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Doctoring Medicaid
Tarren Bragdon, New York Sun, 1-25-07

Tarren Bragdon, from the Manhattan Institute's Empire Center, reviews Governor Spitzer's plans for health care reform in New York State.

As Governor Spitzer plans to take on the problem of rocketing Medicaid spending on the elderly, he needs to get his focus right. In his recent State of the State address, Mr. Spitzer spoke of shifting spending away from expensive institutional care to community and home–based alternatives "so seniors can have the care they want at a price they can afford." The real challenge for the new governor is to provide seniors with the care they need at a price all New York tax payers can afford.

In 2004, New York's Medicaid spending per elderly recipient was nearly two–and–a-half times the average for other states. That amounted to $5.6 billion in added Medicaid costs for New York—roughly 20 times the amount the state expects to save by implementing the Berger Commission's recent recommendations to close and consolidate some health care facilities. In other words, if we reduced Medicaid costs, we conceivably might not have to close facilities.

At almost $43,000 per elderly nursing–home resident, the state's Medicaid expenditures on institutional care are 74% above average. But our home–care expenditures are even higher—more than double the average. Of 39 states reporting in 2004, New York had 10% of the elderly Medicaid recipients yet accounted for roughly 57% of all Medicaid home health care and 39% of all personalcare spending in the country.

The time to confront the challenge of Medicaid and the elderly is now. The Census Bureau projects that the number of New Yorkers over age 65 will increase by 454,000 by 2015. During this period, if there is no change in the current mix of Medicaid services and utilization, and assuming modest annual spending increases per recipient, the state's Medicaid spending on the elderly will rise by a whopping $8 billion, or 82%.

As policymakers look to "right–size" Medicaid, they should focus on ensuring appropriate access to Medicaid–financed services. They should not just close programs and facilities and limit access for all elderly, as all elderly are not overusing health care services...

New York Medicaid needs reform. Seniors should receive those Medicaid services that are medically necessary and independently reviewed, not just those they "want." It is to be hoped that Governor Spitzer's soon–to–be–released budget will take on this challenge.

Project FDA.
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