December 16 Budget Proposal Expected to Address $14B+ Gap, Including Current Year Deficit

Last week, members of the New York State Legislature gathered in Albany for the second special economic session called by Governor David Paterson this year to address the worsening State budget deficit. However, unlike the first special session held in August, which resulted in $1 billion in State savings through the next State fiscal year, including $505 million in health care cuts, the November 18  session was cancelled after it became clear that the Governor and legislative leaders could not reach agreement on new cuts. 

The debate centered on Governor Paterson’s proposed cuts and new taxes, which he released on November 12. The Governor’s proposal included $572 million in health care cuts for the remainder of this State fiscal year, which ends on March 31, 2009, on top of $128 million cut in August and $763 million in April. The Governor proposed major cuts to hospitals, nursing homes, and home care, as well as the reinstatement of the 0.7% gross receipts tax on hospitals. The proposed provider cuts included elimination of the remaining 2008 Medicaid trend factor and the 2009 trend factor; an 8% reduction in Medicaid inpatient hospital and nursing home reimbursement rates for the remainder of the State fiscal year and a 1% cut in home care rates; a 2% reduction in Medicaid inpatient hospital and nursing home reimbursement rates for the next State fiscal year and a 1% cut in home care rates; cuts in graduate medical education (GME) funding; cuts in public hospital and nursing home recruitment and retention funds; and cuts in home health reimbursements for administrative costs.

GNYHA Response: While recognizing the need to reduce spending during the State’s time of great economic stress, GNYHA and 1199 SEIU United Healthcare Workers East, our Healthcare Education Project (HEP) partner, opposed the Governor’s proposal because it fell alarmingly short of any definition of “shared responsibility.” (See HEP ad at left). GNYHA testified to this effect at an Albany hearing of the Assembly Ways and Means Committee on November 14 (to view GNYHA’s full testimony please visit www.gnyha.org). In addition, GNYHA President Kenneth E. Raske and 1199 SEIU President George Gresham sent a letter to each member of the New York State Legislature expressing their opposition to the Governor’s plan as proposed. “For the third time this year…and despite education spending finally being on the table, health care is being targeted to shoulder a deeply disproportionate share of budget cuts—cuts that will severely compromise access to care,” the letter stated. “Indeed, the education ‘cuts’ being sought are merely a reduction in proposed spending increases.” Mr. Raske and Mr. Gresham went on to point out that because the Governor’s plan did not access the State’s rainy day funds, increase personal income taxes on the wealthiest New Yorkers, reduce hospital costs by reforming the medical malpractice insurance system, or require health insurers to dedicate more of their bloated profits to balancing the State budget, the proposal should be rejected.

Next Steps: The Governor has announced that he will release his budget proposal for State fiscal year 2009–10 on December 16. He has said that his proposal will eliminate the current year deficit of at least $1.5 billion and will also eliminate next year’s estimated $12.5 billion deficit. The Governor’s estimate of the deficit for next year is equal to 22% of current year State spending. GNYHA will continue to work with the Governor and the State Legislature to ensure that the budget truly reflects the shared sacrifice necessary to balance the budget without decimating important health care services for the most vulnerable New Yorkers.