Rx NY: A Prescription for More Accessible Health Care in NY

Overview

What's the best way to ensure that all New York State residents-adults and children alike-have access to affordable health-insurance coverage?

Over the past decade, the state government has answered that question by expanding publicly subsidized forms of health insurance, building on what was already the nation's most expensive Medicaid program, while maintaining insurance regulations that make private coverage both scarce and expensive.

Governor Spitzer's first major health-care initiative would carry the trend a step further, by extending Medicaid-funded health care to children in middle-class families previously considered ineligible for such assistance.

But this approach is likely to have two unintended and apparently unanticipated consequences.

First, an increased reliance on such government-subsidized programs will inevitably encourage more New Yorkers to drop their private insurance. As a result, it is likely to be far more costly than the governor expects-adding to a Medicaid budget that already equals the amounts spent by Texas, Florida, and Pennsylvania combined.[1]

Second, offering more government-subsidized coverage to more people will add to the cost pressures on private insurers that effectively subsidize Medicaid's low reimbursement rates. That will ultimately shrink the availability of affordable private insurance options, casting some New Yorkers adrift in a broken market and resulting in a smaller net reduction in the state's uninsured population.

This report offers a way to make health care more accessible and affordable for all New Yorkers without expanding Medicaid. Instead, we offer market-driven reforms to make private insurance more affordable and accessible by:

• Restoring flexibility to New York's health-insurance regulations to permit more innovative and diverse health-plan offerings.
• Creating a guaranteed-access, high-risk pool for high-cost individuals who cannot obtain coverage through their employers and may not be "insurable" in the newly competitive individual insurance market.
• Allowing low-cost, temporary health-insurance plans.
• Requiring small businesses to allow employees to pay their share of premiums with pretax income, through payroll deductions.
• Basing Medicaid income eligibility on fixed income limits rather than a percentage of the federal poverty limits, which don't take account of regional cost-of-living differences.
• Reaching out to noncitizens by targeting private insurance coverage options to them.
• Making Health Savings Account-eligible plans available in the individual-insurance market.

New York Medicaid Facts

Medicaid is a joint federal-state program, enacted by Congress in 1965, as part of Lyndon Johnson's War on Poverty, to provide health insurance for the poor, children, the disabled, and the elderly. In the 1980s and 1990s, the program was expanded to include children in moderate-income families, pregnant women, and, in states such as New York, low- and moderate-income parents and singles without children. 

As of 2008, New York's Medicaid budget totals $47.8 billion-including $23.2 billion in federal funds, $17.5 billion in state funds, and $7.1 billion in local tax support. It serves 3.4 million people. 

New York's is the most expensive Medicaid program in the country; the next largest is California, which spends $37 billion. New York spends nearly twice as much per Medicaid recipient on Medicaid as the national average, as shown in the table below:

Read the full report