NY Medicaid Reform Push

Governor Believes New York Should have Highest Quality Health Care System in the Country, Not Just the Most Expensive

A Policy Memorandum released today by Joseph Baker, Governor David A. Paterson’s Deputy Secretary for Health and Human Services, said that New York’s Medicaid costs are, by far, the highest in the country without providing the results patients deserve.

The health care proposals included in Governor Paterson’s Executive Budget will expand coverage and reduce costs, while providing better results for patients.

Baker writes: “New Yorkers deserve an honest, substantive discussion about why we have the most expensive Medicaid system in the country, but far too many in our State do not receive the quality health care they need.”

A copy of the memo is attached, after the jump below.

POLICY MEMORANDUM
Joseph Baker, Deputy Secretary for Health and Human Services

“The cost of health care eats up more and more of our savings each year, yet we keep delaying reform . . . [Health Care reform is] a commitment that’s paid for in part by efficiencies in our system that are long overdue. And it’s a step we must take if we hope to bring down our deficit in the years to come.” – President Barack Obama, Address to Joint Session of Congress, February 24, 2009

Over the next 27 months, New York will receive substantial assistance from the federal government in the form of enhanced Medicaid reimbursements (FMAP). In a recent speech, President Obama said that this funding will help “struggling Americans keep their health care coverage.”

Governor Paterson agrees with the President that cutting health care coverage for vulnerable New Yorkers during this difficult economic climate would be the wrong course of action. That is why his budget did not propose any reductions in coverage for Medicaid beneficiaries. In fact, it increases access to health care for greater numbers of New Yorkers by reducing burdensome, arbitrary barriers to coverage.

Reforming a Costly System to Improve Quality

Governor Paterson’s budget is simply seeking to reform a health care system that is not getting results. New York spends far more on Medicaid ($2,283) per capita than any other state and twice the national average ($1,026). But statistics show patients still aren’t getting the care they deserve. We rank first in cost, but 30th in health care quality, 21st in the percentage of uninsured adults, and 39th in avoidable hospital use.

Governor Paterson believes New Yorkers should have the highest quality health care system in the nation, not simply the most expensive one.

The problem is that our State over reimburses expensive hospital inpatient services. At the same time, we underreimburse more appropriate and less costly primary and preventative care that will help our health care system improve, save lives and avoid unnecessary expenses down the road. Governor Paterson has been clear that some enhanced funding from FMAP will be used for hospitals, nursing homes, and home care providers. But he has been equally clear that any additional funding must be tied to fundamental Medicaid reimbursement reform that incentivizes high quality care at an affordable cost.

As Peter R. Orszag, Director of President Obama’s Office of Management and Budget recently noted, “The path of fiscal responsibility must run directly through health care.” He observed the importance of “Improving the efficiency of the health system – so that we get better results for less money.” In fact, President Obama’s newly released budget makes several changes to the Medicare reimbursement system, indicating that he intends to allow states to implement much-needed reforms.

The Obama administration is taking the same path as Governor Paterson: expanding coverage while containing costs. We are fortunate that our State already makes a substantial financial commitment to health care, but our challenge is directing that funding in a rational way that promotes high-quality, cost-effective care. And as we seek to expand coverage, it is more important than ever that we ensure that we are spending our Medicaid dollars wisely.

Funneling billions of new dollars into the same old health care system will not improve outcomes for patients. We have tried that approach for decades and costs soared, while quality of care declined. Put simply, as a State, we cannot keep doing the same thing over and over again and expect a different result.

Providing States Flexibility

Additionally, the contention made by several advocate groups that every dollar in enhanced FMAP funding that the State receives must be dedicated to Medicaid is just as baseless as their assertions about the Governor’s proposed health care reforms.

Increased FMAP reimbursements allow New York to reduce its share of Medicaid costs relative to those covered by the federal government to deal with increased enrollments and loss of tax revenue, freeing up State dollars and providing general fiscal relief. Instead of paying 50 percent of the cost of the program, Washington would now pick up a greater proportion. Medicaid payments represent the largest source (42 percent) of all federal funds transferred to state government, making it a logical vehicle for fiscal relief.

In some sections of the federal stimulus bill, such as transportation or education, Congress provided express instructions for how the funding they have provided must be spent. The absence of a similar provision regarding Medicaid speaks volumes.

The only requirements for FMAP funding are that a state may not put these enhanced dollars in a rainy day fund or reduce eligibility for Medicaid beneficiaries – the latter of which is a qualification that Governor Paterson’s original Executive Budget already met. Clearly Congress’ intent was not to tie our hands, but provide flexible relief that each state government could use to address their unique budget needs. In fact, Congress specifically rejected an amendment pushed by the hospital industry and other health care lobbyists that would have prevented states from altering their reimbursement rates for providers, which is a critical component of the Governor’s reform agenda.

These are the facts. And the Paterson administration stands ready to defend them at any time and in any place. We once again reiterate our call for Kenneth Raske, president of the Greater New York Hospital Association, to engage in a public debate with Health Commissioner Dr. Richard Daines on the merits of the Governor’s proposed reforms. New Yorkers deserve an honest, substantive discussion about why we have the most expensive Medicaid system in the country, but far too many in our State do not receive the quality health care they need. We look forward to continuing that dialogue.

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