Health Care, Spitzer, 1199 and the Hospitals:
     Why Universal Health Care Remains the Missing Piece of the Puzzle
      - Mark Dunlea

As usual, funding for health care and education were the big focal points of debate in this year’s state budget. Health care by far the bigger of the two, has drawn the lion share of controversy, including a multimillion dollar TV ad campaign funded by the hospitals and the 1199 SEIU health care union.

Defenders of the hospitals point to them as the crown jewel of the state’s health care system. They are also major centers of employment and economic stimulation in their host communities.

But the details of the actual proposals on the table got lost in the advertising blitz. Governor Spitzer had proposed what many are calling the best health care budget in decades. He called for universal health care for children, and a reduction in the number of the uninsured. But while he outlined key issues related to accountability for health care financing, he failed to propose a comprehensive solution to the problems he identified.

Spitzer also failed to outline any process for committing the state to health care for all despite strong public support for such measures. The Governor argued that he first had to put the state’s health care finances in order before he moves on the broader issue of universal health care. But since much of the health care financial problems grow out of providing health care to the 2.6 to 5.5 million uninsured (the latter the annual number), it is difficult to see how you can solve one without solving the other at the same time.

Unlike years past when Governor Pataki proposed cutting healthcare programs serving low income New Yorkers, this year, advocates for the poor praised the budget proposals. Governor Spitzer not only spared the poor from cuts in his budget, he is proposed a series of reforms to expand access to Medicaid and other public health care programs. He called for universal health care for children by increasing the income eligibility for Child Health Plus from 250% to 400% of the poverty level (in reality, a minimal investment that will fall short of the goal). His also made several proposals to reduce the number of uninsured by 50% over four years, starting with making it easier to access public benefit programs like Medicaid and Family Health Plus and proposed administrative changes that would avoid throwing people in and out of the system as their wages fluctuate from month to month.

The Governor also called for more accountability for public health dollars, focusing on the state payments made to hospitals “for” graduate medical education and Medicaid. Spitzer pointed out that these payments are often not directly tied to the actual services provided to the poor. He had called for a freeze on the trend factor (e.g., inflation adjustment) on the Medicaid reimbursement rate for hospitals (with some offsets for those hospitals most serving the poor). He called for ending the practice whereby hospitals use the state’s Medicaid payments to subsidize deep discounts they provide to private insurance companies.

Spitzer said he wanted to put “patients first”, that public dollars should be directed towards those intended to be helped by the various public health programs – the poor, elderly and disabled – rather than being viewed as a free-floating funding source that helps the hospitals deal with their overall financial needs.

Most reform groups, especially the advocates for the poor, strongly praised the Governor. They agreed that the hospitals have used their political power to win a disproportionate share of the state’s nearly $50 billion health care budget. Few would deny that politics more than sound public policy determines how the state’s health care budget is spent. While everyone publicly decries the wasteful costs of providing primary care to the insured through hospital emergency rooms, New York actually pushes people in that direction rather than relying more on the less expensive community health care services.

But many who agree with the broader health care reform principles advanced by the Governor feel that he has set up a fight (e.g., making hospitals demand that insurance companies bear a fairer share of the financial costs) without proposing comprehensive solution. They argue that the Governor should have directly taken on the power of insurance companies. The Governor did recently announce however he will be putting proposing to reinstate a requirement for prior state approval of insurance rate increases.

Many health care advocates want the Governor to eliminate the waste and bureaucracy of private health insurance by embracing a single payer system such as Medicare for All. As much as a third of health care dollars pay for the existence of private insurance – to pay for their paperwork, bureaucracy and profits. Many of these advocates feel that the state is already paying way much too money for an ineffective “sick care” system and want to both lower costs while providing quality health care to all state residents.

Spitzer is correct in pointing out how politics drives health care financing in New York. Convoluted, slight-of-hand political deals cut in the back rooms of the Capitol make money appear in ways that baffle any outside observer. The Governor, however, only targeted a couple of the irrationals foundations of public health care expenditures – rather than proposing a comprehensive solution.

A broader approach is required. Missing from the media discussion of this years healthcare funding was the Assembly’s funding for a Commission on Universal Health Care. The commission would evaluate the cost-effectiveness of the various approaches to providing health care to all (e.g., single payer, employer mandates, the Massachusetts model, Health Savings Accounts, etc.).

Even if all of Spitzer’s proposals are enacted, there will be well more than one million New Yorkers lacking coverage after four years of implementing these reforms. Without an in depth exploration of proposals for universal health care, NYS legislators might respond to calls for universal healthcare by adopting flawed ideas such as the Massachusetts plan whose unrealistic adoption of individual mandates to purchase insurance is leading to failure.