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State Budget Cuts Cripple Safety Net Hospitals

Fired up healthcare workers rally against short staffing outside Maimonides Medical Center back in 2017. Today, new budget cuts are threatening more New York hospitals. 

New York, NY – New York State is facing a $30 billion budget gap that must be closed in the upcoming 2022 budget. The administration is proposing budget cuts — $600 millions of which are from Medicaid. These cuts will hurt the poorest communities of the city and state the most. Thousands of healthcare jobs are at stake. The stimulus package will cover only part of the state budget gap and cuts will still be on the table. 

New York City’s public health system, NYC Health + Hospitals (H+H), plays a central role in these communities saving lives and providing decent jobs. This, in turn, helps keep local economies alive. It has been documented that every dollar spent on Medicaid generates two dollars in economic activity. This also means increased tax revenues for local and state government. 

The heroic healthcare workers who also live in the communities they serve have been on the front lines risking their lives in the COVID fight. Many have contracted COVID, and some have died. They helped save 8,000 COVID patients’ lives in H+H facilities. The New York City H+H network is still a center for COVID testing, vaccinations and follow up care. Still, NYC H+H is $1.3 billion under-funded now due to the COVID crisis. The state budget passed last April, cut another $100 million from its budget.

More Budget Cuts Will Be Deadly

For years, the state has shortchanged public and other “safety net” hospitals in favor of the big non-profit networks that act like for-profits. Medicaid and uninsured patients, including immigrants, are mostly served by safety net institutions. Yet, the lion’s share of Medicaid and Indigenous Care (ICP) funding goes to the “Healthcare Empires.”

 These non-profit Healthcare Empires CEO’s and top administrators earn millions of dollars. They operate more than a 20% administrative overhead. The NYC H+H and its’ Metro Plus HMO operate with a 1% to 3% administrative overhead. This makes it impossible for all safety net hospitals to be able to absorb cuts. It means layoffs of staff and reduced patient services. 

More cuts will hurt communities of color the most. Severely underfunded public and private safety net hospitals had three times more COVID-19 related fatalities than others. This will mean healthcare services and jobs will be lost where they are needed the most.

The low Medicaid Cap imposed by the state a few years ago, meant that the safety net hospitals had to endure the largest cuts. Now, the state is proposing $600 million more in Medicaid rate cuts. These rates already underfund the cost of care by over $100 per patient visit. 

The state has proposed ending its 50% responsibility shared with the federal government for payment into the ICP and shifting it to local governments. In New York City, the 2022 budget is already proposed at a $5.25 billion deficit. It would be impossible for the city to take on this added burden. There likely would be more cuts to safety net hospitals or deeper cuts in other valuable services.  

Invest in New York

The Invest in New York Program is an alternative to cuts. It is the most comprehensive proposal for increasing state revenues. Unions have lined up in support of its main proposal — increasing taxes on the rich.

The rich can afford to pay more in taxes. In New York, billionaires have increased their wealth by $87 billion since the pandemic begin. The head of Amazon spent $18 million and added two more floors to his $80 million Manhattan penthouse. The head of Goldman Sachs got a 20% raise last March, and now makes almost $28 million a year! 

No polling exists that shows the rich leave states because of local taxes. A Stanford study stated, “…there is little systematic evidence about elite mobility…. of tax flight among millionaires.”

Generating revenues and not budget cuts will help rebuild our economy and save our safety net healthcare institutions. Invest in New York!

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