Understanding New York State’s Proposed Single Payer Bill

By James Lytle, Partner, Manatt HealthGovernment and Regulatory | David Oakley, Counsel, Manatt Health

Editor’s Note: The continuing push to repeal/replace or reform the Affordable Care Act has prompted further discussions of the single payer concept by Senator Bernie Sanders (I-VT) and many of his Democratic colleagues in Washington as well as at the state level, where single payer proposals have been advanced in Vermont, California, Colorado and elsewhere. In a new memo, summarized below, Manatt Health reviews the key provisions of New York State’s proposed single payer bill. To download the full memo free, click here.


New York State’s single payer bill has (in various forms) passed the New York State Assembly on numerous occasions including, most recently, in May 2017. While the New York State Senate has not yet taken action on the bill, which is sponsored in that house by a member of the Senate Democratic minority conference, the bill’s prospects could be much brighter if the Democrats resumed control of that house, either as a result of the 2018 elections or through a reunification with the Senate Independent Democratic Conference, which has aligned with the Republicans. Moreover, the fact that Governor Andrew Cuomo recently expressed some support for the proposal has increased interest in the legislation.

Below are the principal details of the legislation. Click here to download the full bill.

Overview of the Bill’s Approach

The bill is premised on the New York State Constitution’s declaration that protecting and promoting citizens’ health is a matter of public concern and provision and therefore should be made by the state and other governmental units. It incorporates three principal components: universal coverage, a comprehensive set of covered benefits and a single payer to deliver those results.

In lieu of individual or employer premiums, the proposal envisions a tax-supported insurance plan for all New Yorkers, entitled the “New York Health” program. The government would collect payroll taxes plus taxes on certain income (other than wages subject to payroll tax). Revenues from those two taxes would fund coverage. This approach is intended to enable lower-income individuals to obtain the same coverage as higher-income individuals, regardless of their ability to pay—although those with higher incomes (or their employers) would effectively be paying more through taxes for identical coverage. Other key proposals include:

  • Medicare and Medicaid would be delivered via coverage under New York Health. Pursuant to waivers, the Centers for Medicare & Medicaid Services (CMS) would make payments to the New York State Department of Health (NYSDOH) under an agreed formula to constitute the federal payment of claims costs for Medicare beneficiaries and federal matching fund payments for Medicaid expenditures.
  • There would be no role for health plans, such as commercial insurers, managed care organizations (MCOs), Medicaid Managed Care plans or Medicare Advantage plans. However, the bill does not prohibit not-for-profit health plans from serving as care coordinators.
  • The bill is intended to avoid federal Employee Retirement Income Security Act (ERISA) pre-emption by imposing the new state taxes and, effectively, offering a free coverage program. (The federal ERISA law often pre-empts state mandates that dictate covered benefits to employer health benefit plans.) To assist in deflecting ERISA concerns, the bill does not create any employment benefit or require or limit employment benefits. It also precludes employers from duplicating benefits covered under New York Health. It’s difficult to predict whether this approach will entirely resolve ERISA-related litigation challenges.

Organization and Governance

The program would be established under the Public Health Law and administered by the NYSDOH. There initially would be a 15-member temporary commission—appointed by the governor and legislative leaders—focused on implementation. There also would be a permanent Board of Trustees of New York Health, with 26 members appointed by the governor and 14 by legislative leaders. New York Health regulations would be proposed by the NYSDOH but approved by the Board.

In addition, there would be six 27-member regional advisory councils appointed by legislative leaders, with committees representing each borough of New York. The councils would develop community health improvement plans and provide general advice on the program.

Enrollment and Covered Benefits

All New York residents would be eligible to enroll, regardless of immigration status. Colleges could purchase coverage for students who were not otherwise residents of New York. Retiree coverage could be included, but the bill defers details to a later date. Claims payments would be made both for members and for newly arrived individuals who have not yet had a “reasonable opportunity” to enroll.

Covered benefits would be very comprehensive and include all benefits currently covered in Medicaid, Medicare, Child Health Plus and the New York State Employees Health benefit plan, as well as benefits mandated under the Insurance Law for health plans. There would be one benefit package for all enrollees, with no deductibles, copayment or coinsurance for patients to pay.

Long-term care would not be covered. Within two years, however, the Board is charged with developing a proposal around adding and funding long-term care.

Care coordination would be a covered benefit, with standards set by the NYSDOH. All enrolled members would be required to have a care coordinator at all times. Finally, the Board of Trustees would develop a proposal for including worker’s compensation in New York Health.

Role of Providers and Methods of Compensating Providers

Providers already participating in Medicaid or Medicare would be deemed qualified to participate in New York Health, though they may need to complete additional credentialing applications or participating provider agreements.

The only express references in the bill to organized networks of providers for the purpose of contracting with New York Health are accountable care organizations (ACOs) and Taft-Hartley funds, which are both classified as healthcare organizations. (It is important to note that the term “healthcare organizations” in the bill refers only to state-licensed ACOs and Taft-Hartley funds.) These organizations must be not-for-profit or a government entity. Accordingly, it appears that Independent Practice Associations (IPAs) and other networks of providers could not directly contract with New York Health until they become licensed under the state’s ACO statute or part of the Taft-Hartley benefit fund delivery system.

The NYSDOH would establish reimbursement rates and fee schedules for providers. The rates would initially be on a fee-for-service basis. The exception would be care coordination, which would have an alternative payment approach, such as a fixed monthly fee. Reimbursement rates would be payment in full with no balance permitted. Since there would be no deductibles, copayments or coinsurance, the New York Health payment would be the sole revenue to the provider.

The bill calls for use of a variety of payment methods and authorizes demonstration projects using different rates. It also establishes a minimum statutory standard for rate setting for providers, stating that the rates must be “reasonable and reasonably related to the costs of efficiently providing the healthcare service and assuring an adequate and accessible supply of the healthcare service.” The NYSDOH and the Board would be responsible for setting the rates.

In addition, the bill authorizes collective negotiations by otherwise unaffiliated physicians and other health professionals with New York Health in regard to reimbursement rates and other factors. These health professionals, however, are prohibited from striking. The collective negotiations could not be for the purpose of excluding other providers, and New York Health can agree to different terms with one group versus another.

Finally, the bill stipulates freedom of choice among providers. It prohibits New York Health from limiting provider participation for “economic purposes.”

Medicare and Medicaid

The bill proposes that Medicare and Medicaid coverage be delivered via coverage under New York Health. The NYSDOH would apply for any waivers from CMS to obtain the funding. To the extent possible, the state would negotiate with federal officials to obtain lump-sum payments from CMS rather than use separate funding streams under the standard federal spending process. If the preferred form of waivers is not received, the NYSDOH is authorized to undertake alternative approaches.

Funding and Funds Handling

In addition to the federal funds, revenues at the state level would come from two sources:

  • A payroll premium on all payroll and self-employed income, imposed on a graduated scale, so higher income brackets would be assessed at a higher marginal rate than lower brackets; and
  • A nonpayroll premium—set on a graduated scale—assessed on taxable income not subject to the payroll premium, such as interest, dividends and capital gains.

All of the receipts (including those from CMS) would be placed in the New York Health Trust Fund, newly created under the State Finance Law.

The sponsor’s memorandum does not project a cost for the program but simply notes that “[N]umerous analyses document that a single payer system would be most effective for reducing and controlling costs…”

Role of Health Plans and Subcontractors

As noted above, there would be no role for health plans. The bill mandates that health insurers not issue coverage for benefit packages that duplicate the benefits covered under New York Health. Some types of health plans could serve as care coordinators, but only if they were not-for-profit entities. It also is possible that health plans could serve as vendors to ACOs or clinical providers for data analysis but would play no role in providing coverage.

Specialty networks currently subcontracting with health plans to support provider networks and/or care coordination for a limited range of services (such as mental health only) appear to need ACO licensure to qualify as a network provider and directly serve New York Health. To do so, they would need to be not-for-profit entities. As an alternative, specialty networks could become subcontractors to hospitals and other parties serving as care coordinators.

To assist health plan employees who lose their jobs as a result of New York Health, the bill provides funds for job transitions and retraining.

Out-of-State Situations

State residents employed out of state would be included in New York Health. If the employer is subject to New York State law, the employer and employee would pay the payroll premium taxes as if the employee were in New York. If the employer is not subject to New York law, the employee would pay as if he or she were self-employed.

Out-of-state residents employed in New York would not be covered but would be subject to the payroll premium taxes (and a credit would be applied in the amount of conventional health insurance premiums paid for that out-of-state resident).

Coverage under New York Health would include use of some out-of-state providers. The NYSDOH would set procedures and standards for using, regulating and paying out-of-state providers.

Consumer and Provider Assistance

The bill would provide funding to not-for-profit assistance organizations. The assistance would include assistance to consumers, providers and care coordinators.

Effective Date

The bill would take effect immediately after being signed by the governor. It would take some time, however, to implement the many changes that New York Health would introduce. Therefore, the NYSDOH would determine when enrollment would begin.



pursuant to New York DR 2-101(f)

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