Christmas came a little late this year for New York's healthcare industry, but when it came, it showered gifts on everyone-from frontline hospital workers to the state's largest insurer, Empire Blue Cross and Blue Shield.
An election-year healthcare budget, overwhelmingly approved by the state Legislature and as of late last week awaiting the governor's signature, would offer roughly $1.8 billion in new funding over three years to directly subsidize healthcare workers' salaries and help in recruitment and retention efforts in hospitals and nursing homes. The package also guarantees there will be no new Medicaid reimbursement rate cuts for the next three years.
Meanwhile, Empire's present came in the form of a near guarantee that it will be able to realize its years-long struggle to convert to a publicly traded, for-profit company. Funding for the state's healthcare budget will come in large part from 95% of the estimated $1 billion that will be raised by an initial public offering by the insurer-a de facto approval of the conversion. The remaining 5% would go toward the establishment of a foundation to study ways to help improve healthcare to the poor.
"We're very pleased that this legislation will pass. It's an important step in moving our process to restructure forward," said Deborah Bohren, a spokeswoman for Empire, which insures 4.4 million people, primarily in New York.
Ironically, the Empire money represents one of the surer funding sources. The package also relies in part on a hoped-for increase in the federal Medicaid matching rate. In the first year alone, New York is banking on $366 million in new Medicaid funding, said Jennifer Cunningham, executive director of the Service Employees International Union's New York State Council. In the second year, the funding would increase to $706 million, and to $754 million in the third. Although the federal government has been identified as the source of that funding, the state is obligated to fund the initiative regardless of what happens at the federal level, Cunningham said.
A 6% Medicaid-reimbursable tax on nursing homes, certificate-of-need fee increases, and a 39-cent cigarette tax increase help round out the funding sources.
Brokered in large part by Dennis Rivera, president of the healthcare workers union, Local 1199 of the SEIU, the package also required some fancy footwork from the Greater New York Hospital Association and from Gov. George Pataki, who is seeking re-election to a third term this year. The bill almost ensures that the 210,000-member union will get a new three-year contract it can live with; in fact, the contract awaits only ratification by union members, Cunningham said. Although the current contract was set to expire Oct. 31, 2001, the union agreed to extend it until March 31, 2002, in the wake of the September attacks on the World Trade Center (Nov. 5, 2001, p. 4).
"It's a very complicated plan, and it is something we totally support," said Kenneth Raske, president of the GNYHA. "I believe the governor's initiative is going to be considered a guideline for initiatives across the U.S."
The agreement to allow Empire's conversion to go through represents a recent change of heart for the health workers union. Cunningham said that the union still does not "feel that there is a role for for-profit entities in the New York healthcare-delivery system," but found it increasingly difficult to find other healthcare leaders who agreed. The events of Sept. 11 made a resolution of the impasse more pressing.
"I think the bottom line is that Sept. 11 created a new ballgame. If conversion dollars can be used to prop up the healthcare industry in the state of New York, it seems like a reasonable compromise," Cunningham said.