Maryland analysts: Single-payer health care, proposed by Jealous, could cost state $24 billion a year

State-sponsored health insurance for all Marylanders such as the single-payer plan proposed by Democratic gubernatorial nominee Ben Jealous could cost $24 billion a year, forcing lawmakers to significantly raise taxes, according to a nonpartisan analysis.

Such a cost would increase the state’s $44 billion operating budget by more than half.

The analysis, drafted by the state’s Department of Legislative Services and released to The Baltimore Sun, said Maryland would have to levy a 10 percent payroll tax against every business and charge a $2,800 fee for every man, woman and child to pay for a new health care system in which doctors bill the state instead of private insurance companies.

The fee would replace payments residents now make toward health care costs, meaning Marylanders who pay more than $2,800 annually could save money under a single-payer model, according to the analysis.

“Clearly, any single-payer program represents a significant restructuring of the State’s current health care delivery system and tax system,” the analysts wrote.

The Jealous campaign — which has pledged to create a universal health care system without waiting for the the federal government to take the lead — pushed back against the analysis, saying it believes an overhaul of the health care system can be done for much less. Moreover, they argue, even though the state budget would grow, the average Marylander would pay less for health care.

“Everyone is supposed to have access to quality affordable care and the current system doesn’t do that,” said Kevin Harris, a spokesman for Jealous. “This is about getting a better deal for Marylanders.”

If Jealous is elected, Harris said, he will create a commission to figure out how to implement a single-payer system and how to pay for it.

“It would be premature to say” what new taxes or tax increases would be proposed, Harris said.

The campaign of incumbent Republican Gov. Larry Hogan said the Department of Legislative Services analysis shows Jealous is a tax-and-spender.

“This analysis shows just how dangerously irresponsible, unaffordable and unworkable Ben Jealous’ plan would be for our citizens and our economy,” Hogan campaign spokesman Doug Mayer said in an email. “Voters know there is no such thing as a free lunch, and under Jealous’ program middle-class Marylanders would be crushed by tens of billions in new taxes that would send our economy into a tailspin.”

The Jealous campaign provided an analysis from National Nurses United, a union that backs the former NAACP president. The group estimates switching to a single-payer system would save the average Marylander about 10.5 percent a year on health care costs.

Kelly Coogan-Gehr, policy analyst for National Nurses United, said health care costs are continuing to rise rapidly and nearly 400,000 Marylanders remain uninsured — a situation the Jealous campaign calls “unsustainable.”

Coogan-Gehr argued the state’s residents could save significantly through a single-payer system by cutting out the middleman in the process, the insurance companies.

“Our stance is we can’t afford not to do it,” she said. “Maryland is well positioned to go to the single-payer system.”

Dan Johnston, assistant director of research for National Nurses United, said Jealous could use a number of options to pay for the system: sales tax increases, payroll tax increases and income tax increases.

“There are different tax schemes you could do. We looked at different types of financing mechanisms,” he said. “We can get them to where almost everybody is paying less, including businesses. A single-payer system will save everybody money in Maryland.”

The Department of Legislative Services analysis did not offer an estimate for whether the change would increase or decrease health care expenses for businesses and employees.

“The impact on an individual business would depend significantly on the generosity of existing health care coverage offered,” the analysts wrote.

The $24 billion estimate for the cost of a single-payer system did not include existing spending on Medicare, by the Veterans Administration and the military healthcare system, the analysts said.

The spending could grow if the federal government withdrew Medicaid coverage or the state’s administration of health care billing proved costly, the analysis noted.

Current spending on health care in Maryland — including federal, state, employer and employee payments — totals about $59 billion annually.

A single-payer system would disrupt Maryland’s unique approach to paying for health care.

The state and federal government have entered into an “all-payer” contract in which the federal government provides about $1.8 billion more in funds than it would otherwise for Medicare, the government health system for older Americans.

That contract would be voided if the state moves to a single-payer system, said Gene M. Ransom III, CEO of the Maryland State Medical Society. Ransom, who represents doctors across the state, said he worries about the disruption caused by a shift toward a single-payer system. He thinks it will cost much more than the state analysts say.

If the current deal with the federal government is tossed out, Maryland could lose funding for the new Prince George’s County hospital, Ransom said.

“I have a small percentage of doctors who really want to do single-payer,” he said. “I have more who don’t. This would be a major, major change. I’m really worried about these practical aspects.”

Jealous has argued that Maryland is in a better position than other states to create a state-based version of Medicare that would serve people of all ages.

Jealous’ MD-Care plan calls for services that go well beyond traditional Medicare and Medicaid. He would include, among other things, comprehensive mental health care benefits, as well as vision and dental care.

He said his proposed program would build on Maryland’s “all-payer” system, which requires that all insurers pay a standard rate for hospital services.

The system, which has support in both parties, saved an estimated $429 million between 2013 and 2016 and held the growth of Maryland health care costs below the national average, according to the state health department.

Other states have struggled to implement single-payer health care systems.

In California, efforts to set up a Medicare-for-all system have stalled in its Democratic-dominated legislature.

In Vermont, Democrat Peter Shumlin won the governorship in 2010 on a promise to set up a single-payer system. But in 2014, he abandoned the plan, saying the tax rates Vermonters would have to pay for such a system would be “staggering.”

Former Maryland state Del. Heather Mizeur, who is known as an expert on health care policy, said she agrees with most of Jealous’ platform. During her own run for the Democratic nomination for governor four years ago, Mizeur advocated raising the minimum wage, reforming the criminal justice system and legalizing marijuana — much as Jealous is now.

But Mizeur said she does not support a single-payer health care system at the state level.

“Ben Jealous and I agree on a vast majority of progressive ideas to move Maryland forward, but a state-based single-payer health plan is not one of them,” she said. “While it is a worthwhile discussion at the federal level, it is too expensive and unworkable for a state to take on individually — especially for Maryland, given our unique situation with the long-standing federal Medicare waiver that establishes an all-payer system for our hospitals.”

Mizeur called the waiver “the backbone of our state’s health care system” that could be put at risk with the change Jealous is proposing.

“Sometimes an idea sounds great,” she said, “but when we look at the details of how it would actually be implemented, we can see that it is not a good approach.”

Baltimore Sun reporter Michael Dresser contributed to this article.

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This story was featured in The Sun's Alexa Flash Briefing on July 17, 2018.

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