Economic Impact Study

Executive Summary:
Gerald Friedman, Ph.D.
Professor of Economics, University of Massachusetts – Amherst March 5, 2013 Click here to read the full EIS.

Figure 1. Rising health care costs in Pennsylvania, 1997-2012 in nominal terms and compared with costs at constant real per-capita spending.

Figure 1. Rising health care costs in Pennsylvania, 1997-2012 in nominal terms and compared with costs at constant real per-capita spending.

Pennsylvania is on an unsustainable economic path. Health care costs are absorbing a growing share of personal income. Between 1991 and 2009, spending on health care in the Commonwealth increased by $60 billion, rising nearly twice as fast as state income. Little of this increased spending can be attributed to improvements in health care. Instead, the fastest growth ha s been in administration and billing operations … while a growing number of Pennsylvanians are without adequate health insurance or access to needed care.

The Pennsylvania Health Care Plan (PHCP) would put the state on a sustainable path by controlling health care costs while giving all citizens access to quality health care. It would establish a single – payer system to finance health care — paying for all necessary medical care including hospital care, visits to doctors / nurses, occupational and physical therapy, prescription drugs, medical devices, medically necessary nursing home care and home health care. By reducing administrative costs and anti – competitive market practices, the PHCP could save $33 billion in 2014, almost 23% of existing medical spending. These savings would allow t he expansion of coverage to all Pennsylvania residents while still saving over $17 billion, or $1,335 per person. The PHCP would be funded by a 10% payroll tax paid by employers and a 3% levy on income paid by recipients . The shift from insurance premiums and out – of – pocket expenses to taxes linked with income would lower health care spending for over 80% of Pennsylvanians. Businesses and local governments would also benefit, saving on payroll costs as w ell as the premiums paid to cover the “administrative costs ” associated with private health insurance. By lowering payroll costs, the PHCP would make Pennsylvania businesses more competitive, producing an additional 120,000 – 200,000 new jobs. Click here to read the full EIS.

Figure 2. Savings (in $millions) from Pennsylvania Health Care Plan

Figure 2. Savings (in $millions) from Pennsylvania Health Care Plan

Gerald Friedman discusses single-payer health care.

 

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