The Pennsylvania Health Care Plan: Impact and Implementation

by Gerald Friedman, Ph.D., Professor of Economics, University of Massachusetts – Amherst

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Executive Summary:
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 has 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 the 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 well 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.
Legislation was introduced March 19th in the Pennsylvania Senate as SB 400:

Click to access EISExecutiveSummary.pdf

Full report (38 pages):

Click to access EconomicImpactStudy3513.pdf


Categories: Healthcare

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