White House Budget Director Says Administration Not Supporting Medicaid Increases To Fund Pataki’s Health Care Package

The Bush administration will not support New York Gov. George Pataki's (R) plan to partly fund a multibillion-dollar health care package through an increase in federal Medicaid funding for the state, White House Budget Director Mitch Daniels has said, the New York Times reports. As part of the package, the state is seeking an additional $1.8 billion in federal Medicaid payments over three years, to be gained by increasing the federal share of New York's Medicaid costs from 50% to 53%. "The federal government is shouldering half the cost in Medicaid spending now, and we're not favoring a change in that situation," Daniels said (Hernandez, New York Times, 1/18). Pataki's plan, which state lawmakers passed Jan. 16, would raise salaries for health care workers and reduce cuts in services that the governor had proposed earlier. Under the plan, the 210,000 workers covered by 1199/SEIU, a New York City hospital workers' union, would receive raises worth about $700 million over the next three years. In addition to relying on increased federal Medicaid payments, the plan would use a one-time cash infusion of most of the $1.1 billion the state will receive for the conversion of Empire Blue Cross and Blue Shield into a for-profit company. In addition, the state's cigarette tax would increase 39 cents to $1.50 to help pay for the package (Kaiser Daily Health Policy Report, 1/16).

Plan Still Possible, State Officials Say
New York still will be able to cover much of the plan even if the federal government does not increase its share of Medicaid costs, Newsday reports. The Pataki administration said that it was not expecting to receive increased Medicaid funds until October and that the higher cigarette tax and a new tax on nursing homes would fund many of the spending increases. Administration officials also believe Pataki will "ultimately convince" the federal government to increase Medicaid payments. Pataki spokesperson Michael McKeon said, "The first thing that every budget director says, ... is 'No.' We know we need to make the case, but we're confident we will" (Rau, Newsday, 1/18). He added that New York may have "better luck" in Congress, as there is a bipartisan push among governors for an increase in federal Medicaid payments. "We're confident that with that help, we can get it done," McKeon said. However, a senior aide to an unnamed, "prominent" Republican senator said the New York plan would probably be rejected, because it increases payments to benefit "a politically connected union" during an election year. "We're basically being asked to give more federal money to a local union in the form of pay raises. That will be a very hard sell," the aide said (New York Times, 1/18).