A $100 million expansion of the the state’s Health Care Reform Act (HCRA) surcharge is among the latest additions to a list of (so far) several hundred “redesign proposals” under consideration by Governor Cuomo’s Medicaid Redesign Team.

The proposal (number 264, if you’re counting) would extend the HCRA surcharge to surgery and radiological services performed by physicians in office settings.  The same idea was rejected by the Legislature last year when it was offered up by then-Governor Paterson’s as part of his 2010-11 Executive Budget.

**UPDATE** — The surcharge expansion reportedly was on the list of recommendations approved by the Team in its vote this afternoon, with the legislative health committee chairs, Assemblyman Richard Gottfried and Senator Kemp Hannon, among those abstaining.

Where would the money come from? “To the extent possible, affected third-party payors will likely pass this obligation onto physician providers by reducing payments, or onto subscribers through increased premiums/cost-sharing arrangements,” says the proposal description.

The state’s main health care fees — the HCRA surcharge and Covered Lives Assessment — have ballooned from $1.3 billion in 2000-01 to a projected $3.4 billion in 2010-11, effectively raising health care costs by that amount for the three-quarters of New York residents who still haven’t gotten around to enrolling in Medicaid.  In fact, the amounts raised from these de facto taxes on health care this year will slightly exceed projected revenue from the state’s third largest tax, the Corporation Franchise Tax.

Meanwhile, The New York Times reported today that the Health Department will propose a Medicaid spending cap that would require across-the-board spending cuts by Medicaid providers. Quoth the Times:

The spending cap, part of an overhaul of the way the state budgets its spending on health care for the poor, would require millions of dollars in cuts by hospitals, nursing homes and other health care providers. It would also leave them vulnerable to additional cuts if enrollment increases and Medicaid costs rise.

But it would allow providers flexibility in finding their own cost savings, and it would go a long way toward filling the biggest remaining hole in Gov. Andrew M. Cuomo’s budget proposal, which counts on a $2.85 billion reduction in Medicaid spending to close the state’s $10 billion budget gap.

We’ll know where these ideas are headed soon enough; the Redesign Team is due to make recommendations Tuesday.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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