Gov. Eliot L. Spitzer began the long-anticipated health care wars in earnest Friday, charging the state's health care system has put the needs of institutions, labor unions and insurers ahead of patients.
Spitzer vowed his budget plan for 2007, to be unveiled next week, will cover all 400,000 children now without health insurance in New York, while cutting hundreds of millions of dollars in payments to hospitals, nursing homes and drug companies.
The governor said his new administration will chart a course away from an "institution-centered" to a "patient-centered" system of care in the state.
"What went wrong is that health care decision-making became co-opted by every interest other than the patient's interest," he told a group of health care industry executives in Albany on Friday. "Government abdicated its responsibility to set standards, demand results and hold institutions receiving billions in state tax dollars accountable to the state and to the people those institutions serve."
The governor's address puts him at odds with Local 1199, one of the state's most powerful unions, and most influential industries -- not to mention a State Legislature that has beaten back many of the budget proposals Spitzer is borrowing in some form from previous governors who have tried to control health care spending.
The governor's comments came as several hundred health care workers, including about 100 from Western New York, braved a freezing Albany afternoon to stage a protest outside the Capitol against the state's plans to close or restructure dozens of hospitals and nursing homes.
Details of Spitzer's health plan were sketchy Friday; he did not, for instance, say whether he would cut back any specific services to Medicaid patients, nor did he say how the state would cut prescription drug costs. The specifics will come Wednesday when he presents his first state budget plan for the fiscal year beginning April 1.
Spitzer said his eventual goal is universal health coverage for all 2.6 million New Yorkers without insurance.
While that is unaffordable now, the governor said he will focus this year on providing coverage for 400,000 uninsured children. His plan calls for increasing the eligibility level for children residing in families with incomes up to 400 percent of the poverty level. The Children's Defense Fund said that would be the most generous eligibility level of any state.
Reactions from the industry varied Friday, depending on whether the Spitzer plans would benefit them, such as home care providers, who would see no cut in state reimbursement rates, or hit them with steep funding cutbacks, such as hospitals that are facing a freeze on Medicaid rates and cuts for physician training.
"I tend to agree with his goals. The process of getting there needs a lot of work," said Daniel Sisto, president of the Health Care Association of New York, which represents hospitals and nursing homes. He raised concerns about the attacks Spitzer leveled at a broad segment of providers.
Democratic supporters of Spitzer lauded his overall goals of increasing insurance coverage availability and a renewed focus on public health goals. But, five days before the budget is revealed, they already were casting doubt on his ability to deliver some of the savings.
Assembly Health Committee Chairman Richard Gottfried, a Manhattan Democrat who attended the speech, called it one of the most important health policy addresses he has heard from a governor in his four decades in Albany. But he said Spitzer's plans to cut payments to hospitals and nursing homes face an uphill battle in the Legislature.
Spitzer leveled attacks on past deals in Albany that have given large cash payouts to hospitals "to underwrite labor costs." He singled out a 2002 deal, brokered by the powerful Local 1199, which he said resulted in $3 billion being "pumped into the health care delivery system with little to no accountability."
"From now on, health policy, not health politics, will guide us," Spitzer said. He said he expected the plan to be opposed by the "status quo" that has benefited from the current system, and urged New Yorkers to join his side in the fight.
Before the speech, Local 1199, headed by Dennis Rivera, said it would be "unwise" to "enact the same old type of funding cuts" to providers at a time when the state is looking to reduce the number of hospitals in an industry facing a worker shortage.
Spitzer said the controversial Berger commission plan, released last fall, that calls for hospital and nursing home closings, would not have been necessary had the state been properly overseeing the health industry instead of offering huge bailouts to fund unused hospital beds.
John Klein, president of CWA Local 1168, which represents 4,300 health care workers in the Buffalo area, was among those who protested the hospital closing plan in Albany on Friday. "We feel the commission report, as written, could be devastating to health care in Western New York," Klein said.
He said the Spitzer administration should "slow down" the closing process and revisit those facilities slated to be shuttered.
Spitzer held out drug companies and insurers as among those who will have to help pay to right the state's health system -- whether by the state's saving an additional $200 million annually through an expanded prescription drug-purchasing arrangement for Medicaid or through new accountability standards placed on insurers who try to deny coverage.
Besides freezing rates to hospitals for Medicaid patients, Spitzer also wants to end the days of paying some hospitals for physician-training programs that no longer exist. He said Medicaid will no longer be used "to bail out institutions for poor management decisions or pay for unrealistic labor deals or underwrite inadequate reimbursement paid by Medicare and private health insurance companies."
Spitzer said some of the savings from his plan will help fund more community-based health initiatives that include programs to help people remain in their homes instead of in expensive nursing home settings.
He said a new emphasis will be placed on treatment plans for some of the most "medically complicated" Medicaid patients -- those people with multiple medical needs who make up 20 percent of the Medicaid population but account for 75 percent of the system's costs.
Medicaid costs the state about $45 billion this year -- nearly half of the total state budget.