In a tight budget year, New York’s hospital lobby is shooting for the moon, the public policy center of empire

As Gov. Hochul calls for cost containment next year, influential hospital lobbyists are pushing for what could be the most expensive budget Albany has ever seen.

In a joint ad campaign, the Hospital Association of Greater New York and the health care union 1199 SEIU claim that Medicaid pays providers an average of 30 percent less and called on lawmakers to close the gap.

Hospitals are asking for the required rate increases over the next four years, GNYHA President Kenneth Ruske told Crain’s New York.

An ad campaign for the health education program, jointly funded by GNYHA and 1199, did not cite a source for the 30 percent figure or estimate how much the proposed rate increase would cost.

However, any attempt to close such a large gap will come at a high cost.

Eliminating the hypothetical 30 percent deficit would result in a 43 percent increase in current payments. For hospitals alone, that means about $7 billion in increased Medicaid spending a year, $3.2 billion of which will come from the state coffers.

If a similar adjustment were made for all Medicaid providers—nursing homes, clinics, home health organizations, physicians, etc.—the price tag would be roughly $43 billion, including $19 billion from the state.

The latter amount is equivalent to a roughly 33 percent increase in the state’s personal income tax.

The GNYHA and 1199 proposal comes seven months after hospitals secured a blanket rate of 7.5 percent as part of one of the biggest spending Medicaid budgets in two decades.

In this year’s budget cycle, the state faces a projected multibillion-dollar gap between revenue and spending, which Hochul proposes closing by slowing spending rather than raising taxes.

That said, the hospital lobby wields considerable power in public policy and has a track record of winning large spending increases during financial crises. especially happened after the September 11 terrorist attacks.

There is no dispute that Medicaid, the state-federal health care program for low-income and disabled people, typically reimburses providers at lower rates than commercial insurance. Providers usually say it pays less than their actual costs.

However, the claim that Medicaid pays hospitals 30 percent below cost should be viewed with skepticism. Albany Hospital lobby has used inflated statistics in the past, and it looks like they’re doing it again with the current campaign.

There is no universal standard for measuring the cost of care, which varies from patient to patient and location, driven in part by factors within the control of providers, such as the level of compensation paid to managers, physicians and other employees.

For one benchmark used in comparison, Medicare, New York’s Medicaid rates appear relatively generous to hospitals.

a collaborative study The Empire Center and Manhattan Institute found that in 2015, Medicaid paid New York hospitals an average of 22 percent less than commercial rates, but 29 percent more than Medicare rates.

a study The federal Medicaid and CHIP Payment and Access Commission found that Medicaid’s base hospital rates in 2010 were 22 percent below average Medicare rates nationwide, but slightly higher than Medicare rates. in New York State. When copayments were taken into account, the study found that Medicaid paid hospitals better than Medicare in New York and nationwide.

Nursing homes are calling for a similar boost to their reimbursements, saying current rates cover only 75 percent of their costs.

However, the argument that nursing homes consistently lose 25 percent on care for Medicaid patients is hard to reconcile with the enormous profits some operators realize, both from their homes and affiliates.

Efforts could be made to bring Medicaid payments closer to market norms to minimize the corrosive effects of the two-tier medical system.

However, primary care, not hospitals, should be the first priority for such efforts. On average, New York’s Medicaid payments for outpatient physician visits in 2019 were just 57 percent of comparable Medicare rates, the fourth lowest rate among the 50 states.

Rate reform also needs to be coupled with broader change. Although Medicaid was intended as a safety net for the disadvantaged and disabled, enrollment in New York has mushroomed to 40 percent of the state’s population, more than half of whom live above the federal poverty level.

If less needy members could move to commercial insurance, the state would have savings to reinvest, and it could afford to consider overhauling its rate schedule without breaking the budget.