An economic analysis released in February by the Massachusetts Campaign for single payer healthcare, or Mass-Care, offers some details.
Rising health care costs and the federal government’s failure to extend Affordable Care Act subsidies has reinvigorated efforts to implement universal health care in Massachusetts.
“The changes to the ACA on the federal level, and the increase in premiums and the end of subsidies is also creating more panic on the state level,” Rep. Lindsay Sabadosa, D-Northampton, said in an interview. She is a co-sponsor of a measure sitting in the Legislature’s Committee on Health Care Financing to establish a Medicare for All system in Massachusetts.
“Health care costs and the provision of health care services are really at a breaking point,” Sabadosa said. “We’re hearing from doctors who can no longer afford to stay in business. We’re seeing hospitals across the state closing. We’re seeing patients waiting longer and longer and longer to see a doctor or a nurse or get treatment, and then simultaneously we’re seeing health care costs continue to go up.”
An economic analysis released in February by the Massachusetts Campaign for single payer healthcare, or Mass-Care, offers some details.
“The United States as a country consistently underperforms comparable countries in both health outcomes and the cost of care,” said Auden Cote-L’Heureux, a UMass Amherst graduate now a masters student in economics at the University of Bonn in Germany. “If you look at comparable countries, we pay way more per capita for health care, and we have worse health outcomes, including lower life expectancy.”
At the same time, health care costs are a major concern for employers, especially small business owners.
“We’ve consistently heard from our members, particularly our small-employer members, that health care and health insurance costs are always near the top of the list in terms of cost concerns,” said Bill Rennie, senior vice president of the Retailers Association of Massachusetts.
Rennie said that members of the association, which represents the interests of small businesses in Massachusetts, have experienced a years-long struggle “where they face a double-digit increase in their health insurance premiums. So we’re constantly searching for solutions and looking at ways to lower their costs.”
A single-payer system is one way to do that, said Cote-L’Heureux.
“In 2026 the state is likely to spend about $126 billion on health care. If single-payer were implemented in 2026, we could eliminate $55 billion of unnecessary spending.”
According to Mass-Care’s analysis, implementing statewide Medicare for All would eliminate $54.5 billion in state spending on administrative costs and physician, hospital, and drug prices. A total of $24.7 billion of that savings would go to “expanding coverage and correcting underpayment of Medicaid services,” while the rest would be filtered back into the economy.
Most Bay Staters would financially benefit too; under the measure, every Massachusetts resident earning under $500,000 per year would save money. According to Mass-Care, over 98% of Massachusetts households would spend less on health care than they do now.
“As a proportion of their income, low-income people pay much more in premiums, deductibles and co-pays than high-income people, and the impact of this is identical to the impact of a regressive tax,” said Cote-L’Heureux. “And by switching to single-payer, we would effectively adjust that regressive tax, which currently goes by the name of premiums, deductibles and co-pays, to become a fair tax.”
“Single-payer would, by default, increase equality of access to health care in Massachusetts,” he said.
This is not the first time that a state has attempted to implement a universal health care plan. In 2011, the Vermont Legislature implemented Green Mountain Care, the first state-level single-payer health care system in the United States. Despite initial optimism, the plan was abandoned in 2014 due to the state’s inability to find funding for it.
“Vermont got the closest look at it, but never did implement it,” said Rennie. “It’s not an idea that’s going away, but I just don’t think any state could do it on their own.”
Proponents of the Massachusetts bill say that the state won’t run into the same problems that Vermont did. According to Cote-L’Heureux, “one of the big strengths of the current bill in Massachusetts is that there’s a clear revenue plan.”
The bill would create the Massachusetts Health Care Trust to administer single-payer health insurance, and collect and manage the system’s finances. Universal health care in Massachusetts would require $46 billion in funding; to attain it, the bill would implement five payroll taxes, each with a $20,000 exemption.
The bill would establish a 7.5% tax on small employers, an 8% tax on large employers (businesses with more than 100 employees), a 2.5% income tax on employees, a 10% income tax on self-employed people, and a 10% tax on non-payroll income.
Rennie suggested a tax increase portends doom for the state economy.
“The system in the bill would be funded by a system of new payroll taxes on employees and the self-employed. So kind of dedicated payroll taxes to replace what we’re spending on insurance premiums and out-of-pocket spending,” said Rennie.
“We think that would have a very devastating, kind of killing, effect on the economy, and it would be something that would incentivize businesses and employees to bleed the state.”
He also cited the role of health care providers in the cost equation.
“Cost is still the primary concern that we really need to try and get a hold of,” said Rennie. “And from our point of view, a lot of it’s on market control of certain providers.”
It was a sentiment shared by Lora Pellegrini, CEO of the Massachusetts Association of Health Plans, which represents insurers, in a statement to the State House News Service following a public hearing on the bill last year.
“Mandating a one-size-fits-all, government-run health care system would eliminate meaningful health care choices for patients and require dramatic tax increases on residents and employers across the Commonwealth,” Pellegrini said.
“It would also jeopardize the significant progress Massachusetts has made in achieving near-universal coverage and divert attention from the urgent work needed to control the actual drivers of rising health care costs, namely, unchecked provider prices and the skyrocketing cost of prescription drugs.”
To others, a tax increase would simply save people money.
“For a lot of people that’s a scary idea, that they’re going to see their taxes go up in order to pay for health care for everybody,” said Cote-L’Heureux. “If we compare the taxes that individuals will pay under single-payer to the amount that individuals are paying right now for health care through premiums, deductibles and co-pays, there is no comparison. Individuals will be paying much less through taxation than they currently do.”
Sabadosa pointed out efforts by Group Insurance Commission, which manages health care coverage for state employees to rein in costs.
“We’re seeing members of the GIC working really hard to try to keep the cost-sharing down for those plans, to keep full coverage that they’ve had, as plans are trying to shed different treatments in order to save money.”
Cote-L’Heureux was blunter.
“We’ve seen health care prices increase much faster than the rate of inflation over the last 20, 25 years. If health care costs were only increasing because it costs more for hospitals and physicians to treat patients, the increase in health care costs should be much closer to the level of inflation,” he said. “We’ve seen huge increases in profits by insurance companies and, especially in Massachusetts, monopoly profits among insurance companies and hospitals.”
Sabadosa said that ultimately, “Change scares people, but at the same time, change is very necessary.”