State Budget Negotiations Continue And Health Care And Medicaid Will Be Addressed

William T. Stachowski

March 21, 2005

The April 1st State Budget deadline is nearing and the State Senate, State Assembly and the Governor’s office are aggressively pursuing an agreement on a State Budget that we call all agree on to end our history of late budgets. Over the years two major funding issues have played a major factor in delayed budgets, which have hurt the public’s trust in our state government. Health Care (Medicaid being a substantial part of) and Education spending, which combined consume over two-thirds of the entire state budget, have been the profound obstacles in the budget making process. However, local, state, and federal representatives fully understand that reform is needed in both health care and education programs in order to sustain these vital programs and protect our taxpayers from increased taxes and revenue enhancements.

Medicaid has recently been a major issue facing Erie County and its leadership has blamed its complete financial hardship on this one health care program for the poor, disabled and the elderly. Although the State Comptroller has ordered a report on Erie County finances, in which an analysis is due back in June, the State Legislature is taking a proactive approach to assist not only Erie County, but counties across the state who are also facing their own financial dilemmas. As part of the State Senate’s 2005-06 New York State budget proposal, we restore nearly $730 million in cuts to hospitals, nursing homes and health care that were proposed by the Governor, while also taking steps to rein in the increasing cost of Medicaid to local property taxpayers. The restored $730 million in cuts to New York’s health care system, preserves vital programs and services that help protect public health, and firmly rejects the Governor’s proposal to add new and higher taxes on hospitals and nursing homes, as well as cuts in payments for home health aides.

A pivotal part of our budget bills also include measures aimed at stemming the growth of Medicaid, including a sweeping cap on Medicaid costs to local property taxpayers, increased local accountability, an aggressive crackdown on fraud, increased emphasis on managed care and limits on some services. Additionally, in order to provide immediate relief to local governments, the Senate plan also speeds the state takeover of the Family Health Plus program. Together, these programmatic and budgetary actions will save local property taxpayers over $3.3 billion annually when fully effective. To help fund the eventual state Medicaid takeover, counties would be required to remit a set level of local revenues to the state, and be subject to new accountability standards aimed at checking excessive local spending growth. Additionally, an important component of the Senate Medicaid programs includes the creation of a state "Preferred Drug Program (PDP)" and Prior Authorization requirement similar to those used by most insurance companies. We differ with the Executive’s proposal, however, in that the State Senate plan gives doctors final say in which drugs may be prescribed to patients.

Other parts of our Medicaid reform proposal accelerates state takeover of the Family Health Plus Program for counties outside of New York City. The state would assume all local costs for the Family Health Plus Program, effective Oct. 1. We include an expansion of a Medicaid Fraud Prevention System, aimed at saving $40 million annually, and an aggressive new effort to collect as much as $75 million in overdue pharmaceutical rebates owed the state. We also propose that a modest increase in co-payments, up to a maximum of $3, by recipients for prescription drugs, and requiring pre-authorization for certain adult dental services.

As the budget process moves forward, the State Legislature will do all that we can to address the Medicaid program and protect the taxpayers from the current financial abyss that the current Erie County administration has found itself in.