New York Governor outlines possible agreement with Healthcare Association of New York State on health care budget cuts

New York Gov. Eliot Spitzer (D) on Tuesday outlined a potential compromise with the Healthcare Association of New York State on cuts to health care spending in his fiscal year 2008 budget proposal, the Albany Times Union reports.

Spitzer's budget proposal calls for $1.3 billion in health spending reductions for FY 2008, including freezing Medicaid reimbursement rates for hospitals and nursing homes and continuing a gross receipts tax on hospitals.

The agreement would restore 75% of a 2.5% cost-of-living increase hospitals have been expecting but Spitzer's proposal would eliminate.

Partially restoring the increase would cost $136.5 million, half of which would come from the state and half would come from federal funding for hospitals.

In addition, Spitzer would allow the gross receipts tax on hospitals to expire at the end of this month as scheduled.

Removing the tax would save hospitals $136.9 million.

Under the proposed agreement, hospitals would receive Medicaid funds based on the number of beneficiaries they see, as called for in Spitzer's original budget proposal.

The agreement would add about $300 million to Spitzer's proposed budget.

Greater New York Hospital Association President Kenneth Raske said his organization opposes the agreement because it would benefit upstate hospitals more than downstate hospitals.

The agreement between Spitzer and the Health Care Association of New York State would redirect to the upstate area $24 million that otherwise would be used for graduate medical education.

The hospital association supports a plan by state Assembly Democrats that would fully restore the cost-of-living increase and eliminate the gross receipts tax (Odato, Albany Times Union, 3/21).

Republicans in the New York state Senate last week on a party-line vote rejected the health care provisions in Spitzer's budget proposal.

A proposal in the state Senate would restore most of the health care cuts (Kaiser Daily Health Policy Report, 3/13).

According to the Times Union, if an agreement on spending cuts is reached with hospitals, an agreement with nursing homes likely would follow (Odato, Albany Times Union, 3/21).