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January 26, 2007

Governor Spitzer: Putting patients ahead of institutions will cut costs, improve quality in health care

New York must create a "patients first" health-care system by restraining Medicaid spending on hospitals and nursing homes, eliminating wasteful funding for graduate medical education and promoting wider use of health information technology, Governor Eliot Spitzer said.

The state will also seek to expand the Child Health Plus program to cover 400,000 uninsured children, make it easier for adults to qualify for Medicaid coverage and seek to limit pharmaceutical spending, Governor Spitzer said in a preview of the health-related budget proposals he will make next week.

New York wastes billions of dollars, and fails to deliver quality health care, because of "an institution-centered system" of care, the Governor said in remarks at the Rockefeller Institute of Government in Albany.

"Every initiative and every investment we make must be designed to put the needs of patients first," he said. "The result will be a high-quality health care system at a price we can all afford."

As an example of previous failures in policy, the Governor cited "wasteful state subsidies" for unused hospital and nursing-home beds.

"Tax dollars have been spent on empty hospital and nursing home beds instead of insuring our 400,000 uninsured children," he said. "Now we face dramatic instead of gradual change to rationalize a system in desperate need of reform."

New York spends more on Medicaid than any state in the nation -- an average of $2,215 for every state resident, Governor Spitzer said. Funding for hospitals and nursing homes is higher in New York than anywhere in the country, he added.

"Despite leading the nation in health care spending, we are not leading the nation in results," the Governor said. For example, he said, New York leads all states in the proportion of deaths due to chronic disease, and suffers from high numbers of childhood asthma and obesity.

"New York's Medicaid program has spent more than $8 billion over the last five years on graduate medical education -- $77,000 per graduate resident in 2005 compared to similar states like California that spent just $21,000 per resident," he said. "Many of those dollars are going to pay for phantom residents and doctors who don't even exist."

Since 2002, the state has pumped more than $3 billion into pay increases for hospital workers, with "little to no accountability," the Governor said.

Governor Spitzer said his first Executive Budget will propose shifting dollars away from institutions and toward better health care by freezing Medicaid rates for hospitals and nursing homes, and imposing a "partial freeze" on managed-care plans. It will stop graduate-medical education payment for "residents who don't exist," he added.

The proposed budget will target health insurers who "get away with deep discounts that don't support the hospital services their members use," the Governor said. It will also ensure that Medicare drug plans, rather than Medicaid or the state's EPIC program, pay for patients' costs where appropriate; and increase use of "clinical equivalents" in the state's Preferred Drug List.

Other budget proposals will support more coordinated care for patients with multiple medical needs, expand managed long-term care and strengthen efforts against Medicaid fraud.

The text of Governor Spitzer's remarks is available at www.state.ny.us/governor/keydocs/0126071_speech.html