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Zack Hutchins
Director of Communications

December 22, 2003

Senator Bruno proposes Medicaid cost savings

Senate Majority Leader Joseph L. Bruno announced proposals to limit the growth of state spending on Medicaid and other taxpayer-funded health programs, the biggest contributors to major fiscal problems facing the state, county governments and New York City.

Under the proposal by Senator Bruno and the Senate Task Force on Medicaid Reform, the state would take over county and New York City costs for Family Health Plus, the health-insurance program Governor Pataki and the Legislature created in 1999.

“In just a year’s time, enrollment in Family Health Plus has increased 91 percent and the cost has increased 625 percent,” said Bruno. “Local governments can no longer bear the financial burden of the extraordinary growth rate in this program without compromising other essential services.

“By taking over these costs, we expect local governments to pass the savings on to taxpayers,” he said. The Senate proposal would not specifically require localities to pass those savings along to taxpayers.

Family Health Plus enrollment has risen to 283,000, and cost taxpayers $797 million from November 2002 to October 2003, according to state officials. The program offers recipients a rich benefit package including services such as prescription drugs, vision and dental care that many private and government employers find too expensive to include in their employee benefits. Unlike most employer-provided health insurance, Family Health Plus requires no co-payments, deductibles or other contributions from recipients.

New York’s Medicaid spending is roughly 2.5 times the national average per resident. If New York’s elected leaders simply brought per-capita Medicaid spending down to twice the national average, taxpayers would save more than $4 billion a year, according to The Public Policy Institute.

The Senate proposed that the existing Family Health Plus benefit package be modified and require modest cost-sharing measures, adjusted according to income. The proposal would also offer individuals above the eligibility limit a full-cost, buy-in provision.

Overall, the proposals would save state and local governments $2.5 billion over the next five years, according to Senator Bruno.

Senator Bruno also announced a proposal to establish a preferred drug list and prior authorization plan for pharmaceuticals. Those changes would save state and local governments $730 million over five years, he said.

The task force recommended expanding existing financial incentives to purchase long term care insurance and allowing acceleration of life insurance benefits; and restricting the ability of a spouse to refuse contribution to the cost of long term care for a partner.

In addition, the task force proposed developing disease management demonstration programs for the chronically ill. Disease management programs would shift the focus of Medicaid to a system that emphasizes coordinated care, according to the task force.

The task force also proposed greater use of utilization review throughout Medicaid; authorizing medical savings accounts; and a suggestion that the state “explore” unspecified tort reform.

“The recommendations of the task force envision a Medicaid system which respects patients and taxpayers, uses technology to deliver and manage effective care and not just pay bills, introduces personal involvement and responsibility on the part of the recipient, and particularly reforms the long term care system to de-emphasize institutional care and to permit responsiveness to consumer needs,” said Senator Ray Meier, a member of the task force. The reforms will also reduce taxpayer costs at the state and local levels, he said.

“This important mission statement should be the guiding light for Medicaid reform,” said Business Council President Daniel B. Walsh, a member of the advisory panel to the task force. “We will judge any action on Medicaid this year by these standards.”