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¢hicken Little$


¢hicken Little$

April 23, 2003
Urban PolicyOther

As the battle over the state budget intensifies in Albany, so is the war of words over the airways. Advocacy groups are using aggressive radio and TV ads to scare the daylights out of New Yorkers by predicting dire consequences if some of the Gov. Pataki's proposed budget cuts go through.

But as is often the case, these ads are hyperbolic in the extreme. Nothing illustrates this more than the campaign underway by the state's powerful health-care lobby, which is trying to derail cuts to New York's bloated Medicaid system.

The handiwork of a coalition that includes the Greater New York Hospital Association and the Health Care Workers Union 1199, the campaign in- cludes an over-the-top TV ad showing a mother racing to a hospital emergency room, only to find it closed. The message: Any cuts to the Medicaid system will leave New Yorkers without crucial care.

New York's health-care lobby has long made these kinds of exaggerated prophecies, which never seem to materialize. When then-Gov. Mario Cuomo proposed Medicaid cuts back in 1991, as the state faced a steep recession, Hospital Association head Kenneth Raske predicted "a vast destruction of the health-care system." Even more irresponsibly, he warned: "People will die because of these proposals."

What happened? The state achieved about $600 million in Medicaid savings, and nothing like the predicted disaster occurred. In fact, over the next three years, Gotham's private hospitals, which form the bulk of the Hospital Association membership, added about 10,000 workers, a 7 percent gain—hardly suggesting an industry facing financial ruin.

The health-care lobby turned to scare tactics again in 1995, when Pataki proposed to deregulate prices for hospital procedures. By allowing insurers and hospitals to negotiate rates directly with one another, Pataki's plan would drive down rates so far that it would be "like an avalanche overnight," Raske claimed. "There will be major dislocation."

Pataki went ahead with the reform anyway—but no "avalanche" followed, "overnight" or otherwise. Far from letting HMOs pressure them into lowering rates unreasonably, hospitals banded together, forming muscular negotiating groups that then gained the upper hand in the market, demanding higher rates and on-time payments from insurers.

The latest ad campaign proves once again that, for the state's health-care lobby, no amount of funding is ever enough. Just three years ago, after health-care advocates spent $13 million on an ad campaign pushing for new Medicaid spending, Pataki dedicated more than $9 billion of New York's share of the federal tobacco settlement to the Medicaid system.

Not content with that porcine sum, the lobby demanded yet more—so last year Pataki pledged another $2.7 billion to help pay for private-sector hospital workers' raises. Now, barely a year later, the lobbyists are back with their usual fear-mongering, trying to stop Pataki from cutting what amounts only to a portion of the vast sums he recently added to the system.

Even before Pataki poured new billions into health care, New York had the most expensive Medicaid system in the country—spending more than twice as much per patient as other big states (like California) because it pays for so many nonessential services.

It's a crippling burden on the state and local economy. Sooner or later, New Yorkers must say "enough," and stop believing the health-care lobby's sky-is-falling nonsense.

Steven Malanga is a contributing editor of City Journal, from whose Spring issue this is adapted.