NCPA - National Center for Policy Analysis

Single-Payer Health Care No Panacea for Maryland

October 11, 2001

Health care for the uninsured has become a major issue in many states and now Maryland is examining ways to achieve universal coverage. The system could include expanding Medicaid (the federal-state health care program for low income families) or creating an insurance pool to cover the uninsured. However, some reform advocates would go much further and reshape the entire health care system. They suggest a multi-payer system requiring employers to either offer health insurance or pay into a government-created system for the uninsured. Others advocate a single-payer, government-financed system that would replace private health insurance and cover all Marylanders.

Applying its State Tax Analysis Modeling Program to Maryland, the Beacon Hill Institute found that all four approaches would incur major costs. Their analysts examined how each method of implementing universal health care would affect employment, payroll, tax revenues and the capital stock. (see figure)

  • A single-payer system would be the most expensive resulting in the loss of 117,531 jobs and a loss of $4.8 billion in wage income in 2002.
  • The job loss would be equivalent to an increase in Maryland's unemployment rate of 4.7 percentage points.
  • By contrast, an expansion of Medicaid to cover the uninsured would cost 30,618 jobs and a loss of $1.2 billion in wage income -- causing the equivalent of a 1.2-percentage-point increase in the state unemployment rate.
  • All four health care systems would require the state to raise additional tax revenues, say researchers, ranging from $565 million for the multi-payer system to nearly $12 billion for the single-payer system in 2002.

To fund the single-payer system the state would have to raise the average effective personal income tax rate by 233 percent, from the projected 2002 effective rate of 5.01 percent to 16.69 percent.

Source: David G. Tuerck, "Universal Health Care and the Maryland Economy: An Econometric Analysis Using the Maryland State Tax Analysis Modeling Program," September 2001, Beacon Hill Institute for Public Policy Research, Suffolk University, 8 Ashburton Place, Boston, Mass. 02108, (617) 573-8750.

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