Pork Barrel at Ground Zero
In the days following the attack on the World Trade Center, emergency rooms at many New York City hospitals sat eerily silent as rescuers combed fruitlessly through the rubble for survivors. Yet the city's private hospitals have now presented a bill of $313 million for costs allegedly associated with Sept. 11. They are angling for federal money to help pay that tab.
Private hospitals are the first big New York industry to seek a handout from Washington, and already a predictable pattern is emerging. Gov. George Pataki set the tone last month when he asked Washington for an eye-popping $54 billion for New York State, including billions for dubious projects unrelated to Sept. 11. The hospitals' plan smacks of similar opportunism. More than 60% of the "losses" they claim have not occurred yet and have little to do with the terror attacks. Both requests are typical of New York's entitlement culture, which knows little about fiscal restraint and expects all misfortune to be solved with taxpayers' money.
Gov. Pataki's state bailout plan takes the most chutzpah. Beyond the $20 billion in clean-up and reconstruction the federal government has earmarked for New York, Mr. Pataki called for a host of goodies, including $12 billion to replace state and local tax revenues likely to be lost in New York's economic slowdown. This money would prop up what is already one of America's fattest state budgets, nourished by the country's highest state and local taxes. Never one to lead by example on fiscal matters, after handing this bill to the federal government, Albany's legislative leaders finished off a new state budget that increases spending by 5.5%, or about $4.5 billion.
New York State's bailout plan is also a reminder that no catastrophe is too great to be exploited for political gain. Under the rubric of economic revitalization, Gov. Pataki requested federal funds for a high-speed rail line between Schenectady and New York City that would provide far more of an economic stimulus to upstate than to Lower Manhattan. The biggest beneficiary of that project might be the governor himself, whose record on the upstate economy makes him vulnerable in next year's New York election.
These and other goodies have evoked groans in Washington, where Republicans in the House and Senate will slice and dice the governor's package. But whatever fails this time may wind up back on the table next year if the state's economy deteriorates further during Gov. Pataki's re-election campaign and he turns for help to friends in Washington.
The similarities between the Pataki bailout plan and that of the hospitals is not a coincidence. New York's hospitals are true creatures of Albany—heavily subsidized and politically savvy. They are also, as a result, among the costliest and most inefficient health-care institutions in the country.
State and local government already kick in billions of dollars a year, much of it of questionable value, to support New York's hospitals. The state, for instance, pays its medical centers about $544 million a year to subsidize doctor training even though New York has a surplus of physicians and half of those trained leave the state to practice elsewhere.
To keep the government money flowing, New York's hospitals and their chief ally—the healthcare workers union, Local 1199—have become well-oiled lobbying machines, more adept at squeezing money from government than adapting to changes in the marketplace. Last year, they spent a record $13 million successfully lobbying for a new healthcare bill that turns over $9 billion in money from the federal tobacco settlement to New York State's Medicaid system, already the most expensive in the country. One result of such largesse is high costs. The average Medicaid hospital bill in New York state is 75% greater than in California or Texas.
Like the state's own bailout package, a big chunk of the losses the hospitals are claiming have little to do directly with the terrorist attack. To fatten up their claim, hospitals are projecting a $200 million decline in revenues over the next several months as patients cancel or put off procedures, especially elective ones, as a result of the souring New York economy. Rather than trim their own expenses or cut nonessential personnel to meet this change in the marketplace, the hospitals want government to pay.
Hundreds of millions of dollars in federal doctor-training subsidies are scheduled to be cut next year. The city's hospitals have fought doggedly for the last four years to avoid those cuts, and now they are using Sept. 11 as yet another way to advance their claim.
The entreaties of the hospitals and New York State stand in sharp contrast to the approach taken by New York City Mayor Rudolph Giuliani. On the same day Gov. Pataki requested the $54 billion, Mayor Giuliani vowed to cut $1 billion out of his budget, a move that sent an embarrassed Mr. Pataki scrambling a few days later to impose a state hiring freeze. Asked what Washington could do to help the city, Mr. Giuliani has lobbied for a federal tax cut that would allow New Yorkers to keep more of their own money.
Mr. Giuliani's guiding principle has been that New York must demonstrate it is willing to help itself before it can ask others for aid. That's something the rest of the state should take to heart.