On December 16, New York Governor David Paterson released his budget proposal for the remainder of the current State fiscal year (SFY) and for SFY 2009–10, which begins on April 1, 2009. The Governor’s proposal, which seeks to close an estimated $15 billion budget deficit, contains $3.5 billion in health care cuts and taxes, including an unprecedented level of funding cuts to hospitals, nursing homes, and home health care providers as well as new hospital and home health provider taxes. These measures, if enacted, would result in layoffs, elimination of services and, in some cases, facility closures.
Industry in peril: In addition, the Executive Budget contains major changes in Medicaid reimbursement methodologies for hospitals, nursing homes, and home health care, which slash spending in all three sectors. In a press statement, the Healthcare Education Project (HEP), a joint project of GNYHA and 1199 SEIU United Healthcare Workers East, decried the lack of “shared sacrifice” in the budget because the Governor assumed no Federal relief despite the fact that President-elect Barack Obama and the Congressional leadership have promised billions in aid; provided for no broad-based tax increases through reform of the personal income tax despite strong public support for an increase on the wealthiest New Yorkers; provided no medical malpractice insurance reform or payer reform to help reduce provider costs so they can better absorb funding cuts; and does not share cuts equitably across all sectors of State spending. “Providing New York’s most vulnerable residents with health insurance doesn’t mean much when you also propose cuts that will quite literally destroy hospitals’ ability to care for them,” said GNYHA president Kenneth E. Raske. “And how can a budget that will force hospitals to slash services, lay off workers, and even shut their doors for good be called shared sacrifice? Who’s doing the sharing? Over 80% of nursing home revenue and home care funding comes from Medicaid. How can they sustain this? No other industry will be impacted so severely. Quite simply, this budget weakens health care in New York beyond repair.” The Governor has asked the Legislature to complete action on the budget one month early, by March 1, 2009.
Specifics: The Executive Budget includes health care spending cuts and taxes of $3.5 billion, including $799 million in hospital cuts and taxes, $424 million in nursing home cuts, and $190 million in home care cuts and taxes. Many of these are cuts to the Medicaid program, causing an equal loss of Federal funds, while Medicaid inpatient hospital cuts also trigger a loss of Medicaid HMO funding. Consequently, GNYHA’s preliminary estimate of the total hit is $1.4 billion to hospitals, $845 million to nursing homes, and $360 million to home care providers.
More harm: The Governor’s budget would also eliminate the HCRA GME pool. First, HCRA GME funding would be cut by $24.3 million for 2008 and every year thereafter. Second, the Executive Budget would cut half of the remaining $282 million in HCRA GME pool funding and transfer the other half of it—$141 million—to the bad debt and charity care pool. Because the bad debt and charity care funding is matched by the Federal government, there is no actual aggregate reduction in funding to hospitals due to the transfer; however, the funds would be allocated to teaching hospitals under a different methodology than the current HCRA GME methodology, thus redistributing the funds. The Executive Budget also contains new health care–related taxes, including a 0.7% tax on hospital gross receipts and a 0.7% tax on total home health provider revenues.
HEP responds: HEP has launched an advocacy campaign to restore many of these health care cuts in favor of shared sacrifice across all sectors.
