New York Gov. David Paterson has proposed $1.8 billion in cuts to Medicaid and other healthcare spending over the next two years.
The proposed cuts are part of Paterson's deficit reduction plan that is intended to eliminate New York's $1.5 billion current-year budget shortfall and protect against further declines in revenue. Paterson also said he wanted to "make a down payment" on the 2009 deficit.
The Paterson plan includes reducing reimbursement rates and eliminating trend factor increases across all sectors, recouping Early Intervention overpayments from New York City, using unspent Graduate Medical Education funds for financial plan relief and discontinuing funding for several HCRA programs.
Paterson also wants to increase assessments levied upon the insurance industry.
According to the governor's office, the healthcare cuts would amount to savings of $572 million in 2008-09 and $1.2 billion in 2009-10.
"The deficit reduction plan I have put forward today represents a series of difficult choices across virtually every area of state spending," said Paterson. "The only way we are going to overcome this unprecedented crisis is through shared sacrifice.
Paterson said that even after the spending reductions, 2008-09 Medicaid spending is expected to increase over the next year by $145 million, or 1 percent, to $15.3 billion, and by $1.5 billion, or 10 percent, in 2009-10.
"The unfortunate reality is that many worthy programs with laudable goals, some of which I have supported in the past, will have to experience reductions in funding," said Paterson. "With the state facing the largest deficits in its history, we have no other option but to make these tough but necessary choices."