Testimony Presented by Nirav R. Shah, M.D., M.P.H. - Joint Legislative Budget Testimony - March 3, 2011

State Fiscal Year 2011-12 Executive Budget

Hearing Room B
Legislative Office Building
Albany, New York
March 3, 2011
10 a.m.

Good morning Senator DeFrancisco, Assemblyman Farrell, other distinguished members of the Senate Finance and Assembly Ways and Means Committees, Senator Hannon and Assemblyman Gottfried. I am Nirav Shah, Commissioner of Health, and I am pleased for this opportunity to appear before you today to discuss the Executive Budget as it relates to the mission of the Department of Health.

Governor Cuomo's message to me as a Commissioner, to you as legislators, and to stakeholders in the health care field has been crystal clear: maintaining the status quo is simply not an option. Restoring New York to national prominence in health care delivery and outcomes demands that we make tough choices and do business in new ways. As we make these choices, we must also recognize that this is a time of opportunity to bring together the best minds and ideas to reshape our health system and serve New Yorkers more efficiently and cost-effectively.

The Executive Budget maintains core public health programs in critical areas such as tobacco control, obesity prevention, and HIV/AIDS Prevention and Services.

Tobacco use continues to be the number-one cause of preventable disease and death in the State. Health care costs related to treating smoking-caused diseases total approximately $8 billion annually for New York alone, with lost productivity costs associated with smoking totaling more than $6 billion a year. Sustaining support for the Tobacco Control program will help us reach the goal of reducing adult prevalence of smoking to 12 percent and adolescent prevalence to 10 percent by 2013.

Obesity and overweight are the second-leading preventable causes of death. More than 24 percent of adults in New York are obese, which puts them at increased risk for chronic diseases like type 2 diabetes, heart disease, stroke, and some types of cancers. Treating obesity-related illnesses and conditions costs New York State more than $7.6 billion a year. Consistent with the principle that we must pay for performance, the budget continues support for the evidence-based strategies and initiatives proven to reduce rates of obesity, especially among children.

The Executive Budget also sustains New York's commitment to fighting the HIV/AIDS epidemic, which remains a major public health issue in New York State. Funding to the AIDS Institute for Aid to Localities and the AIDS Drug Assistance Program remains level in this budget. The Executive Budget also maintains access to health care and related services for persons with HIV/AIDS and will strengthen our evidence-based prevention programs, including sexual health promotion and enhanced access to testing for HIV and enhanced integration between HIV and STD testing and care.

New York State has been living beyond its means for far too long. Medicaid is a prime example. Our spending is the highest in the nation, and we aren't getting the value we should demand. Medicaid spending has increased at an annual rate of 6.4 percent over the last 10 years, close to three times the rate of inflation. These increases have been borne by the people of this State – the very people who have had to make hard choices in balancing their own household budgets. New York's mean property tax is 96 percent higher than the national average, fueled in large part by the escalating cost of Medicaid, making owning or maintaining a home unaffordable for many New Yorkers.

The State needs to change the way it does business and there is no better example than the Medicaid Redesign Team created by the Governor's Executive Order. As a member of the Medicaid Redesign Team, I have been fortunate to join my colleagues from the Health Department, the Legislature, and health care stakeholders in traveling across the State to hear thousands of suggestions from health care providers, consumers, and taxpayers alike. The Medicaid Redesign Team's recommendations, which were accepted by Governor Cuomo on February 24, will redesign and restructure the Medicaid program to be more efficient and get better results for patients.

The 79 recommendations submitted to the Governor meet his budget target by introducing a global cap on State Medicaid expenditures of $15.109 billion through a variety of mechanisms, including:

  • Reforming the Medicaid payment and program structure to generate $1.138 billion in total state savings;
  • Eliminating the permanent law statutory cost drivers which generate $186 million in state savings;
  • Implementing a 2 percent across-the-board rate reduction to generate $345 million in savings; and
  • Prepaying certain Medicaid payments to leverage additional enhanced Federal matching funds made possible under ARRA, which generates a $66 million benefit.

The recommendations also include industry-led cost containment initiatives totaling up to $640 million in savings, representing an unprecedented partnership between the state and its health care industry. The Medicaid program will be subject to a contingency reduction if this goal is not met.

These proposals will benefit both taxpayers and patients. One million New Yorkers will have access to patient-centered medical homes, and within 3 years almost the entire Medicaid population will be enrolled in some kind of care management.

The first phase of the Medicaid Redesign Team's mission was an unprecedented effort, but our work continues. This is an ongoing process and we will continue to review opportunities for reform and submit our final report on comprehensive reform to the Governor in November.

I am proud to be part of this effort and I am confident that by working together to implement this plan we can make the Medicaid program better for those who rely on it for essential health care services as well as for those who pay for it.

Governor Cuomo has called upon me and other Commissioner and agency heads to lead by example and make a 10 percent reduction in our budgets. As Commissioner, I will ensure that these reductions are enacted responsibly, so that we continue to fulfill the Department of Health's critical mission while meeting our budgetary targets. In reshaping our agency and making the necessary reductions, I will seek to work in conjunction with our workforce and with outside stakeholders. Like Medicaid Redesign, we do not pretend to have a monopoly on good ideas for change, and I will listen to all interested parties who genuinely want to help in this challenging process.

We've had to make some tough budget decisions to respond to the current economic challenges. But I am optimistic that New York is poised to once again become a national leader in health and health care. One of my highest priorities as Health Commissioner is to reduce health problems and improve health outcomes through greater integration of public health priorities into the delivery of medicine. We will use all the tools at our disposal to further integrate public health priorities and best practices into medicine, Medicaid policy, health information technology, and new models of health care delivery. We will focus on low-cost and no-cost ways to achieve environmental changes that support better health outcomes for New Yorkers, and we will focus on policies that improve health.

Governor Cuomo and I are dedicated to working in partnership with the Legislature, health care stakeholders, and all New Yorkers to transform our health care system with the ultimate goal of making access to high-quality, affordable health care available to New Yorkers at a cost that reflects our fiscal realities.

Thank you. I am happy to answer your questions.