|
Prescription
|
|
New York’s Medicaid
Program
Under The Pataki Administration |
|
A Report from... Assembly Speaker Sheldon Silver Assemblymember Richard N. Gottfried Assemblymember Roberto Ramirez April 1999 |
Governor Pataki’s ill-conceived Medicaid policy threatens health care for all New Yorkers and jeopardizes thousands of jobs working men and women depend on. Every year for the last five years, Governor Pataki has demanded deep cuts in the Medicaid program. His efforts to take needed dollars away from the health care system threaten care for working people, the elderly and the disabled and limit health care choices for patients and their families.
Getting
to the root of the problem: Governor Pataki’s failure to implement
promised Medicaid reforms
There is no question that cutting the cost of Medicaid is beneficial
to New York’s taxpayers. But risking the health and well-being of
our families is not the answer to cost-containment. Reforming the system
is clearly the answer — and it’s an answer the Governor has,
for the most part, ignored.
The Governor has reneged on his commitment to implement effective Medicaid
reforms — which he had already agreed to — that could save taxpayers
hundreds of millions of dollars a year. He has neglected his promise to
institute an effective Medicaid managed care program that cuts costs and
provides better health care for our elderly, disabled and needy children
and families.
Year after year, Governor Pataki has promised to enroll hundreds of
thousands more patients in Medicaid managed care — and year after
year he has fallen short. The Governor’s failure to reach his own
enrollment targets in Medicaid managed care has cost taxpayers more than
$310 million in lost savings over the past three years.
Moreover, nearly 18 months after the enactment of long-term care reforms,
he has neither promulgated regulations nor entered into contracts with
providers to implement the managed long-term care program.
Governor’s
comparison of New York’s Medicaid spending to Medicaid spending in
other states is deceptive
Governor Pataki has attempted to justify his harsh cuts with a simplistic and distorted comparison between New York’s Medicaid spending and that of other states like California and Texas. This skewed comparison ignores the factors that make New York’s program different.
• There is a real difference in costs between New York and other
states
Demographic differences between New York’s population, and those
of California and Texas, contribute to the disparity between our Medicaid
spending and theirs. New York’s Medicaid program has a higher proportion
of elderly and disabled recipients than California or Texas. These are
particularly high-cost groups. In addition, New York has higher numbers
of AIDS and substance abuse patients than either of those states.
• New York utilizes more federal funding
New York’s Medicaid spending appears high when compared with California
and Texas because we have succeeded in using Medicaid to cover services
and populations previously funded solely by the state. New York has done
this in order to take advantage of the fact that the federal government
reimburses our state for half the cost of care furnished under the Medicaid
program.
• New York’s program is higher quality and provides more
services to the elderly, disabled and families
The nursing home scandals of the mid-1970s were a wake-up call to examine
and improve care for the elderly and disabled. Since then, New York has
set higher standards for nursing home care than any other state in the
nation. This focus on quality treatment for our most vulnerable citizens
has raised the cost of nursing home care — thus raising our Medicaid
spending.
Texas and California, by contrast, have among the lowest nursing home
reimbursement rates nationally, and their nursing homes have been criticized
for delivering low quality care. In fact, California’s nursing homes
have been the subject of a U.S. General Accounting Office report which
found “unacceptable care in many homes.”
Recognizing the importance of helping frail elderly and disabled people
remain in their homes rather than costly institutions, New York is also
providing more home care than other states. In contrast, California and
Texas make home care available to a much smaller number of patients.
Governor
Pataki ignores the fact that cutting health care funding means threatening
the system — and eliminating jobs
Each state dollar eliminated from the health care system triggers additional
cuts of two federal dollars and one local dollar. These cuts compromise
quality care and — this year alone — threaten 12,000 good-paying
jobs our families depend on.
The Governor’s continued insistence on deep cuts in Medicaid, despite compelling arguments that they are damaging and unnecessary, may serve his need to mask his failure to implement Medicaid reforms. The Legislature has repeatedly given the Governor the building blocks and authority to implement real Medicaid cost reform. In 1996, the Legislature reenacted legislation permitting statewide mandatory managed care in Medicaid. And, in 1997, it enacted the Integrated Long-Term Care Financing Act, permitting the establishment of managed long-term care plans to provide an integrated continuum of care to the elderly and disabled using Medicaid and Medicare. The Governor failed to implement either one.
While he could have saved hundreds of millions of dollars using managed care, he has consistently failed to achieve enrollment targets. Today, only 626,000 of 2.3 million eligible Medicaid recipients are enrolled in managed care. This is far below the enrollment target of 1.3 million that the Governor set in each of the four previous years and even further below the 2.2 million target set forth in the Governor’s application for a federal waiver.
Although Governor Pataki says he has made implementing mandatory managed care in the Medicaid program a cornerstone of his health care agenda, his policies have hindered the growth of an effective and sustainable program. The Pataki Administration spent approximately $1.3 million on an out-of-state consultant to facilitate the transition to a mandatory managed care system — almost triple the estimated cost of the project. Despite spending $1.3 million, it took the Governor more than 2 years to obtain the federal waiver necessary to begin a statewide mandatory program. The Governor’s delay in implementing the waiver has cost the state and our local governments approximately $300 million in lost savings.
The Governor’s managed care strategy actually crippled what had
been a growing and successful managed care program. From 1991 to 1994,
enrollment in the voluntary Medicaid managed care program grew at an average
monthly rate of 4.2 percent, and between 1993 and 1994, enrollment nearly
tripled. Since September 1995, however, the program has lost approximately
62,000 participants, and enrollment in the program has been stagnant for
nearly four years (see Figure 1).
The deterioration of the program has been exacerbated by the Pataki Administration’s
dramatic reduction in managed care premiums, which has forced several
managed care plans to leave the program and others to halt enrollment
of Medicaid recipients. The only reason the program did not totally collapse
was the Legislature’s appropriation of $20 million to raise rates.
In a national comparison, the Pataki Administration’s failure to
implement Medicaid managed care is even more pronounced. Only ten states
have lower Medicaid managed care penetration than New York (see Figure
2).
Moreover, Governor Pataki repeatedly cites California as a state that
has maintained low spending in its Medicaid program — while failing
to recognize that California has been far more successful than the Pataki
Administration in moving Medicaid recipients into managed care. While
only 29 percent of New York’s eligible Medicaid recipients were enrolled
in managed care as of June 1997, 39 percent of California’s eligible
recipients were enrolled in managed care.
Similarly, the Governor’s implementation of the Integrated Long-Term
Care Financing Act has lagged far behind schedule. It took the Governor
two years to support the concept of managed long-term care and engage
in negotiations with the Legislature. And, in the 18 months since the
bill was passed, the Administration has not promulgated regulations or
entered into contracts with the entities interested in participating in
the program. Once again, savings are lost due to a lack of commitment
to reform.
|
Figure
1
Medicaid Managed Care Enrollment Pataki Promises vs. Actual |
|
|
|
 |
| Source:
Department of Health, The Partnership Plan, and Assembly staff estimates Note: "Pataki's Promise 1995" indicates levels projected under the Partnership Plan. "Pataki's actual" reflects Medicaid managed care enrollment as of 1/99. |
|
| Figure 2 |
 |
“Many items New York State counts as Medicaid appear elsewhere
in California under other names and budgets, making it appear that they
are doing more with less when in fact they are not, and what they are
doing may not be of the caliber of New York State’s program.”
• New York State Senate Majority Research Service
Demographic differences drive spending
In evaluating Medicaid spending, we must consider the uniqueness of each state’s population. Demographics contribute to the disparity in expenditures between New York, and California and Texas. For example, elderly and disabled individuals comprise 31 percent of New York’s Medicaid population, while these groups comprise only 23 percent of both California’s and Texas’ Medicaid recipients.1
The elderly and disabled clearly utilize more Medicaid services. This makes it much more expensive to meet their health care needs. Nearly 75 percent of New York’s Medicaid budget is spent on this population, even though it comprises just one-third of New York’s Medicaid recipients.
New York also has the highest number of reported AIDS cases in the country. It has more than twice as many cases as Texas and has seventeen percent more cases than California.2 The rate of AIDS cases per 100,000 population in New York is approximately triple the rates of California and Texas.3 Many AIDS patients have very high health care costs. Even AIDS patients who are relatively healthy require a daily regime of expensive medications to maintain their health.
New York also has higher expenses due to a higher number of admissions into publicly-funded drug treatment than California or Texas. In 1995, New York’s admissions to treatment per 100,000 population were nearly four times that of Texas and fifty percent higher than California’s.4
New York maximizes federal contributions to health care for the elderly,
disabled and poor
States have a choice about how to fund health care for the elderly, disabled and poor. They may pay for it with state funds or ask the federal government to share in the costs through the Medicaid program. New York has wisely chosen to provide better services with federal help under the Medicaid program.5 Texas and California have chosen a lower quality of care with less federal help. That is why New York’s Medicaid spending appears high when compared with Texas and California.
A report issued by the New York State Senate Research
Service reached the same conclusion. According to the Senate report:
Many items New York State counts as Medicaid appear elsewhere in California under other names and budgets, making it appear that they are doing more with less when in fact they are not, and what they are doing may not be of the caliber of New York State’s program.6
While condemning New York’s “high” Medicaid spending, Governor Pataki has repeatedly embraced this Medicaid maximization strategy. In each of the last four years, the Governor expanded Medicaid intergovernmental transfers. He sought and obtained a waiver to bring the former Home Relief population into the federal Medicaid program. Even though Governor Pataki recognizes that New York’s policy of maximizing the use of federally-matched Medicaid dollars makes good sense, he at the same time makes “sound bite” attacks on its cost.
California and Texas boast lower Medicaid budgets but, instead, pay for many health care services through other programs using state and local funds or smaller federal grants.
New York has attracted additional federal funds by shifting both institutional and noninstitutional care for the mentally ill (“MH”) and mentally retarded (“MR”) populations into the Medicaid program. New York currently finances the bulk of its care for these populations through Medicaid. New York has secured a home and community-based waiver from the federal government to provide a broad range of community-based services to the mentally retarded and developmentally disabled with federal financial participation. Medicaid now accounts for approximately 90 percent of the $2 billion spent annually on MR services and about 50 percent of New York’s $4.2 billion annual MH budget.
Neither Texas nor California cover services for the mentally ill and mentally retarded through Medicaid to the extent achieved by New York. Specifically, in Texas, Medicaid accounted for just 27 percent of the state’s FY 1995 operating budget for such services: about half of the funds for MR services came from Medicaid and other federal sources, while less than 10% of MH spending was Medicaid or otherwise federal.7 In California, Medicaid accounts for approximately 50 percent of the state’s MR budget and approximately 35 percent of its MH budget.8
New York’s coverage of childless adults through a Medicaid waiver, which secures federal financial participation, also distinguishes its program from California’s and Texas’. Neither California nor Texas covers non-disabled, childless adults through its Medicaid program. In California, however, counties are required by state law to cover the costs of medical care for indigent adults who are not Medicaid eligible. Instead of covering this population through Medicaid, California imposes a mandate on local governments.
Coverage for the medically needy — working families with low incomes and those with high medical expenses that “spend down” to the Medicaid eligibility level — is also scanty in other states compared with New York. In Texas, for example, a family must spend down to approximately 24 percent of the federal poverty level in order to be eligible for Medicaid. In New York, by contrast, a family only has to spend down to between 60 and 90 percent of the federal poverty level, depending on the size of the family.9 For New York to follow the Texas model would force working families into impoverishment to secure health care.
New York also covers all personal care services (a form of home care) through its Medicaid program. Although California’s Medicaid program includes some personal care, only a portion of its personal care services are funded through the Medicaid program, securing federal matching funds. The remainder of the personal care expenditures are funded entirely with state and local dollars.10
Similarly, Texas does not cover personal care through its general Medicaid program, but instead covers personal care through its home and community-based waivers and a Medicaid 1929(b) program that provides only personal care services (and not medical care) to needy disabled individuals. However, there are long waiting lists in Texas for the home and community-based waiver programs.11 In addition, Texas uses Title XX and state funds to provide personal care to needy residents.
It is clear that on the basis of maximizing federal contributions alone, simply comparing New York Medicaid expenditures with California and Texas is badly flawed.
New York emphasizes community-based care
New York’s level of Medicaid spending is also attributable to its commitment to caring for frail elderly and disabled residents in community settings. The alternatives — denying care, or putting people in institutions — have been rejected. In addition to the home and community-based waiver program for the mentally retarded and developmentally disabled discussed above, New York benefits from several other home and community-based waivers, including the Katie Beckett program for disabled children and the Long-Term Home Health Care Program. The Long-Term Home Health Care Program is the only one of its kind in the country, serving 25,000 people annually who would otherwise be placed in nursing homes or would do without necessary care.
Elderly and disabled New Yorkers and their families are much better off as a result of New York’s Medicaid policies. Following California or Texas, as Governor Pataki recommends, would be devastating.
In California and Texas, long-term care most commonly results in the institutionalization of the elderly or infirm. While Texas claims to be committed to providing care in community settings, its personal care benefits are limited. Those in need of care face long waiting lists for its home and community-based waiver programs.12 Likewise, California has initiated several home and community-based waiver programs, but they serve relatively few individuals.13
Statistics show just how few resources California and Texas have committed to community-based care. In California, only 6.3 percent of Medicaid long-term care expenditures are for home and community-based care. In Texas, only 6.5 percent of all Medicaid long-term care expenditures are for these services. In New York, the proportion of Medicaid spending on home and community-based care is nearly twice as high — home and community-based care comprises 11.5 percent of all Medicaid long-term care expenditures.14
In addition, the proportion of recipients receiving home
and community-based care in California and Texas is less than half the
proportion receiving such services in New York. In California, there
are only 47 Medicaid home health recipients per 1,000 recipients, and
in Texas there are only 30 Medicaid home health recipient per 1,000
recipients. In New York, by contrast, there are 126 Medicaid home health
recipients per 1,000.15
III. Governor’s Cuts Burden Our Already Struggling Health Care System
Taking needed funds away from the health care system not only hurts the elderly, disabled and others receiving Medicaid. It causes cutbacks that reduce health care for all New Yorkers, especially working people and their families.
The Governor proposes nearly $1 billion in cuts for hospitals
alone, and he does so at a time when New York’s hospitals are struggling
to stay afloat. Their operating and bottom line margins are the second
worst in the nation, and other important performance indicators are
no better: the hospitals’ ratio of long-term debt to capitalization,
ability to repay debt, liquidity and ability to meet short-term obligations,
and their overall financial health, rank as the worst or second worst
of all fifty states16
(see Figure 3).
Source: The Comparative Performance of U.S. Hospitals: The Sourcebook 1999; HCIA The 1998-99 Almanac of Hospital Financial & Operating Indicators; William Cleverley |
||||||||||||||||||||||||||||||||||||||||||||||||
Indicator
Hospital reductions threaten quality care
Despite tough times, measures of the hospitals’ productivity are among the best in the nation.17 New York’s hospital charges are below the national average, ranking 21st in the nation.18 Hospital length of stay and utilization is dropping considerably.19 New York City hospitals have already reduced their workforce by eight percent.20 Further reductions would result in diminished staffing levels and services, and would impair the hospitals’ ability to obtain state-of-the-art equipment and to attract the finest physicians, threatening the quality of care.
Governor’s cuts jeopardize nursing home care
Our nursing home industry — which is already losing money on its Medicaid residents — is facing deep cuts in Medicare reimbursement, as well as the Governor’s proposed Medicaid cuts. Nursing homes are being reimbursed at less than cost for Medicaid residents.21 In 1995 alone, they lost over $200 million on care reimbursed through Medicaid.22 The Governor’s proposed $515 million nursing home cut will impair them even further.
New York has historically paid nursing home rates higher
than the national average because of its commitment to providing high
quality care to elderly and disabled residents. Disregarding that commitment,
the Governor strives to bring New York down to the level of care found
in Texas and California. But the Governor fails to recognize that these
states have nursing home reimbursement rates that are among the lowest
in the country and their nursing homes have been plagued by a high incidence
of poor care.
Texas has the lowest average nursing home rates in the nation. As a
result, facilities keep low staffing ratios and have been criticized
for low quality of care.23
The Texas Legislature is considering changes in Medicaid reimbursement
to encourage higher staffing ratios and quality improvements.24
Similarly, California’s average reimbursement rate for nursing home care was approximately ten percent below the national average in federal fiscal years 1992-94.25 Advocates maintain that California’s rates cover only about three-fourths of the cost of nursing home care.26 The U.S. General Accounting Office (GAO) recently released a report criticizing California’s nursing homes. According to the GAO, “unacceptable care continues to be a problem in many homes.” Of 62 cases of resident deaths reviewed, 34 residents “received care that was unacceptable and that sometimes endangered their health and safety.” 27
Home care cuts will force patients into institutions
The home care system is likewise hard hit by the Governor’s proposed Medicaid budget. Like nursing homes and hospitals, home care providers are experiencing considerable reductions in Medicare funding. Under the federal Balanced Budget Act, home health care reimbursement was cut by $150 million in New York — a 17 percent reduction. The Governor’s proposed $229 million in home care cuts will exacerbate the impact of this federal reduction.
Moreover, home care providers’ reimbursable administrative
costs are capped, so there is little room to cut these costs. Providers
have already taken steps to contain Medicaid costs through the use of
shared aides and personal emergency response systems. In New York’s
home attendant program, more than 90 cents out of every dollar spent
by Medicaid goes to worker wages and benefits. Furthermore, reimbursement
levels are diminishing the ability to recruit and retain competent staff
at the relatively low wages the providers are able to pay. Additional
cuts in reimbursement are likely to make recruitment and retention more
difficult, resulting in lower quality of care and long waiting lists
for home care services.
IV. Cutting Medicaid Means Cutting Jobs
Medicaid funding for academic medical centers and teaching hospitals is one of the vital underpinnings of New York State’s health research and medical education infrastructure. Spending by this academic medical infrastructure totals approximately $21 billion annually and directly supports 250,000 jobs.29 When the spinoff effect is included, this industry generates over $43 billion in economic activity within New York State, including 459,000 jobs statewide, $1.85 billion in State tax revenue and at least $1 billion in local tax revenue.30 Half of the spending on the academic medical infrastructure comes from out-of-state sources, primarily federal Medicare and Medicaid funds and NIH grants.31
For many years, the John F. Kennedy School of Government
and Senator Daniel Patrick Moynihan have documented that New York State
sends more tax dollars to the federal government than it receives in
the form of programs, grants and payments. According to the most recent
report, New York State’s $14 billion balance of payments deficit
with the federal government ranks 41st in the country.32
Without the federal payments that New York receives for health care
and health care related research, its deficit would be considerably
larger.
V. Conclusion
Cost containment can be achieved, without sacrificing
quality, through real reforms already enacted by the Legislature. Governor
Pataki’s failure to implement those reforms and his proposed health
care cuts reflect a policy long on promises and short on success. They
clearly demonstrate the Governor’s lack of leadership and vision
in achieving cost containment through Medicaid reform.
2) U.S. Dept. of Health and Human Services, Public Health Service, Center for Disease Control, HIV/AIDS Surveillance Report, vol. 10, no. 1, at Table 1.
4) Office of Applied Studies, Substance Abuse and Mental Health Services Administration, TEDS (11/5/96).
5) See Holahan, et al. Health Policy for Low Income People in New York, Urban Institute 1997, 2.
6) New York State Senate Majority Research Service, Medicaid: New York State versus California - A Comparative Analysis, April 1991.
7) Wiener, et. al., Health Policy for Low-Income People in Texas, Urban Institute 1997, 52.
8) California Department of Developmental Services; California Department of Mental Health.
9) The estimated federal poverty level for a family of four in 1999 is $16,700.
10) Zuckerman, et al., Health Policy for Low Income People in California, Urban Institute 1998, 64.
11) Wiener, Joshua M, et. al, Health Policy for Low-Income People in Texas, Urban Institute, 1997, 47.
12) Wiener, Joshua M, et. al, Health Policy for Low-Income People in Texas, Urban Institute, 1997, 47.
13) Zuckerman, et al., Health Policy for Low Income People in California, Urban Institute 1998, 64.
14) AARP, Across the States: Profiles of the Long-Term Care System, 1998.
15) AARP, Across the States: Profiles of the Long-Term Care System, 1998.
16) Cleverley, William O., The 1998-99 Almanac of Hospital Financial and Operating Indicators, The Comparative Performance of U.S. Hospitals.
18) Data Advantage Corporation, Analysis of 1997 MedPAR data.
19) NYS Institutional Cost Reports.
20) New York State Department of Labor, Division of Research and Statistics, Monthly Employment and Quarterly Wages, 1999.
21) New York Association of Homes and Services for the Aging, Analysis based on NYS Department of Health data.
23) Wiener, et al., Health Policy for Low Income People in Texas, Urban Institute 1997, 49.
24) Legislative Staff, Texas House Human Services Committee.
25) Zuckerman, et al., Health Policy for Low Income People in California, Urban Institute 1998, 63.
27) GAO, California Nursing Homes: Care Problems Persist Despite Federal and State Oversight, 7/27/98.
28) Employment Review, NYS Dept. of Labor, Nov. 1998.
29) The Economic Impact of the Academic Medical Infrastructure on New York State and the New York City Metropolitan Region, A. Ilan & Associates (Feb. 1999), 19.
32) Walder, Jay H. and Leonard, Herman B., The Federal Budget and the States, Taubman Center for State and Local Government, John F. Kennedy School of Government and Office of Senator Daniel Patrick Moynihan (22d ed. FY 1997) 76, 103. The state ranking first in the nation, New Mexico, has a balance of payment surplus with the federal government.