Governor David Paterson of New York has released his 2011 budget proposal. The budget includes reforms directed at the health insurance market and $1 billion in savings from cuts to the Medicaid program
Health insurers would be required to spend 85% of premiums on medical costs
The Governor has proposed that health insurers be required to spend at least 85% of premium revenue on medical costs. The proposal would make the requirement retroactive to 2010 premium rates currently in effect.
The governor noted in his budget proposal that since the state phased out prior approval of health insurance premiums by the Department of Insurance, health insurance premiums have grown by double-digits, increasing nearly 14 percent annually in the managed care small group market.
Under the new proposal, the Department of Insurance would be authorized to review health insurance premiums rate increases in excess of 10%.
Budget proposes Medicaid cuts
The budget proposes to decrease Medicaid spending by over $1 billion. Some of the spending cuts would result from three targeted areas:
- Total payments to hospitals would be reduced and determined solely based on the costs of services provided to the uninsured, discontinuing the practice of making payments based almost exclusively on a hospital’s accounting of bad debts.
- Changes to drug purchasing programs reducing State spending and maximizing revenues by increasing drug rebates and by accessing Federal Medicare Part D coverage for New York seniors.
- Consistent with reform efforts, the State would establish quality benchmarks to reduce the level of unnecessary treatments for preventable conditions. Hospitals that perform below these standards would receive reduced reimbursement to encourage improved quality of care..
New taxes proposed on cigarettes and soda
This would include a $1.00 increase in the cigarette excise tax, and a new excise tax on beverage syrups and soft drinks – intended to lower long-term health care costs by discouraging unhealthy consumption habits that put New Yorkers at risk for obesity, diabetes, cancer, heart failure, strokes, and other diseases.
Complete budget proposal here
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