A special task force has determined that President Clinton's healthcare reform plan could cost New York hospitals $6.5 billion in the first four years of implementation.
In the first year, anticipated gains would be offset by losses for a total net reduction of $1.3 billion, meaning the state's 251 acute-care hospitals would have to reduce spending by 3.5% for the year, the task force said.
The report to New York Gov. Mario Cuomo also said the state could be forced to spend an estimated $5.3 billion in the first year to provide healthcare coverage for the poor. Eventually, those costs would be offset by savings resulting from lower healthcare prices, but not before the state incurs several years of losses, it said.
So far, New York may be the only state to have undertaken a comprehensive analysis of the Clinton plan's financial impact. The analysis will enable New York to be "a better participant" in the ongoing debate over health reform, said James Tallon, president of the United Hospital Fund in New York and a member of the Governor's Health Care Advisory Board Task Force on the Clinton Health Care Plan, which produced the report.
With New York's large poor and uninsured population, "you would think that this would be one of the most-helped places," said Kenneth E. Raske, president of the Greater New York Hospital Association. Some 2.4 million New Yorkers lack health insurance coverage, according to the task force. But the Clinton administration's proposed cuts in Medicare graduate medical education, disproportionate-share adjustments and Medicaid "are major culprits in the large and negative impact in New York," he said.
Assuming that new spending for universal coverage is offset by a reduction in healthcare spending, New York state government would spend an additional $342 million in the first year of the plan's implementation and $43 million in the second. But the state would gain $317 million in the third year and $748 million in the fourth.
While lauding Mr. Clinton's plan as the only proposal containing "all the critical elements for reform," the task force also was concerned about the federal government's use of a Medicaid payment formula based on per capita income. New York's average per capita income is inflated by a small number of very wealthy individuals, limiting the federal government's share of Medicaid costs to 50%, the report said. However, if the percentage of people at or close to the poverty level were measured, New York would qualify for a 57% federal match.