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Citizens Union

The Governor's Misguided Health-Care Cuts

Governor George Pataki’s proposed budget for health care is a devastating package that is especially cruel and insensitive to working people and their families and takes funds away from patient care. It would cut health care spending in the state by more than $1.45 billion, including direct cuts to Medicaid and increased taxes on nursing homes, hospitals, and home care agencies. The New York City health care system alone would lose over $875 million.

Many think of Medicaid as a program for poor adults. But 70 percent of Medicaid spending pays for care for the elderly and disabled, and half of the rest is for children. Medicaid reimbursements keep our hospitals, nursing homes, home care agencies, and community health centers afloat.

In previous budgets, the governor mainly tried to cut funding to health care providers, making it harder for them to serve all of us. But this year, his cuts would take coverage and services away from hundreds of thousands of less politically powerful people -- working people, the elderly and disabled adults.

Family Health Plus, the Medicaid expansion that covers low-income working adults (e.g. a family of three with a gross income under $23,000 a year) , is targeted for cuts. Governor Pataki proposes that anyone who works for a company with more than 50 employees, or who has had health coverage within the last 12 months, would be ineligible for Family Health Plus. So, an under-paid Wal-Mart worker who cannot afford health benefits would be barred.

The administration says it is doing this because large companies should provide coverage for their workers. And they should. But why penalize the workers? Does the governor think that people with low-wage jobs at big companies have the leverage to make their employers provide affordable coverage?

The budget would require people covered by Family Health Plus to pay part of the cost for doctor visits, hospital stays and even ambulance services, increasing costs for taxpaying New Yorkers who are barely above poverty. And people on Family Health Plus would no longer be covered for going to the eye doctor or dentist.

The budget would make it harder for senior citizens to qualify for Medicaid coverage for long-term care (nursing home or home care). People needing such care must spend any assets they have above a certain amount on their care before Medicaid steps in. If the person transferred assets to someone else (e.g. a family member) before applying, Medicaid counts the value of those assets as if the person still had them for three years after the transfer. The governor would extend the look-back to five years back from the date of application (not the date when the asset had been transferred). So, if an elderly person pays for a grandchild’s college education and four years later goes into a nursing home this year, the governor would deny that person Medicaid for five years.

Supposedly this would keep people who can afford their own care from taking advantage of Medicaid. Actually, it would require people of modest means to impoverish themselves to pay for care or would pressure family members to give up their careers to care for an elderly relative. People who can afford lawyers can use trusts and other arrangements to get around these proposals.

It is ironic. If you are very wealthy and die, Republicans want you to be able to leave your entire fortune to your family without any estate tax. But if you are middle class and frail, they want you to spend your life savings on health care, leaving you with little or nothing to pass on to your family.

The governor is in the right ballpark in proposing a preferred drug list for Medicaid. The only Medicaid providers whose rates of payment are virtually unregulated by New York’s Medicaid program are the drug companies. Now, the governor has proposed a preferred drug list for Medicaid. A preferred drug list/prior authorization program – if done right – can dramatically reduce what we pay to drug companies. It can encourage doctors to focus on effectiveness and cost, without restricting their patients’ access to needed drugs. But the Pataki proposal gives too much weight to cost rather than quality in determining what drugs would go on the preferred list and would allow state bureaucrats to override a physician’s judgment on what drug to prescribe a patient. In upcoming budget talks, the Assembly will work to negotiate a good system.

The budget refers vaguely to promoting "case management" of "high-cost cases." Effective management can mean better care and lower cost, but it can only be done if a patient is covered by a plan over an extended period of time. Today, people are constantly dropped from Medicaid only to re-enroll months later, because of outdated bureaucratic requirements. The Assembly has fought to cut red tape to promote stable coverage and better management of care. The governor opposes these reforms.

People often, for example, ask why New York spends so much more than California per Medicaid recipient. The implication is that we must be spending money we don’t need to. But there are good and important reasons for the difference.

For one, New York has shifted most of its mental health spending into Medicaid. We are smart to do that, because the federal government helps us pay for Medicaid. California does not do that, so its state and local governments end up paying the whole bill.

We provide good care for elderly and disabled patients, including much more home health care than California. If we did not, many New Yorkers would receive no care, become impoverished paying for care, or their family members would have to disrupt careers to care for them.

New York’s payments to hospitals, nursing homes, home care agencies, and health centers are more closely related to the real cost of providing care than California. That supports the health care system that we all depend on. If funding is cut -– whether by Medicaid cuts or more patients being uninsured –- then staffs will be reduced and services stretched thinner. Even the wealthiest patient will get poorer quality care, and lives will be in jeopardy.

California’s Medicaid program is actually one of the worst in the country –- spending less per recipient than any state, including Mississippi. New York’s Medicaid spending is not much different from neighboring states like Connecticut, New Jersey and Massachusetts.

In health care, as in education and other human services, cutting is not reform. The real solution to the inefficiencies and inequities in health care and health care financing is to move toward universal coverage with broad-based public financing. Governor Pataki’s proposed budget is a major step in the opposite direction.

Richard Gottfried is a member of the New York State Assembly. A Democrat from Manhattan, he is chair of the Assembly’s Committee on Health.

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