January 13, 2015

Testimony Before the New York State Assembly
Committee on Health on Single Payer Legislation

by Cessie Alfonso, Citizen Action of New York

Chairman Gottfried and other members of the Assembly Committee on Health: My name is Cessie Alfonso. I live in Troy in Rensselaer County and am a member of the board of directors of the Capital District Chapter of Citizen Action of New York, an organization that advocates for social, racial, economic and environmental justice with thousands of members in affiliates throughout New York State, including here in the Capital District. I’d like to thank you for holding these hearings around the state.

As you know, Citizen Action has advocated for quality, affordable health coverage for decades, and has played a significant role in numerous health care reforms, including the creation of Child Health Plus and legislation re-instituting the regulation of rates for health insurance premiums on the state level and the passage of the Affordable Care Act (ACA) on the federal level.

Citizen Action supports A.5389A/S.2078A, which would establish a “single-payer” system of health coverage in New York through a plan funded by the state called “New York Health.” Many of the arguments for single-payer are similar to the reasons that motivated many of us to fight for the Affordable Care Act, the 2010 landmark federal reform law. Before the ACA was passed, there were close to 50 million people without health insurance in the United States, including well over two and a half million New Yorkers. If a family wasn’t covered under employer-provided health insurance, it was difficult or impossible for most low or moderate income families to afford buying quality health insurance on their own.

And before the ACA, many others were “underinsured”: they had health coverage, but it simply wasn’t adequate. Often health plans were riddled with exclusions, high out-of-pocket costs and provisions like lifetime and annual caps on coverage. As a result of this substandard coverage, many New Yorkers and other Americans who were insured experienced financial disaster when if someone in their family got really sick or into an accident. Because of the costs of health insurance and health care itself, 3 of 5 bankruptcies in America were related to medical bills. Many of those filing bankruptcy had health coverage.

There’s no doubt that the ACA is beginning to address these and other fundamental problems with health care in the United States and therefore is a significant step forward for consumers: especially in New York State, which is effectively implementing the federal law. As you know, as of the end of the first year of open enrollment, roughly one million New Yorkers had enrolled in NY State of Health, our state’s health benefits exchange, and hundreds of thousands have enrolled since then, significantly cutting into the number of uninsured. Health insurance premiums from New Yorkers have been significantly kept in check, in particular for people on the “direct pay” market: consumers who have to pay for their coverage out of their own pockets. These consumers are paying on average over 50% less than they would have had to pay for comparable plans before the law was implemented in New York.

Although the ACA was an major step forward, it did not comprehensively address several fundamental long term issues faced by health care consumers, including: high cost-sharing; the excessive and unnecessary costs to the health care system that have resulted from our current insurer-based system; and certain bad insurer practices, such as arbitrary denials of care; and coverage for undocumented immigrants. We will join with our partners in Health Care for All New York in finding solutions — legislative and administrative — for these and other problems like narrow networks. At this same time, we urge the Legislature to address the remaining problems with our current insurer-based system in a more comprehensive way through the passage of single payer legislation. I’d like to briefly touch on a few ways the ACA has fallen short, including one item that even the single payer bill does not seem to satisfactorily address in its current form: coverage for the undocumented.

High Cost-Sharing: While the ACA has important limits on cost-sharing, and even provides subsidies to keep cost-sharing down, it’s still unfortunately still true that consumers can incur high costs for deductibles and co-payments under health coverage they purchase through NY State of Health. For example, consumers who choose bronze plans through NY State of Health may face thousands of dollars of deductibles in a single year. The ban in the New York Health bill on charging any amount for premiums, deductibles or co-pays would eliminate this problem, ending the all too common situation of consumers becoming financially strapped or even insolvent due to high medical bills.

Excessive Costs: Ultimately, we must address the high administrative costs in the American health care system, which place a huge unnecessary burden on those who purchase health coverage directly or indirectly, including employers, consumers and small businesses. The New England Journal of Medicine calculated in a 2003 article that administrative costs, including such items as medical billing, then consumed 31% of U.S. health care spending. Health insurer overhead and profit has been estimated at between 12% and 14% nationally. A single-payer system will make a significant dent in these unnecessary costs that are passed onto ratepayers, such as executive salaries and insurer advertising due to the need of each health plan to promote its products on the private market. The inconsistent billing systems of multiple health insurers, which place enormous burdens on doctors, hospitals and other health providers, is another example. Single-payer has the enormous potential to lower many of these unnecessary and wasteful costs.

Bad Insurer Practices: Before the passage of the ACA, massive evidence was uncovered of bad faith health insurer practices such as arbitrary denials of coverage when consumers got sick or insured. The ACA has partially addressed this problem through, for example, improvements in the process under which consumers can appeal denials of coverage. However, I believe that a single payer system would provide a much more comprehensive solution. Under New York Health, where the state would be the predominant provider of health coverage in the state, there would far few instances of arbitrary coverage denials than under the current system, in which profit-seeking health insurers have strong financial incentives to reject claims.

Coverage for Immigrants: One of the major failures of the ACA is its discriminatory and unjust exclusion of undocumented immigrants from the protections under the law. The undocumented are excluded from receiving the subsidies in the law intended to assist financially qualified consumers to purchase health insurance. Even more unjust, people who are undocumented are totally excluded from participation in state exchanges, including NY State of Health, even if they are able and willing to completely pay for the cost of coverage out of their own pockets. I was happy to see that the New York Health bill seems to permit participation by the large number of undocumented consumers who live in our state, but this is not absolutely clear from our reading of the bill. We therefore urge you to make the bill language more explicit on this point so that thousands of tax-paying New Yorkers are not inadvertently left out of New York Health and have to forgo health care or rely on poor alternatives for their care, like emergency rooms.

In closing, we must remember that quality health care and quality health coverage are basic human rights. It is the basic responsibility of government to provide every resident with quality health care. The Legislature should take the next logical step to ensure this promise becomes a reality in our state while working in the short term to improve the ACA.

Thank you.