New York City Would Lose $1B for Physician Training Under Proposed Medicaid Cuts

New York City hospitals could lose more than $1 billion in state and federal funds for physician training as a result of federal Medicaid changes scheduled to take effect May 25, according to an analysis released Tuesday by the city's Independent Budget Office, the New York Times reports.

Under the new regulations, which congressional Democrats are attempting to delay for an additional year, New York City public hospitals would lose about $390 million in federal and state Medicaid funds, or 7.5% of their total budgets, and private hospitals would lose about $790 million, or 4.4% of their total revenue. The report states that an "abrupt termination" of the Medicaid funds "could cause severe disruptions to the finances of both public and voluntary hospitals, to patient care and to the city's economy." According to the Times, the losses would have "widespread ramifications" because New York hospitals train a "large share" of the nation's physicians, many of whom serve their residencies in low-income neighborhoods. In 2006, 40% of all Medicaid funds for medical training nationwide, or $1.36 billion, went to New York state. The Medicaid funds also accounted for 40% of the $3.4 billion spent on graduate medical education in the state.

Bush administration officials say the new regulations are intended to restore "fiscal integrity" to the Medicaid program, which was never intended to fund medical education. In addition, the administration says the cuts will refocus Medicaid funding on low-income beneficiaries(Hartocollis, New York Times, 5/14).