Healthcare

Single-payer health care: rationed services, worse outcomes and exorbitant tax increases for all Mainers

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For years in the Maine Legislature lawmakers have grappled with countless ideas to expand access to affordable health care services. Unfortunately, many of these proposals include provisions that would undermine the free market or saddle taxpayers with millions of dollars in new taxes. Two such proposals this legislative session are LDs 109 and 407. LD 109 would establish a public health insurance option while LD 407 would create a single-payer “universal health care” system. Both bills are scheduled for a public hearing on Thursday, May 9 at 1 p.m. before the Health Coverage, Insurance and Financial Services Committee.

The idea behind establishing a public health insurance option is simple: Let any Maine resident enroll in the State of Maine Health Plan, the government-sponsored and privately-administered health insurance program serving tens of thousands of government employees and costing taxpayers $133 million in 2013.

The State of Maine Health Plan is exceptionally generous compared to employer-sponsored plans in the private sector, making it an attractive option for potentially hundreds of thousands of non-public employees. The State of Maine Health Plan pays 95 percent of the premium for employees earning less than $30,000 per year, 90 percent of the premium for employees earning $30,000 to $80,000 per year, and 85 percent for higher-income workers. That means that a state worker earning $40,000 enrolled in a plus-one plan paid $465 per month in premiums in 2017 — less than many private sector employees.

And with in-network deductibles of $600 for an individual and $1,200 for a family, the State of Maine Health Plan provides superior coverage to all but the best private-sector options.

LD 109 omits vital information about how unemployed Mainers would be treated under the program. The State of Maine Health Plan currently operates, by definition, on the assumption that its members are government employees. By expanding eligibility to any Maine resident, tens of thousands of people who are either unemployed or out of the labor force entirely could enroll. How would the state’s contribution to their insurance costs be calculated?

The bill does not create a “public option” to genuinely compete against private insurers, but instead proposes to create a public insurance program that is far more attractive and generous than what most private insurers — or employers — can match. The public option would undercut private firms and gain a significant share of the market, destabilizing Maine’s health care system and leaving Maine taxpayers to foot the bill. Incredibly, the bill is silent in providing a funding mechanism for what would be a significant increase in state expenditures.

The Government Accountability Office is already warning that states will face huge fiscal challenges unless they rein in spending on public health care programs. The massive government take-over of health care that LD 109 represents is exactly the wrong direction to be heading. No state has enacted a public option, and for good reason.

As it relates to the single-payer model outlined in LD 407, establishing such a program in the State of Maine would damage our economy, make our tax system significantly less competitive and put our citizens’ health care at risk.

The realities of single-payer programs never match their supporters’ rosy rhetoric. In countries with single-payer programs, wait times for urgent treatment, access to life-saving pharmaceuticals and outcomes for serious diseases are generally significantly worse than in the U.S.

The costs of single-payer programs are also prohibitive. Several states have launched single-payer initiatives only to turn back after the full budgetary and economic implications came to light. Perhaps the best-known example is Vermont, which tried to enact a similar single-payer program in 2014.

After years of study, even prominent liberals, including Democratic Governor Peter Shumlin, rescinded their support when it became clear that the plan would nearly double the size of the state’s budget in the first year alone. The state would have had to increase the state personal income tax to 9.5 percent and introduce an 11.5 percent payroll tax.

Other state-based single payer initiatives have stalled for similar reasons. The Maryland Department of Legislative Affairs found that a single-payer program in Maryland would cost state taxpayers $24 billion per year. To put that into perspective, Maryland’s total budget is approximately $41 billion.

A 2018 analysis in Florida found that funding a single-payer program would require an increase in the state’s sales tax to 39 percent or the creation of a 37 percent income tax. The RAND Corporation found that adopting single-payer in New York would cost state taxpayers $139 billion in 2022, requiring tax revenues to increase 156 percent over current projections.

Unsurprisingly, LD 407 also provides no specifics on how the state would fund the program, control health care costs or improve quality. If passed, the bill would lead to rationed care, worse outcomes, and exorbitant tax burdens on Mainers.

About Liam Sigaud

Liam Sigaud is a former policy analyst at The Maine Heritage Policy Center. A native of Rockland, Maine, he holds a B.A. in Biology from the University of Maine at Augusta and has studied policy analysis and economics at the Muskie School of Public Service at the University of Southern Maine. He can be reached by email at liam.sigaud@maine.edu.

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