President Clinton last week used his line-item veto power for the first time, and among the three items he struck from the historic five-year balanced-budget law was a waiver that would have allowed New York to keep
$200 million in Medicaid payments HCFA said were improperly made.
The two sides negotiated last week in an effort to find a compromise solution. The White House floated a plan that would split the difference and allow New York to keep $100 million. However, New York officials gave the proposal a cool reception.
HCFA contends that from 1992 to 1995 New York's provider tax and donation system skirted rules implemented in 1991 to curb state Medicaid excesses. After 1995 New York changed its tax system to comply with federal regulations. The taxes in question are used to fund New York's system of charity care and a state children's health initiative.
Sens. Alfonse D'Amato (R-N.Y.) and Daniel Patrick Moynihan (D-N.Y.) inserted a provision in the budget bill that would have barred HCFA from seeking the funds.
Clinton, however, vetoed the measure, saying it unfairly benefited one state. Clinton added that the provision was not part of the agreement between GOP leaders and the White House that formed the basis of the budget bill.
But some Republican lawmakers say the White House did agree to a version of the measure during negotiations. They released a document they said was transmitted to them by the White House during budget talks that shows a version of the measure.
New York Gov. George Pataki attacked the veto, which he said would "threaten New York's ability to deliver much needed healthcare services to our children and neediest citizens."
While not offering details, Pataki said he is considering several courses of action including filing a lawsuit and working to override the veto.
Healthcare Association of New York State President Daniel Sisto also criticized the veto, which he said ultimately could cost New York hospitals money if the state is forced to make up a $200 million budget shortfall.
"(The president) could have found some other provision to veto rather than bombing a child health plan in New York," Sisto said.