Testimony on the New York Health Act before the New York City Council

Testifying before the NYC Council in support of its resolution endorsing the New York Health Act, December 6, 2018

Testimony of Assembly Member Richard N. Gottfried

in Support of the New York Health Act

Public Hearing: City Council Committee on Health

New York City Hall

December 6, 2018

I am Assembly Member Richard N. Gottfried.  I chair the Assembly Health Committee and I am the introducer, along with Senator Gustavo Rivera, of the New York Health Act, to create single-payer health coverage for every New Yorker.  I appreciate the Council Health Committee holding this hearing on Speaker Corey Johnson’s resolution endorsing the bill.  I support the resolution.

In both houses of the State Legislature, we now have solid majorities who have co-sponsored, voted for, or campaigned supporting the NY Health Act.  And Governor Cuomo supports single-payer health coverage, although he says he has questions about whether it can be done at the state level.

Every New Yorker should have access to the health care they need, without financial obstacles or hardship.  No one says they disagree with that.  And the New York Health Act is the only proposal that can achieve that goal.

In NY State, we spend $300 billion – federal, state, and non-governmental – on health coverage.  Nationally, we spend far more than any industrial democracy as a percentage of GDP.  But 18 cents of the insurance premium dollar goes for insurance company bureaucracy and profit.  Our doctors and hospitals spend twice what Canadian doctors and hospitals do on administrative costs, because they have to fight with insurance companies.  We pay exorbitant prescription drug prices because no one has the bargaining leverage to negotiate effectively with drug companies.

Just about every New Yorker – patients, employees, employers, and taxpayers – is burdened by a combination of rising premiums, skyrocketing deductibles, co-pays, restrictive provider networks, out-of-network charges, coverage gaps, and unjustified denials of coverage.  I know I am, and I bet everyone in this room is.

And those financial burdens are not based on ability to pay.  The premium, the deductibles – the insurance company doesn’t care if you’re a multi-millionaire CEO or a receptionist.

In a given year, a third of households with insurance has someone go without needed health care because they can’t afford it – and usually for a serious condition.

The number one cause of personal bankruptcy is health care — even for those who have commercial health coverage.

We’ve put control of our health care in the hands of unaccountable insurance company bureaucrats. Nobody wants insurance company bureaucrats deciding what doctor you or your family can see and when.

The health insurance system means massive cost increases for most everyone and better health care for hardly anyone. It’s a disaster.

But it doesn’t have to be that way.

The NY Health Act will save billions of dollars for patients, employees, employers, health care providers and taxpayers – while providing complete health coverage to every New Yorker.

Everyone would be able to receive any service or product covered by any of the following:  NY Medicaid, Medicare, state insurance law mandates, and the current state public employee benefit, plus anything the plan decides to add.

And there will be no premiums, no deductibles, no co-pays, no restricted provider network, and no out-of-network charges.

We’ll actually save billions of dollars because we get rid of insurance company bureaucracy and profit, doctors and hospitals will be able to slash their administrative costs, and New York Health will be able to negotiate much lower drug prices by bargaining for 20 million patients.

And this lower cost will be shared fairly, based on ability to pay.  NY Health will be funded by broad-based progressively graduate taxes.

There will be one tax on payroll.  At least 80% of it must be paid by the employer.

There will be a similar tax on currently taxable “unearned” income – like capital gains and dividends.

Because of the savings and the progressively graduated tax mechanism, 90% or more of New Yorkers will spend less and have more in their pocket.

Pumping this money back into our economy will create 200,000 new jobs in New York.

And there will be money to completely cover everyone, and make sure doctors, hospitals and other providers are paid fairly – and today, most of the time, they are not.

The vast majority of our hospitals get most of their revenue from Medicaid, Medicare, and uncompensated care pools – none of which fully cover the cost of care.  The NY Health Act requires full funding for all hospital care, and hospitals will save billions in reduced administrative costs.

Here are 3 basic numbers:  The savings from insurance company bureaucracy and profit, provider administrative costs, and drug prices will total $55 billion.  The increased spending for covering everyone; eliminating deductibles, co-pays and out-of-network charges; and paying providers more fairly will cost $26 billion.  So the net savings to New Yorkers is $29 billion.

The way our society deals with long-term care – meaning home health care and nursing home care – for the elderly and people with disabilities is a moral outrage.  NY’s Medicaid does a much better job than other states.  But today, New Yorkers spend $11 billion a year out-of-pocket for long-term care.  And family members – usually women – provide unpaid home care worth $19 billion.

In January, Senator Rivera and I will be announcing that the NY Health Act will cover long-term care.

Now, that will use up $19 billion of the net savings.  But it means no NY family will have to wipe out lifetime savings, and no family member will have to give up a career, to provide long-term care for a loved one.  That’s profoundly important.

How much tax revenue will we need?  With the net savings, we’ll need $129 billion from the NY Health taxes.  When we add home care and nursing home care, we’ll need $159 billion.

How do we know the NY Health program will treat us – and our doctors and hospitals – fairly?  Two ways.

First, the legislation explicitly requires that provider payments be reasonable, related to the cost of providing the care, and assure an adequate supply of the care.  No coverage today has that guarantee.

Second, we’ll all be in the same boat; rich and poor.  Every New Yorker – every voter – will benefit from the program.  And every voter will have a stake in making sure our elected officials keep it as good as possible.

Remember where we started:  Every New Yorker should have access to needed health care, without financial obstacles or hardship.  We’re not there today.  The NY Health Act will get us there.  If anyone doesn’t like the NY Health Act, they should either put on the table another plan that will get us there, or admit that they’re OK with depriving millions of New Yorkers of health care or family financial stability.

Concerns have been raised by many of NY City’s municipal labor unions.  They are justifiably proud of the good deal they have won for their members over the years.  Good scope of coverage.  The City pays the full premium.  And the contract says that if there are savings in the health benefit, the savings go into a stabilization fund to pay for salaries and benefits.  As they remind us: at the bargaining table they have given up wages and benefits to protect this deal.

Under NY Health, by law, every municipal employee, like every New Yorker, would have an even broader scope of benefits, and without deductibles, co-pays and restricted provider networks and out-of-network charges.

Under the bill now, collective bargaining could continue to have the City pick up the whole tab for the payroll tax and pass on the savings to the stabilization fund.  But Sen. Rivera and I have offered to add bill language that by law would require the City to do that, without the need to bargain for it.

Our parents didn’t raise us to screw workers.  Period.  Sen. Rivera and I are determined to make sure that labor’s concerns are protected under the NY Health Act.  We are continuing the dialogue with them.

Thank you for letting me testify.