New York State Assembly
Committee on Health

Richard N. Gottfried, Chair
822 Legislative Office Building
Albany, NY 12248

January 2004

  • State Senate Medicaid Proposals Would Hurt Working Families
  • Major Cuts in Governor’s Budget Expected

The recent State Senate report on Medicaid keeps the Medicaid program largely intact, which reflects a legislative consensus that New York’s Medicaid program provides urgently-needed health care and support for our health care system. But the report’s call for significant cuts in Medicaid may signal a breaking of that consensus.

Seventy percent of Medicaid spending pays for health care for the elderly and disabled, and half of the rest is for children. Medicaid provides essential funding for hospitals, nursing homes, home care agencies, and community health centers. If their funding is cut — whether by Medicaid cuts or more patients being uninsured — then staffs are cut and services are stretched thinner. Even the wealthiest patient will get poorer quality care and some people will die.

While the report talks about “fundamental restructuring” of Medicaid, and mentions many topics, most of its recommendations only vaguely refer to “encouraging” this or “expanding” that, with few specifics. Does the Senate mean to offer the Governor broad, unspecified — and unprecedented — authority to cut?

Some of the Senate proposals are in line with Assembly initiatives, including legislation to create a Medicaid preferred drug list and ease the cost of Medicaid for counties and New York City.

But some of the proposals would unfairly increase the cost of, and limit access to, care for working people and their families and senior citizens with limited incomes.

Governor Pataki’s budget proposal is due on January 20. With the state facing a multi-billion dollar deficit, he will likely propose massive cuts in Medicaid, as he has in the past. Protecting health care funding will be a top priority for the Assembly, as it has been in the past.

Richard N. Gottfried
Assembly Committee on Health


Easing local cost of Medicaid/Family Health Plus. Counties and New York City have been calling for the state to relieve them from having to pay part of the cost of Medicaid. The Senate proposes that the state pick up the local share of Family Health Plus, which is part of Medicaid. The original proposal for Family Health Plus was an Assembly bill that did not require any local share. It was Governor Pataki and the Senate who insisted on requiring local governments to pay part of the cost. I welcome the Senate’s support for the Assembly’s position on funding Family Health Plus without a local share.

Senior citizens’ income and assets. The Senate report would lower income eligibility levels and encourage seniors to strip the equity out of their life insurance policies and homes to qualify for Medicaid. The Senate’s proposals require people of modest means to impoverish themselves or go without care, or pressure family members to give up careers to care for an elderly relative. Proposals to make it harder for senior citizens to transfer assets to become eligible for Medicaid coverage for long-term care have been made for years — and repeatedly rejected by the Legislature for good reason. People who can afford lawyers can use trusts and other arrangements to get around these proposals.

Non-institutional care. The Senate report talks about “encouraging” non-institutional care – i.e., home care instead of nursing homes. But the Senate proposals to tighten the rules on spousal support and disposing of assets would actually discourage home care use.

Better management of care. The Senate report talks about better “disease management,” use of technology to manage care, etc. But effective management of care requires that a patient be covered by a plan over a period of time. Today, patients are constantly dropped from Medicaid rolls and re-enroll months later, because of outdated red tape. The Assembly has fought to simplify this process to promote stable coverage and better management under Medicaid managed care. The Senate has refused to support these reforms.

Child Health Plus and Medicaid. The Senate proposes to move some children from Medicaid to Child Health Plus. The Governor proposed this in 2003 and both houses rejected it. The main difference between Medicaid and Child Health Plus is that Child Health Plus does not cover home care services that are needed by severely disabled children. The effect of this change would be to deprive severely disabled poor children of care they need.

Preferred drug list/prior authorization. The only Medicaid providers whose services and rates of payment are virtually unregulated by New York’s Medicaid program are the ones who happen to be huge for-profit corporations — drug companies.  A preferred drug list/prior authorization program — if done right — can be an effective way to reduce what we pay to drug companies and encourage prescribers to focus on effectiveness and cost, without restricting access to drugs. The Assembly worked hard to negotiate this legislation with the Governor and the Senate, and it will be a high priority for us in 2004.

Cutting Family Health Plus. Family Health Plus, originally proposed by the Assembly, has been so successful that Governor Pataki takes credit for it. It provides health coverage to low-income working people who would otherwise be uninsured. The Senate proposal would unfairly eliminate covered services and increases costs for taxpaying New Yorkers who are barely above the poverty level. We should not do that. However, I welcome the Senate’s support for the Assembly proposal to let people above the Family Health Plus eligibility level buy into the program at their own cost.

“Right-sizing” nursing homes. Many nursing home patients could be cared for at less cost in other settings. My bill A.8815, which passed the Assembly in 2003 and is sponsored in the Senate by Sen. Ray Meier, would cut red tape so nursing homes can decrease their number of beds as patients are moved to other settings. I welcome the Senate’s support.

Medical savings accounts (MSAs). The Senate proposes to encourage MSAs, which give a tax benefit to people who put money aside to pay for higher deductibles in the health insurance. MSAs make it easier for people who are wealthier and healthier to leave the ordinary health insurance market. Unfortunately, that means more insurance policies will have higher deductibles, health insurance will be more expensive for average working people who can’t afford a high deductible, and more people won’t be able to afford insurance. MSAs may work for wealthier people, but only at the expense of everyone else.

Encouraging long-term care insurance. New York’s public-private partnership long-term care insurance program is a good program that helps hold down the cost of long-term care insurance and Medicaid’s long-term care costs. The Senate report proposes to encourage long-term care insurance, but it does not say how.

“Seamless” long-term care. The Senate report calls for “seamless” long-term care. The Legislature enacted a Managed Long Term Care law in 1998 to encourage seamless long-term care. Implementation of the law has been hobbled by the Pataki Administration. I look forward to working with the Senate in developing specific ways to overcome these administrative obstacles.

The “California” question

People often ask why New York Medicaid spends so much more than California per Medicaid recipient. There are good and important reasons.

New York has shifted most of its mental health spending into Medicaid, in order to draw down massive Federal matching funds. We’re smart to do that. California doesn’t. Mental health patients consume a lot of resources and increase our “per recipient” cost.

New York provides good care for elderly and disabled patients, including much more home health care than California. If we didn’t, many elderly and disabled people would receive no care or become impoverished paying for care, or family members would have to disrupt careers to care for them. Providing this care drives up New York’s “per recipient” Medicaid cost.

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. If we were to slash those rates, we would devastate the health care system that we all depend on.

California may call itself the Golden State, but its 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 our neighboring states like Connecticut, New Jersey and Massachusetts.

New York State Assembly
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