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NYS Economy Can Save Over $9 Billion Each Year

Health Plan Admin Costs-Chart(Analysis) As NYS citizens collectively make do with less because the private sector is incapable of delivering either full employment or the economy’s potential for output, and government officials refuse to stimulate the economy in order to reach either mark, here’s one way we can collectively clear an estimated $9 billion per year: set up a single-payer health-care plan for NYS residents. A quick run-through of the math is provided below, but data (see chart) reported by the Centers for Medicare and Medicaid Services (CMS) show that there is a significantly large difference in administrative costs – overhead, marketing, and private profits – between private-sector health plans and public ones. This is a price difference we in NYS should exploit, serving to stimulate consumption, investment, and employment growth through savings on personal health care.

[CMS reports administrative costs as a percent of total health-care expenditure for both public and private health plans (see table below).]

Given personal health-care expenditure of $81.2 billion by NYS residents through private-sector health plans during 2009 ($162.9B total – $34.1B Medicare – $47.6B Medicaid), and taking the averages from the table to estimate the administrative-cost difference between private-sector and public health plans, a savings of $9.4 billion per year is possible by simply replacing all private-sector health plans in NYS with a public one. That means that we as a state could have $9.4 billion more to spend by switching all current customers of private-sector health plans to a single public health plan. Of course, that would require bold leadership by state officials to overcome opposition from the health-insurance industry, and to educate the citizenry about this potentially effortless benefit.

Labor and working families in WNY should support a public heath plan for NYS – to include making their elected representatives know about their support. This is low-hanging fruit for a rational system of government.

Health Plan Admin Costs-Table

Data: <http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf >, <http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2012.pdf >, <http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/res-tables.pdf >.



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