Eliot's Next Fight

Big Battle For Tiny Health-Care Reform

AS he tries to bring a semblance of rationality to New York state's dysfunctional health-care system, including its $45 billion-a-year Medicaid program, Gov. Spitzer faces a much bigger battle than the one he lost this week.

Assembly Speaker Sheldon Silver and Senate Majority Leader Joe Bruno reneged on their agreement with the new governor to choose a new state comptroller from a short list of qualified candidates, rather than one from the Legislature's ranks. Why would they go along with his challenge to the health-care status quo?

After all, New York's powerful health-care workers' union - the 320,000-strong Service Employees International Union Local 1199 - is about to launch a statewide protest, including TV and radio ads, against Spitzer's health-care budget. George Gresham, the union's new leader, calls the proposal "the most devastating health-care cuts any governor has every proposed."

But this is much ado about next to nothing. A look at the fine print of Spitzer's proposed $1.2 billion in health-care savings for next year shows that the "cuts" are anything but devastating.

First, overall state spending on health-care would still rise inexorably. Next year, federal, state and local spending on Medicaid in New York would still exceed this year's total by at least $2 billion. (The feds pay about half of the Empire State's Medicaid bill, while state and county taxpayers pay the rest.) And state money devoted to the program would rise about 3 percent, likely outpacing inflation.

After the tiny changes Spitzer proposes, New York would still spend nearly as much on Medicaid as Texas and California combined.

What's more, the new governor actually proposes to expand - significantly - one piece of Medicaid: child enrollment. Spitzer would open the state's child-health-insurance program, Child Health Plus, to families who earn four times poverty-level income; this would make nearly half a million children newly eligible.

That change will surely entice some moderate-income parents to switch their kids from private insurance, provided through their jobs, to public insurance - since they'd now get a better deal from the state than from their employers.

But what about those "devastating cuts"? Spitzer proposes to freeze at this year's level payments to hospitals, nursing homes and public-health managed-care plans, rather than provide automatic hikes. He intends to revise the state's payments to fund medical-student training, so that hospitals no longer get paid more than they spend on such training.

He'd also end some subsidies to nursing homes that result in double payments for the same services, and try to ensure that Medicaid money follows real Medicaid patients at nursing homes, rather than funding other costs. He wants to slash wholesale payments for prescription drugs, too.

One more Spitzer idea that hospital and nursing-home managers and workers will hate: Noting that New York spends 70 percent of its Medicaid money on just 20 percent of its patients (mostly elderly and disabled), he'll review expensive hospitalization and nursing-home cases. Reducing hospitalizations and irrational payments to hospitals would go a long way toward cutting costs.

Again, all Spitzer is doing here is limiting growth in Medicaid and other health-care spending: Without the $1.2 billion these mostly short-term fixes will generate, Medicaid spending, for example, will top out at more than $48.5 billion next year, Spitzer estimates, partly due to higher enrollment.

Spitzer's modest savings would give him some time over the next year to construct for New York, almost from scratch, a more rational public health-care system. Under the current crazy setup, Medicaid isn't so much a health-care program for the truly needy as it is a subsidy for foundering hospitals and nursing homes. This muddled mission lies behind the fact that New York spends $10 billion more each year on Medicaid than does California - even while providing insurance for less than half as many people.

To succeed, however, Spitzer must cut through the apocalyptic rhetoric from the union and other special-interest groups, and persuade voters that the state needs real change. As in past health-care-reform battles, New Yorkers will soon face a deluge of ads claiming we're all going to die if Spitzer changes a thing.

And 1199 is one of Albany's biggest institutional lobbyists and donor bases, as well as a huge voting bloc - so it can expect ironclad loyalty from the Assembly and the Senate. The New York Public Interest Research Group reports that a full third of the $6 million spent by New York's top 16 PACs in 2004 came from groups that benefit from Medicaid money - among them Local 1199 and pharmacy interests.

And, as the remarks by the new 1199 leader show, the union believes that it's powerful enough to maintain the dysfunctional status quo in New York health care, despite the swelling cost to taxpayers - popular new governor notwithstanding.

In the eyes of the special interests, today's not Day 40 of a new era - it's Day 4,424 of the old.

This piece originally appeared in New York Post

This piece originally appeared in New York Post