Date: January 22, 2008
CONTACT: Jeffrey Gordon


Governor Spitzer today proposed fully funding access to health care for all of New York’s 400,000 uninsured children, and proposed actions to continue his multi-year effort to fundamentally reform our state’s health care system to provide higher quality service at lower costs.

“It is imperative that we continue working toward providing access to affordable health care for all New Yorkers – and that starts with insuring every child,” said Governor Spitzer. “In the absence of Federal leadership, we must move to implement a smart policy that has wide bipartisan support in New York State.”

Last year’s Budget expanded eligibility for Child Health Plus, New York’s version of the State Children’s Health Insurance Program (SCHIP), to children from families with incomes up to 400 percent of the Federal Poverty Level. Subsequently, the Bush Administration issued onerous and arbitrary new requirements that blocked New York and other states from obtaining federal support for the expansion of their children’s health insurance programs.  New York, along with several other states, is suing the Federal government to challenge the new requirements. President Bush has also repeatedly vetoed Congress’ bipartisan legislation to reauthorize and increase funding for SCHIP, making it all the more important that the State take action on behalf of its uninsured children.  

The 2008-09 Executive Budget fully funds the $19 million gap that would otherwise be left by the Federal government’s failure to fund its share of the expansion.  This effort will ensure that every child in New York has access to affordable health insurance.  Overall, the total cost of the expansion to the State will be $37 million in 2008-09.

The Executive Budget also continues reforms Governor Spitzer initiated last year to reduce unsustainable growth in New York’s Medicaid program by shifting resources to primary and preventive care from more expensive inpatient services.

In 2007-08, state Medicaid spending declined by 1.9 percent, the first decrease in nearly a decade. Building on these efforts, the 2008-09 Executive Budget recommends actions that will produce health care savings of $980 million. Over the last two years, growth in this program has averaged only 0.8 percent on a State Funds basis, compared to more than 8 percent over the five years before Governor Spitzer took office. All Funds Medicaid spending would total $46.3 billion, an increase of 2.7 percent.

“New Yorkers deserve a more efficient and affordable health care system that puts patients first,” said Governor Spitzer. “We must provide incentives that will ensure our residents get the right care, in the right setting, at the right price.”

The Executive Budget also undertakes further efforts to expand coverage. They include providing funds to allow employers to “buy-in” to the state’s Family Health Plus program, expanding coverage for Foster Care children from age 18 to 21, streamlining eligibility and enrollment processes for public insurance programs, and establishing an Elderly Pharmaceutical Insurance Coverage (EPIC) Discount Card that would be available to non-seniors and others who are uninsured and meet EPIC eligibility guidelines.

The expansion of health care coverage and care is dependent on an adequate supply of doctors and nurses. The Executive Budget seeks to address shortages in both these professions in underserved rural and urban communities. A new “Doctors Across New York” program will be created to provide loan repayment grants and other incentives to encourage doctors to practice in these underserved areas. Additionally, nursing education programs at the State University of New York (SUNY) and the City University of New York (CUNY) will be expanded to help increase the State’s capacity to educate more nurses.

Other key health care initiatives funded by the Executive Budget include $50 million to support funding for stem cell research and $15 million to address key public health and aging priorities.

Revenue will be raised by treating Health Maintenance Organizations (HMOs) as insurance companies for tax purposes.  The Budget proposes to tax HMOs at the same rate as other accident and health insurance companies since they are similar in operation to traditional health insurers and compete with these businesses.  This measure will generate $247 million on an All Funds basis in 2008-09.

Savings in the health care area will be achieved by proposals that include:

  • Medicaid Fraud:  The Executive Budget adds 75 new staff and advances other anti-fraud measures that will help the Office of the Medicaid Inspector General (OMIG) produce state savings of $590 million, an increase of more than $160 million compared to those anticipated in the 2007-08 Enacted Budget.
  • Controlling the Cost of Prescription Drugs: The Executive Budget takes several actions to ensure that the state pays the appropriate price for prescription drugs, generating savings of $172 million in 2008-09.
  • Reforming Hospital, Primary and Preventive Care Reimbursement:  Moving resources away from expensive inpatient services to more efficient and effective primary care, using Medicaid’s market power to purchase quality care, accounting for savings that will be realized from the implementation of the Berger Commission’s recommendations and reducing inflationary costs, will provide savings of $100 million in 2008-09.
  • Health Care Reform Act: The Executive Budget extends the Health Care Reform Act (HCRA) for an additional three years and recommends several proposals to ensure that it is fiscally balanced through March 2011.  These actions, which will generate $193 million in savings, include increasing the Covered Lives Assessment by $140 million, enhancing HCRA’s audit capabilities, and financing the Newborn Screening Program with insurance industry assessments rather than with HCRA funds.
  • Public Health Measures:  State savings of $124 million are achieved in 2008-09 by eliminating a cost-of-living adjustment for Early Intervention providers, recouping Early Intervention overpayments, and realizing other efficiencies.
  • Long-Term Care System: A portion of the financing for the nursing home rebasing initiative, authorized in 2006-07 but not yet implemented because the required Federal approval has not been secured, will be recouped by the state, and the remaining funds to be released in 2008-09 will be disbursed.  In total, State savings of $152 million will be generated in 2008-09. The Executive Budget also establishes a Home Care Advisory Council to propose long-term reforms to provide more effective treatment and service.
  • Other Savings Initiatives: A total of $79 million in other savings initiatives are recommended. These include modernizing the Medicaid Utilization Threshold Program, improving the management of health care transportation programs, limiting managed care premium increases and developing other initiatives to better coordinate care.