January 16, 2002
Lawmakers approve huge health-care spending bill opposed by The Council
State lawmakers have approved hundreds of millions of dollars in new health-care spending intended largely to fund raises for health-care workers. The Business Council opposed the plan.
However, one provision of the original plan to which The Business Council specifically objected, a reduction in state reimbursements to pharmacies for Medicaid prescriptions, was drastically revised in the final bill.
Spending: The bill provides for new spending estimated at $1.7 billion. Government sources said specific spending components of the bill include:
- $696 million in "workforce assistance funds" for hospitals statewide.
- $475 million in aid for nursing homes.
- $39 million in aid for free-standing health clinics.
- $597 million over four years for personal health care services.
- $30 million in new state aid to nursing homes.
- $8 million in new Medicaid coverage for low-income women diagnosed with breast or cervical cancer.
- $136 million over three years for excess medical malpractice insurance for doctors.
The bill also enable low-income persons with disabilities to join or rejoin the workforce while maintaining their Medicaid coverage. And it will continue funding for the Elderly Prescription Insurance Coverage (EPIC) program, which funds reductions in prescription-drug costs for senior citizens.
Sources of funding: Lawmakers cited a number of sources of funds they said would pay for the spending. These sources include:
- A one-time gain of approximately $1 billion over three years expected from the conversion of Empire Blue Cross/Blue Shield from a nonprofit to a for-profit company.
- An increase in the state's cigarette tax ($1.11, the highest in the nation) to $1.50 per pack.
- A 3 percent increase in the Medicaid reimbursement rate that the state will seek from the federal government. If that effort succeeds, the state would receive another $1.8 billion over three years from federal taxpayers in all states.
The Council's opposition: The Business Council wrote to Governor Pataki and legislative leaders last week as reports of the privately negotiated health-care bill surfaced. In its letter The Council argued, specifically, that the proposal would:
- Impose unacceptable new tax and other burdens on our economy and our business community. In particular, The Council noted that New York's cigarette tax, already the nation's highest, would drive more consumers to lower-cost sources on Indian reservations or the Internet, further shrinking New York's percentage of packs taxed and costing convenience stores and other retailers revenues from sales to customers driven elsewhere by the tax.
- Commit the taxpayers to huge, ongoing expenditures, based on revenue hopes that are, at the outset, both dubious and temporary-and that, if anything, are likely to weaken over time.
- Address a "crisis" in hospital employment that is largely illusory.
The Council also argued that the originally reported proposal would undermine patient access to cost-effective medicines by raising costs for pharmacies by reducing Medicaid reimbursement rates for Medicaid prescriptions. The final bill did not include this reimbursement reduction.
The approved bill does not include any measures, such as those proposed last year by Sen. James Seward and Assemblyman Joseph Morelle, to enable sole proprietors to buy health insurance through business associations at rates now available to groups of between two and 50 employees. Both The Business Council and its affiliate, The Chamber Alliance of New York State, have supported this idea.