DMI Blog

Amy Traub

The Other Battle for Health Care Reform in New York State

Reforming New York's health care system is probably the most contentious dispute in Albany today. The debate between Governor Spitzer on the one side and 1199 SEIU and the Greater New York Hospital Association (GNYHA) on the other has become so fierce that it's easy to overlook some otherwise controversial proposals that the two sides actually agree on. Chief among these are ending abuses by the enormously profitable insurance and pharmaceutical industries. Reforming the state's health insurance and prescription drug policies would have a huge impact on New York's health care costs and quality, yet both the drug and insurance industries are tremendous forces in Albany in their own right, making this another battleground -- one that threatens to get lost in the sound and fury surrounding cuts to hospitals.

New Yorkers spent nearly $16 billion on prescription drugs in 2004, 65 percent more than in 2000, and the costs continue to mount. High drug prices burden employers paying for insurance, insured patients struggling with high co-pays and deductibles, taxpayers footing the bill for Medicaid's burgeoning drug costs, and the uninsured, who pay the highest costs out-of-pocket. Meanwhile the pharmaceutical companies rake in windfall profits. It's a part of the health care system both Governor Spitzer and 1199/GNYHA agree demands reform.

There's even consensus about some of the reform steps that are needed such as strengthening the state's Medicaid preferred drug list (a list of the most effective and cheapest medications which doctors are encouraged to prescribe), and using it to negotiate more aggressively with drug companies. The governor has estimated that this reform could save taxpayers $200 million a year.

But the savings could be extended even beyond Medicaid and the state's drug program for the elderly directly to the 2.6 million uninsured New Yorkers trying to scrape together enough money to fill medically necessary prescriptions. The state of Maine provides a remarkable model (pdf) for using the leverage of a preferred drug list to persuade companies to lower pharmaceutical costs, giving Mainers average discounts of half off the retail price of generic drugs and 25 percent off brand-name drugs, sometimes beating Canadian prices. (Watch this space for a forthcoming podcast and transcript of the Drum Major Institute's discussion with Maine and New York legislators about how to import these measures to New York) We won't get that kind of reform in New York without a fight however. For a fascinating look at how the drug industry's political influence plays out in Albany, and how they've successfully slowed and weakened reform efforts so far, see this New York Times article (no password necessary).

The insurance industry is another powerful Albany player whose business practices increase their profits and everyone else's health care costs (pdf). Both 1199/GNYHA and Governor Spitzer agree that HMOs need to be more closely regulated so that they can't delay or deny payment for the medical care they're supposed to be covering. Governor Spitzer has also argued for reinstating prior approval of HMO's insurance rates a regulatory measure that successfully kept insurance premiums for New York's small businesses under control in the past. But, like the pharmaceutical industry, insurance companies and HMOs wield tremendous power in Albany, and passing these reforms won't be easy.

If we allow the fight over state budget cuts to hospitals and nursing homes to eclipse the effort to rein in pharmaceutical and HMO costs, these powerful industries will continue to evade meaningful regulation and profiteer off New York's health care system. That would be a damn shame.

Amy Traub: Author Bio | Other Posts
Posted at 11:04 AM, Mar 09, 2007 in Health Care | Insurance Industry | Medicaid | New York | Politics
Permalink | Email to Friend