Count New York among the states eyeing Medicaid as a remedy for ailing budgets. New York Gov. David Paterson last week unveiled a plan to cut state spending for the safety net insurer by as much as $500 million for the past six months of 2008 and $1.04 billion in fiscal 2009, which begins April 1.
By doing so, New York joined California, Georgia, Mississippi and other states squeezed by a weak economy and troubled housing market to cut or consider curbing Medicaid spending in an effort to close budget gaps. Californias answer to its $17 billion budget deficit includes $1.5 billion cuts to healthcare services.
Patersons plan, which includes Medicaid cuts for hospitals, nursing homes, pharmacies and home care, would slow spending in 2008 and is expected to translate into $1.7 billion in savings the following year, the governors office said.
As a result, the plan calls for New York to reduce Medicaid hospital payments by 7% in the last six months of 2008 and by 3.5% in 2009. Another proposal would eliminate an increase for inflation. The governor also proposed restoring a fee on hospital revenue. Combined, the measures would generate $99.4 million in 2008 and double that in 2009.
Nursing homes face the greatest cuts, totaling $169.4 million in 2008 and $338 million the next year. Medicaid cuts are among a half-dozen cost-saving measures, which would also wipe out nursing home grants and cap state nursing home funding at $230 million.
New York hospitals, nursing homes and insurerswhich could see fees increase by 12% under Patersons fixmobilized quickly against the plan in advance of New York lawmakers return to Albany on Aug. 19 for a special economic legislative session.
I will fiercely oppose it, said Kenneth Raske, president of the Greater New York Hospital Association, which launched a series of radio ads against the cuts though an alliance with a New York healthcare union. We want every New Yorker to know whats at stake. Raske said New York should delay action pending the outcome of efforts in Congress to temporarily boost the federal share of Medicaid to states.
Joel Perlman, chief financial officer at Montefiore Medical Center, said the 1,002-bed New York hospital and its recent acquisition, the bankrupt 345-bed Our Lady of Mercy, stand to lose $45 million through 2009 should lawmakers adopt Patersons Medicaid measures. These cuts trouble us and the magnitude clearly would be devastating to Montefiore and neighboring Bronx hospitals, which care for a disproportionate share of Medicaid patients, he said.
Paterson targeted insurers as well with a $120 million increase to a $920 million assessment on the industry. The New York Health Plan Association, a trade group, said the governors proposed increase would add 67 cents to $19 to individual premiums and $2 to $64 for family coverage. When were trying to do things like find ways to expand insurance coverage in New York state, we shouldnt be increasing the cost for those already purchasing it, said Leslie Moran, the groups senior vice president.
New York Health Commissioner Richard Daines defended the proposals as fairly balanced across sectors and said hospitals are better positioned to handle cuts because of the states initiative, known popularly as the Berger Commission, to close and consolidate facilities and improve ambulatory access.
Hospitals will have to adjust to rocky economic conditions, he said. I just dont think were in an era where you can lock down a budget at the start of the year, he argued. That may be increasingly true across the country. States reported $40 billion in combined budget shortfalls for 2009, the National Conference of State Legislatures said in July. Thats compared with $13 billion in 2008.