What's New

Zack Hutchins
Director of Communications

March 31, 2005

Health Care Reform Act initially slowed spending, but New York's hospital system is growing again, report shows

Albany's Health Care Reform Act and other Medicaid reforms slowed the growth in hospital spending in the 1990s, but the growth is back, a new Public Policy Institute report shows.

"The original HCRA was a major step toward higher-quality and more affordable health care for New Yorkers," the Institute's latest Medicaid Watch '05 report says. HCRA's introduction of market forces helped push annual increases in hospital spending as low as 1.2 percent in 1997 and 1998.

But new data from the federal government show that annual increases in overall spending on hospitals rose to nearly 4 percent in 1999 and 2000. In addition, hospital employment has been growing over the past four years, the Institute said.

Despite some reforms, New York State's hospital system is still "too large, too bureaucratic," the Institute said. The system has too much capacity; keeps patients longer, on average, than other states; and focuses on dollars instead of quality of care.

The new state budget will keep in place some $1.3 billion in taxes, first imposed as part of the original HCRA legislation in 1996, to pay for graduate medical education and other costs. "The taxes were called 'temporary,' but Albany is not even considering reducing them," the Institute said.

The Public Policy Institute is publishing Medicaid Watch '05 to document the case for reforms that reduce overall costs imposed on New York's taxpayers, businesses, farmers, and county governments. All reports in the series are at www.ppinys.org.

These reports were researched and written by Robert Ward, the Institute's director of research. To interview him about Medicaid spending, telephone 518/465-7511, ext. 271.