JUNE 1998

NYS health funds are for consumers before providers

New York's investment in its health care system "should focus on the needs of consumers, not the appetites of providers," The Business Council's specialist in health care advised the state's health-care establishment at a recent conference.

"New Yorkers as citizens, patients, and workers have one overriding priority: accessible, affordable health care coverage," said Elliott Shaw, The Council's director of government affairs and health-care specialist.

Shaw addressed the Third Annual Health Care Conference sponsored by Empire State Report June 4 in Manhattan.

Whether New Yorkers are the primary beneficiaries of state investments in health care should be the main gauge of the value of an investment, Shaw said.

Not all state investments in health care pass this common-sense test, he added.

"For example, the 'covered lives assessment'-also referred to as the Graduate Medical Education (GME) tax-allows teaching hospitals to add a government-approved surcharge to their patients' bills."

This surcharge supports the costs of training student-physicians.

Shaw noted that New York's total subsidy for graduate medical education is $1.385 billion a year.

"But half of the young doctors educated in New York State practice in other states," Shaw noted.

"New Yorkers don't want to invest tax dollars to train doctors for Iowa or New Jersey or North Dakota."

Arguments for investing in providers regardless of benefits to New Yorkers are variations on the 'trickle-down' theory," Shaw noted.

"Hospitals, medical schools, and other providers seem to say that all New Yorkers ultimately benefit from world-class medical institutions, so just feed our providers' appetites and be confident that the return on investment will eventually 'trickle down' to all taxpayers," he said.

"New Yorkers are proud to have such excellent institutions here, but they still want our investments to benefit New Yorkers directly, not just our institutions," he said.

Shaw noted that his views were strenuously challenged by conference participants from hospitals, medical schools, research institutions, and other institutions that receive funding from state tax dollars.

June 11, 1998