New York State Senate Republicans Propose $2.5B in Cuts to Medicaid

The New York State Senate's Republican majority on Monday unveiled a proposal that would cut about $2.5 billion from the state's Medicaid program over five years with measures that include placing restrictions on prescription drug coverage and encouraging alternatives to nursing home care for seniors, the New York Times reports (Perez-Pena, New York Times, 12/23). The plan proposes to use the savings to exempt counties from paying into Family Health Plus, a program that allows some low-income residents to purchase health insurance through Medicaid. The proposal is part of a 30-page report from the state Senate Task Force on Medicaid Reform that calls for cutting the growth of the state and local shares of Medicaid costs by reducing services. Currently, the state and local governments each pay 25% of the program's $42 billion budget, nearly twice the national average on a per beneficiary basis, the Times reports. Medicaid's total cost has grown by $12 billion, or about 40%, during the last five budgets as the cost of medical services has outpaced inflation and lawmakers have expanded the program, according to the Times. With the $2.5 billion in proposed cuts, the state would realize an estimated $1.6 billion in savings over five years, and local governments would save about $900 million (McKinley, New York Times, 12/22). Savings are estimated to grow from $185 million in 2004 to $624 million during the 2008-2009 fiscal year, according to the Democrat and Chronicle (Gallagher, Rochester Democrat and Chronicle, 12/23). The task force's plan includes more than 40 proposals to reform the state's Medicaid program, including measures to:

• Create a preferred drug list for Medicaid so the state can negotiate lower drug prices with manufacturers (Rau, Long Island Newsday, 12/23). The measure would save an estimated $730 million over five years (Rochester Democrat and Chronicle, 12/23).
  


• Restrict seniors from transferring assets to family members to diminish their wealth enough to qualify for Medicaid coverage of nursing home care. Currently, spouses of Medicaid beneficiaries can maintain "tens of thousands of dollars in assets" and a "modest income," which would usually disqualify Medicaid enrollment, the Times reports (New York Times, 12/23).
  


• Recover the assets of nursing home patients, which would save the state $225 million over five years (Rochester Democrat and Chronicle, 12/23).
  


• Allow more disabled people to live outside nursing homes by permitting Medicaid coverage of other types of care and assistance.
  


• Reduce some benefits and increase premiums in Family Health Plus (New York Times, 12/23). Overall, the plan's measures aimed at reducing coverage for families would produce an estimate $410 million in savings over five years (Rochester Democrat and Chronicle, 12/23).
  


• Require some Medicaid beneficiaries to enroll in HMOs.
  


• Transfer some children from Medicaid to the Child Health Plus program (New York Times, 12/23). Such transfers would reduce child health insurance expenditures by an estimated $195 million over five years (Rochester Democrat and Chronicle, 12/23).
  


• Explore importing prescription drugs from Canada (Long Island Newsday, 12/23).
  

Savings Would Fund Family Health Plus
Under the proposal, the state would use about $1 billion of the savings to pay for local governments' share of Family Health Plus. Enrollment in the program has nearly doubled to 280,000 during the past year, and its cost has increased six-fold to about $880 million annually. The proposal would also address "skyrocketing" county property taxes, which have increased at double-digit rates for the past three years, the Times reports.

Reaction
Some county executives say the plan's measures might not even "put a dent in the Medicaid burden" and suggest that the state also assume local governments' share of costs for Medicaid beneficiaries who are elderly, disabled and blind -- who make up about one-third of Medicaid beneficiaries but account for more than two-thirds of the program's costs, the Times reports. Robert Gregory, executive director of the New York State Association of Counties, said most county executives would also like to see a proposal for the state to curb the cost of prescription drugs. However, he said the plan to shift the cost of Family Health Plus to the state is "certainly a good start." Gov. George Pataki (R) has not yet decided whether he supports a state takeover of Family Health Plus, but he has "agreed in principle" to cut the cost of Medicaid to save local governments money, according to spokesperson Suzanne Morris, the Times reports (New York Times, 12/22). Currently, a task force commissioned by the governor is studying health care spending (Rochester Democrat and Chronicle, 12/23). Pataki's aides added that he will recommend Medicaid cuts in his executive budget. However, the Senate proposal, combined with county executive pressures to curb medical costs, will "make it harder for [Pataki] to compromise this year with the Assembly Democrats," the Times reports (New York Times, 12/22). Assembly Health Committee Chair Richard Gottfried (D) said he supports many of the suggestions but finds others, such as encouraging seniors to use life insurance benefits to pay for long-term care, "very cruel to senior citizens of limited means" (Long Island Newsday, 12/23). He added, "While the report talks about 'fundamental restructuring' of Medicaid and mentions dozens of topics, most of its 'recommendations' only vaguely refer to 'encouraging' this or 'expanding' that, with few specifics" (Rochester Democrat and Chronicle, 12/23). A coalition of groups including Planned Parenthood, the Federation of Protestant Welfare Agencies, Gay Men's Health Crisis and the Coalition for the Homeless released a statement that called the report "a flawed plan that will deny health care to many needy New Yorkers, damage our health care system and cost more in the long term" (New York Times, 12/23).

Editorial
"Taxpayers can expect little relief from ... soaring health care costs any time soon" because the task force's plan, heralded as a "fundamental restructuring of Medicaid in New York," offers few savings, few financial details of how the measures would result in savings and several proposals that "call for merely 'exploring' new plans," a New York Post editorial writes. The editorial continues, "Despite six months of meetings, more than 1,000 pages of documents and consultations with representatives in every relevant field, the best the Senate panel on Medicaid reform could come up with was a few hundred million dollars a year in savings -- on a $42 billion program!" (New York Post, 12/23)