NY Times

Pataki Aides Sketch $1 Billion in Proposed Cuts in Health Care and Medicaid Spending

January 18, 2005

By AL BAKER

ALBANY, Jan. 17 - Aides to Gov. George E. Pataki outlined

the nearly $1 billion in spending cuts on Monday that he is

proposing for health care and Medicaid, saying they include

a sharp reduction in benefits for about 340,000 people

enrolled in a health insurance program for the working

poor.

The cuts are part of the budget proposal that Mr. Pataki is

to submit to the Legislature on Tuesday. To help close a

projected budget gap of $4 billion in the fiscal year

beginning April 1, the governor is focusing in part on

Medicaid, the $44.5 billion-a-year health insurance program

for the state's low-income residents.

One of the most significant benefit reductions that the

governor is seeking in the program for the working poor,

known as Family Health Plus, is the elimination of mental

health services for adult enrollees.

In all, the Family Health Plus program would be cut about

$142 million, according to budget analysts and aides to the

governor.

The changes being proposed for the program will be among at

least $1.1 billion in savings Mr. Pataki is seeking in

health care costs, including cuts in reimbursement rates to

hospitals and nursing homes, the analysts said. Another

proposal would eliminate the Medicaid options for adults

for nonclinic dental care, podiatry, clinical psychology

service and private-duty nursing, which together would save

$65 million.

The governor is including $137 million in "administrative

efficiencies," including freezing certain premiums for

managed-care companies. Also, New Yorkers in Family Health

Plus would have to pay a $250 co-payment for hospital

visits under his plan.

Medicaid is the fastest-growing part of the state's $101

billion annual budget. Besides the cuts, Mr. Pataki is also

seeking to raise $234 million in additional taxes and

surcharges on hospitals and nursing homes, though similar

proposals have failed in the State Legislature in the past.

"This is probably one of the worst budgets I've ever seen

in terms of the impact on Medicaid, for hospitals alone,"

said Kenneth E. Raske, the president of the Greater New

York Hospital Association. He vowed to fight the cuts and

the taxes in the coming legislative session.

In proposing the cuts, the governor's aides linked them to

an initiative that would assist localities by requiring the

state to pick up a larger share of their Medicaid costs.

The plan includes New York City, where Medicaid costs are

now roughly $5 billion a year.

In New York, Medicaid costs are shared by state and local

governments, as well as by the federal government, but

local officials have been complaining that the program's

costs, growing at an average of 11 percent annually, have

placed a strain on county budgets and services and have

been a prime cause of local property tax increases.

Under the plan, a county's local Medicaid costs would be

capped on Jan. 1, 2006, at the amount it paid in 2005, plus

up to 3.5 percent or actual costs, whichever is lower. The

next year, it would be capped at the 2006 level, plus as

much as 3.25 percent of its cost. In 2008, costs could go

up only 3 percent.

In 2008, each county would face a decision: continue to pay

New York the 2007 base amount, plus up to a 3 percent

growth factor; or pay the state its 2007 base amount from

its sales tax revenue plus a cost that is equivalent to the

rate of growth of the sales tax in that county.

Each option would give the counties predictable Medicaid

costs, and the second option would help small upstate

counties where the sales tax revenue is stagnant, the

governor's aides said.

The plan could provide billions of dollars in local

government relief over the next five years, including $82.6

million next year for New York City in its first year.

In a statement, Mr. Pataki said his plan was more than

simply redistributing the Medicaid burden, but part of a

comprehensive plan to improve the state's health care

system. He also wants to create a bipartisan commission to

study the system.

Jennifer Cunningham, the political director for

1199/S.E.I.U, the health care workers' union that

represents 250,000 health care workers across New York,

warned of the impact of the cuts. "I don't think a Tom

Suozzi or an Andy Spano can afford to endorse less aid for

the already financially troubled Nassau County and

Westchester County medical centers," she said, naming the

county executives in those respective counties, who have

long expressed frustration about the growing Medicaid

burden on localities.

She said the cuts in reimbursements would be devastating.

Sewell Chan contributed reporting for this article.