February 09, 2010

Testimony: Proposed Budget for Health and Medicaid

Source: NYSUT Legislative Department

Exec. VP Andrew Pallotta

Testimony of Andrew Pallotta, Executive Vice President, New York State United Teachers, to the Senate Finance Committee Carl Kruger, Chair, and Assembly Ways and Means Committee, Herman D. Farrell, Jr., Chair on the Proposed 2010 - 2011 Executive Budget for Health and Medicaid

February 9, 2010

Good afternoon, Chairman Kruger, Chairman Farrell, and honorable members of the Senate Finance Committee and Assembly Ways and Means Committee.

I am Andrew Pallotta, Executive Vice President of New York State United Teachers (NYSUT). NYSUT represents more than 600,000 education and health care workers statewide. NYSUT's Health Care Professionals Council (HCPC) consists of representatives of NYSUT's 13,000 professional registered nurses and other health care professionals working in public and private health care settings. Our members work in hospitals, clinics and through home health care agencies. Our members also include physicians, visiting nurses, therapists, lab personnel, school psychologists, psychologists, and registered professional school-based nurses throughout New York state. In addition, NYSUT represents over 160,000 retirees, many of whom use the state's health care system. On behalf of the HCPC and NYSUT, I thank you for the opportunity to submit testimony today on the 2010-2011 Executive Budget Proposal.

I am sure we can all agree that the key to providing critically needed health care services in a high-quality manner is having appropriately trained and knowledgeable health care professionals at every level of the health care delivery system. Having said this, NYSUT is concerned about some of the health care gap closing measures (valued at $1.9 billion) included in the Executive Budget. Many of these cuts are associated with the delivery of programs and would impact professional health care providers who: work in hospitals-especially SUNY's public teaching hospitals which have been under funded for decades (- $244.6 million in cuts and taxes); work as home care providers; (- $73.9 million in cuts and taxes) and who work in nursing homes ( - $140.2 million in cuts). Specifically, we are disappointed by cuts to the Medicaid reimbursement rates and to the increase in assessments for these health care organizations).


We strongly oppose the total elimination of the remaining FY2010 Medicaid trend factor reimbursement update (1.7 %) to hospitals ( - $26.7 million total Medicaid), home care providers ( - $25.8 million total Medicaid) and nursing homes (- $ 249 million total Medicaid). This action, unfortunately, requires the aforementioned health care facilities to absorb all inflationary increases without any cost-of-living adjustments. Such a harsh approach ignores the mix of services and heightened costs that providers offer and fails to distinguish between high and low occupancy facilities.

A large portion of the Executive's cuts to the Medicaid program also mean an equal loss of matching Federal funds. If enacted in its current form, the Executive's Budget proposal would amount to $382.1 million (gross) in decreased revenue to hospitals, $154.8 million (gross) in decreased revenue to home care providers, and $243.1 million (gross) in cuts to nursing homes. The consequences of the Executive's proposed cuts to health care professionals working in hospitals, home care and nursing homes may be: massive layoffs; elimination and sacrifice of high quality services; and, most likely, facility closings. Clearly, results of this magnitude to the health care community are unacceptable to NYSUT and to New York state citizens, who would be adversely affected by either an elimination or compromise to health care services. We ask that you work closely with the Executive on alternatives to his budget proposals.

Also, the Executive Budget seeks to dramatically increase the assessments for health care facilities which is an additional heavy financial burden to place on them. For hospitals, the Executive places an assessment on inpatient gross receipts by more than double from the previous year (0.35% to 0.75%); which results in a $130.2 million charge to hospitals. Home health care facilities and personal home care providers are also having their gross receipts assessed at double the previous year's rate (0.35% to 0.70%) resulting in the amount of $17.6 million. Nursing homes increase in gross receipts tax for services rises from 6% to 7% at a cost of $67.8 million for them. Needless to say, the act of increasing taxes for health care facilities and eliminating their cost-of-living increases can only have adverse affects for these institutions and their staff and patients.

Health Care Reform Act (HCRA)

NYSUT is always concerned about preserving funding for the Health Care Reform Act (HCRA) as it serves as the centerpiece for a myriad of health care initiatives upon which New York state's health system rely. One major component of HCRA is the recruitment, retention and professional development of nurses and other health care professionals. The nursing shortage in New York state shows no sign of improving. It is imperative for health care institutions to have the means to recruit and retain those who are willing to work in a broad range of settings. Therefore, we were pleased to see that there were no proposed cuts to this area of HCRA. In addition, we also approve of the Executive's proposal to institute a syrup-in-beverages tax and a cigarette excise tax increase which would generate $450 million and $200 million; respectively, in additional revenues for HCRA. We are optimistic that you will work to maintain increased HCRA funding so that health care services is New York state does not suffer.

There is no doubt that the state faces enormous fiscal challenges however, health care providers have already endured significant cuts as part of the state effort to close budget gaps. More must be done on the revenue side so that the budgets are not on the backs of health care workers and the patients they serve. One option we look towards is the extension of the current Federal Medical Assistance Percentages (FMAP) for Medicaid enhancement provided under American Recovery and Reinvestment Act (ARRA) (61.5% through the end of 2010) .

Senior Citizens and Prescription Drugs

Promoting affordable and accessible prescription drug coverage for New York residents and union members is a long-term goal of NYSUT's HCPC and the New York State AFL-CIO. Our organization continues to lead an on-going, labor task force to review and study ways New York state government can realize savings by controlling the escalating costs of prescription medications; especially for our seniors and retired members. Therefore, we oppose the Executive's proposal to significantly reduce coverage to those in need of the Elderly Pharmaceutical Insurance Coverage (EPIC) program through his elimination of the Medicaid/Medicare Part D Drug Wrap Elimination.

NYSUT has always had a long-standing commitment to provide for our retired members who have dedicated numerous years to the health care or the education fields. Advocating for affordable prescription drug programs for these members, both nationally and state-wide, is part of that NYSUT commitment. Most seniors are part of the Medicare/Medicare Part D programs (dual eligibility). The EPIC program provides drug coverage, to primarily low and middle income seniors, for any medications that are denied by a Medicare Part D plan. Yet, enactment of the Executive's proposed elimination of the EPIC and Medicaid wrap around coverage will force seniors to pay top dollar for necessary prescription drugs, as covered under Medicare Part D only, and may leave seniors with the inability to afford their medicine. The total amount of cuts to the Medicaid Wrap Elimination program, if enacted in the SFY 2010-2011, would be $4.3 million.

Health Reform Initiatives

We would like to thank you for enacting the Nurse Care Quality Protection Act (Chapter 422 of the Laws of 2009) last session. Your collaborative and bipartisan support with this issue showed sensitivity, respect and concern towards New York state nurses. In addition, NYSUT is also supportive of the Executive's 2010-2011 SFY proposal to:

  • Increase the Medicaid fraud target by $300 million, bringing the total collection target to $1.17 billion;
  • Add coverage for medically-needy orthodontia to the Child Health Plus benefit package; and
  • Create an Obstetric Access and Quality Pool as a way of providing funds to hospitals to assist in improving the quality of and reducing the shortage of obstetric services in hospitals ($26 million).


NYSUT's Health Care Professional Council appreciates certain reforms to the health care system proposed in the Executive Budget, however, we oppose any cuts that adversely effects the health care professional workforce and its ability to provide direct quality care to New York state residents, particularly the indigent. Such cuts to essential health care services serve only to compromise our health care professionals' ability to maintain and help the people of New York state. The state should not adopt drastic cuts to Medicaid, increase taxes to hospitals, licensed home care/personal and home care agencies completely eliminate the trend factors these entities or severely restrict a senior's ability to pay for prescription drugs.

The NYSUT Health Care Professional Council, as well as all NYSUT members, look forward to working with the legislature and the Executive to ensure that all New Yorkers have the resources necessary to insure that they receive the highest quality of care possible.

Thank you for your consideration.

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