
tactics, to try to influence policy makers support for the NY Health act. “Insider” strategies
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include direct lobbying of legislators/bureaucrats to persuade them to do so through the
provision of information, while “outsider” strategies include exerting pressure on legislators
by working through civil society actors to influence the general public’s perception of the
legislation.60 The development of the Realities of Single-Payer website is an example of an
outsider strategy to try to discredit the policy through public persuasion.
For other groups, the existential threat posed by single-payer is not as great and
support/opposition appears to stem less from material concerns and more from either
misconceptions and misgivings about reform or perhaps a general fear of change and loss
aversion. For instance, unions put more weight on not wanting to end up with worse health
insurance for members than what they currently negotiate but fail to recognize the greater
space they would gain to negotiate on salary or other demands by shifting to tax financed
health coverage. Bureaucrats put greater emphasis on what this new program will mean for
their workload and organization and fail to appreciate the opportunities that could come from
enhanced responsibilities for the provision of health care. Providers worry about potential
loss of income and autonomy even as their autonomy is already curtailed by the vicissitudes
of health plan red tape and paperwork. Citizens have not been exposed to the full cost of
health coverage and therefore do not see the gains to be realized through UHC.
Given the opposition from groups that do not stand to lose directly from financing
reform, this discussion suggests that American political culture and a peculiar hostility
towards taxation may be primarily to blame for the lack of progress towards universal health
financing. America’s libertarian ethos and anti-socialist past appear to be easily exploited to
denormalize single-payer options. These same symbolic strategies have been deployed
throughout the history of US health reform to undermine comprehensive financing proposals,
previously principally propelled by the American Medical Association in conjunction with a
coalition of conservative Republicans and Southern Democrats.56
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The signature public, single-payer plans in the US—Medicare and Medicaid—are
themselves a product of a compromise aimed at achieving universal health financing. The
reform team responsible for enacting Medicare and Medicaid in 1965 viewed these programs
as a stepping stone to national health insurance that could be expanded incrementally to
additional groups (including children) and eventually the whole population.56 However, with
defeat of Kiddycare in 1968 and subsequent development of concerns about the rising cost of
public insurance programs, Medicare-for-All was relegated to the fringes of the Democratic
Party and political left in the US.
Will this current effort (in a long number of efforts over many years) succeed in New
York State? Will Medicare-for-All come to pass in the US? What are the chances? While
single-payer health financing reform has largely been off the table at the federal level since
the 1970s, there are promising signs that this may be changing. First, Bernie Sanders’
unsuccessful bid for the Democratic nomination in 2016 re-popularized single-payer and
made it a litmus test of subsequent Democratic candidates. As an indication of this shift,
Representative John Conyers has introduced single-payer in each Congress since 2003,61 but
it was not until 2017 that the plan gained the backing of 60% (117) of House Democrats.62
Under the sponsorship of Representative Pramila Jayapal, the bill has expanded and remained
popular. Sanders’ Medicare-for-All bill in the Senate is backed by several 2020 Democratic
presidential contenders, including Senators Kamala Harris, Elizabeth Warren, Cory Booker
and Kirsten Gillibrand.63 The ultimate prospects for single-payer at the national level will
hinge almost entirely on the outcomes of the Democratic primaries and the 2020 elections. If
the wave of progressivism that has brought record numbers to the House Progressive Caucus
continues to gain momentum, then single-payer may indeed be a legitimate possibility. If not,
its fate remains improbable.
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The prospects for New York State will likely also largely hinge on trends at the
national level. If there is a clear signal towards support for progressivism, this will likely
push the Democratic majority in the state Senate to support the New York Health Act or face
penalty at the voting booth. On the other hand, if it looks like health reform will be passed
federally, this could dampen enthusiasm for a state-based solution. Presently, single-payer is
not the main focus of the state legislative agenda as the Senate moves to approve a variety of
bills that had been previously stymied by the Independent Democratic Caucus. At the time of
reintroduction of the NY Health Act, 81 Assembly Members (54% of Assemblymembers)
and 22 Senators (35% of Senators) were listed as original cosponsors on the bill. Thus,
support in the Senate even with a Democratic majority is not guaranteed. Further, the fact that
single-payer is advancing at the national level could provide cover to Democrats that are less
supportive of universal financing reform in New York State, reducing its likelihood of
adoption.
This is one of the unique qualities of efforts to reform health financing at a sub-
national level. While the “states as laboratories of democracy” metaphor is often held up as a
normative ideal of federalism, states may be reluctant to try to such a bold reform if it
appears that the same reform is on the federal horizon. This is especially true given the
challenges of implementing single-payer at a state level. This is evident in the strategy of the
Governor who cites the complexities of implementing single-payer at a state-level as a reason
to leave this to the federal level. None the less, it would be hard to imagine that the Governor
would veto the bill if it were passed by the state Legislature, especially if by wide margins.
Given the current attention to Medicare-for-All on the national stage, being the head of
government for the first state in the Union to adopt and successfully finance a single-payer
system could be a point to claim credit over. Governor Cuomo’s wide win margin in the
recent primary against Cynthia Nixon, a single-payer proponent, could be interpreted as
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support for his more moderate political agenda. Thus, in spite of having a solid Democratic
majority in the Assembly and the Senate, the prospects of the New York Health Act passing
even in future session remain low in the present session.
Furthermore, experience dictates that the closer a bill gets to being viable, the more
that the opposition ramps up its counter-messaging, which could dampen support even as it
builds. Though it is difficult to estimate the exact impact or amount of effort towards
lobbying at a state level, at a federal level, according to the Center for Responsive Politics,
the pharmaceutical and insurance industries spent more than any other industry (including oil
and gas) on lobbying.b The pharmaceutical industry spent over $282 million in 2018 and the
insurance industry spent more than $158 million in that year. Public support also tends to
wane as the details about large changes required and the uncertainty this presents gain
attention.
Strategies to increase support. The central role that Medicare-for-All is playing as a
litmus test for progressivism within the field of Democratic hopefuls who will be running for
the presidential primaries bodes well for compelling State Senators to be bold and forward
looking in the next Legislative session. To build additional support, the reform team might
undertake various strategies to apply pressure to reluctant Democrats to support this bill.
One strategy used in 2014 was to hold public hearings across the state to build
enthusiasm and support for the NY Health Act. A series of six public hearings were held
across the state from December 2014 to January 2015 that brought out 189 speakers, most
enthusiastically endorsing the plan (176 out of the 189 witnesses).64,65 The hearings served as
a way to demonstrate the wide support from the public and gather public opinion on the NY
Health Act before the bill (A.5062) was put on the floor vote for the first time in the
2015−2016 session. One hearing was held in Albany on May 28, 2019, and the Senate Health
Committee Chairman announced that there would be a series of hearings across the state.66
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The present strategy of the Campaign for New York Health in conjunction with local
chapters of Physicians for a National Program has been to collect personal testimonies of
ordinary citizen’s experiences with the health care system for possible public use. These are
largely an “outside” lobbying strategy.
Potential “inside” lobbying strategies (which to our knowledge are not presently being
implemented by the reform team) might include building quiet support among key
bureaucrats whose affirmation of the bill would speak to the feasibility of reform. Individual
pressure could be applied to Democratic Senators who do not presently endorse the bill with
efforts to run more progressive candidates in state primaries and draw attention to their lack
of support for the bill, a strategy that contributed to the “Blue Wave” at the national level.
The reform team may also need to compromise on key components of the bill to make
it appear less radical or to gain support from certain key constituencies. Already, in
discussions with certain unions, the reform team has agreed to cover the full cost of payroll
taxes for unions that currently have their health care fully covered. The reform team might
also employ strategies that have been proposed in other states attempting single-payer, like
Vermont, where the reform team recommended tort reform for physicians, reduced payroll
taxes on small employers, or related strategies like allowing supplementary coverage to
placate insurance companies or modelling scenarios that might include modest co-pays and a
more limited benefit package. Table 1 summarizes actual and potential strategies that either
have been or may be undertaken by the reform team as well as strategies of the opposition.
CONCLUSION
New York State is at a critical juncture in terms of its ability to be the first state in the
nation to adopt a single-payer universal health coverage system. Due to changes in the
composition of the Senate occasioned by broader political headwinds at the federal level,
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New York might plausibly have enough votes to adopt the NY Health Act. However, the path
to victory is far from straightforward. The reform team faces many obstacles, particularly
how to counteract symbolic framings of single-payer that evokes paternalistic constraints on
freedom and liberty. In this regard, the merits of single-payer may be its own worst enemy—
the fact that it is a tax-financed government program can either be framed as its greatest
merit, providing equitable and affordable coverage to all as a right, or as a coercive Leviathan
extracting tithes while rationing care.
NOTES
[a] ERISA is a federal law that sets minimum standards for voluntarily established
retirement and health plans in private industry to provide protection for individuals in these
plans and is not allowed to be regulated by state law. Thus, there are questions about whether
employers that self-insure could use ERISA to block the levy of payroll taxes to finance a
state health insurance plan.
[b] For information on this, see:
https://www.opensecrets.org/lobby/top.php?showYear=2018&indexType=i
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Accepted Manuscript
36
Table 1: Political Economy Factors and Strategies
Dimension Political economy
factor
Potential or Actual Strategies
used by reform team
Strategy Used by
Opposition
Proposed policy: Reduce fragmentation in pooling by merging insurance schemes into a
single-payer system at a state-level
Interest group
politics
"Manage
outside" by
managing
interest groups
that may resist
or promote
policy
implementation
to protect their
interest.
Insurance
company
opposition
Point out continued role in
providing supplementary
insurance plans; Point to
losses from current system
and the self-interest of
opposition groups
Emphasize
reductions in
choice;
government
inefficiency/
corruption
Union opposition
(due to perceived
reduction in
benefits)
Make benefit package as
generous or more generous
than the most generous union
benefit package; Continue to
pay full amount for unions
where state pays full benefit;
include new benefits like
LTC
Mobilize
members/workers
that currently
receive state plans
losing benefits
Provider
opposition due to
concern over
reimbursement
rates
Increase pay to at least
Medicare rates to ensure
participation; Tort reform;
Provide loan forgiveness or
scholarship programs for
medical training; point to
survey that shows a majority
of AMA members support
single-payer
None of these
proposals are in
the current bill
Hospital
opposition due to
concern over
reimbursement
rates
Emphasize administrative
savings from single-payer
and consistency; appoint
representatives to an
independent board
Emphasize
incremental
strategies that
maintain status-
quo
Business group
opposition due to
increased tax
Exempt small employers from
payroll taxes; Use cost study
(Rand) to show savings to
Play on fears of
increased taxes,
decreased bottom
Accepted Manuscript
37
Dimension Political economy
factor
Potential or Actual Strategies
used by reform team
Strategy Used by
Opposition
burden businesses; try to gain public
support of large and small
businesses to assuage
concerns of others
line
Bureaucratic
politics
"Manage within
and around" by
managing
bureaucrats
working in the
multiple layers
of
administrative
organizations.
Concern about
increased
responsibility for
program
administration
without
increased
resources/pay
Stress the increase in resources
and agency growth; contract
out administrative functions
Play on fears of
public
administrators
Little clarity on
who would be
responsible for
what (i.e.,
financing/budget
)
Unclear whether a financing
strategy can be set by the
legislation or needs to be
determined by the DOH
Exploit lack of
financing plan to
undermine
legislation down
the road (as
happened in VT)
Concern about
technical
difficulties of
state-level
reform
Is it possible? Waivers
required. Would state lose
money?
Play on practical
fears to steer
support towards
more modest
reforms
Budget politics
"Manage
money" by
managing
financial
decision-
makers within
the system.
Opposition from
finance
authorities based
on fiscal
sustainability
Link health reform to other
cost-saving policies and
conduct actuarial analysis to
convince of long-term fiscal
impact (Commissioning of
RAND study by the NY State
Health Foundation.
Stress the massive
tax hike required/
the doubling of
the state budget to
scare people and
that cost savings
compared with
status-quo are
minor at best.
Leadership
politics
"Manage up"
by managing
their
superiors,
Low support of
Executive
(Governor) –
punt to federal
level
Pass legislation and force
Governor to veto; Point to
strong public support as
signaled in opinion polls
Point to technical
difficulties of
reform at a state
level; Appoint a
study commission
on the issue to
Accepted Manuscript
38
Dimension Political economy
factor
Potential or Actual Strategies
used by reform team
Strategy Used by
Opposition
often political
leaders to
ensure their
commitment
to policy
implementatio
n.
stall a vote.
Low support
among
establishment
Democrats/
Assembly
Speaker
Organize public hearings
across the state to drum up
grassroots support and
pressure reluctant legislators
Assemble
meetings/
hearings among
opposition
Beneficiary
politics
"Manage down"
by managing
the intended
beneficiaries of
the policy and
mobilize their
engagement and
elicit their
feedback.
(i) Uncertain
support and trust
in expansion of
services and
demand for
enrolment into
scheme, (ii)
Concern from
current
beneficiaries of
scheme about
reduction in
benefits and
subsidization of
poor
(i) Provide generous benefits,
improve supply conditions
and (ii) gradually increase
benefits to align with highest
level and ensure no reduction
for current enrollees, (iii)
Show cost savings to all but
the richest top 1% of income
earners (Rand study); Stress
reductions in property taxes
due local Medicaid financing
in NY State
Show that public
support wanes
when details are
fleshed out- like
increase in taxes
and doubling of
state budget
Concern about
supply of health
services being
reduced due to
increased
demand leading
to longer wait
times
Use evidence to assuage
concerns
Play on fears of
long wait times in
Canada
External
politics
"Manage
donors" by
managing
external actors
that may fund
health policies
Federal health
reform specter
Point to benefits at the federal
level of having a state-based
example for reform (states as
“laboratories of democracy”
Use the possibility
of federal health
reform to punt
and stall
Accepted Manuscript
39
Dimension Political economy
factor
Potential or Actual Strategies
used by reform team
Strategy Used by
Opposition
and influence
implementatio
n, especially
in low-income
countries.
