SENATE PASSES HEALTH CARE REFORM LEGISLATION

Senator Bruno addresses more than 2,000 health care workers outside the Capitol.

Measure Addresses Workforce Shortage; Assists Health Care Facilities

Tuesday, January 15, 2002

The New York State Senate passed an historic health care reform legislation that would provide for a multi-billion, three-year plan to address the critical shortage of health care workers, to financially strengthen hospitals, nursing homes and other health care facilities and increase funding for other important health care programs. In addition, the measure authorizes the conversion of Empire Blue Cross/Blue Shield from a nonprofit to a for-profit organization.

"With this bill we will help the people whose job it is to help others," Senate Majority Leader Joseph L. Bruno said. "We are providing assistance to some of the lowest paid health care workers who are soldiers on the front line against disease, pain and suffering and who often put themselves in harms� way."

"We are addressing a critical shortage of staffing at our hospitals and nursing homes while continuing to meet our goal of having a quality health care safety net," Senator Kemp Hannon (R, Garden City), Chairman of the Senate Health Committee, said.

"Addressing needs of our health care work force is just the beginning," Senator Bruno said. "This is a comprehensive piece of legislation that continues or expands important health care programs that benefit women and children, families and senior citizens throughout the state. It will ensure that New Yorkers continue to have access to quality, affordable health care provided by the best health care facilities anywhere."

"Since sponsoring the original Empire Blue Cross/Blue Shield conversion bill, I have fought for a measure that provides a fair and equitable statewide distribution of money to our hospitals and nursing homes Senator James L. Seward (R/C-Oneonta), Chairman of the Senate Insurance Committee said. "The bill we�re passing does so, making a significant investment of new money in our health care network. Access and quality of care will both be improved to the benefit of consumers."

The plan will provide $696 million in workforce assistance funds for hospitals throughout the state; $475 million for nursing homes; $39 million for free standing health clinics and $597 million (over four years) for personal health care services. In addition, it will provide $30 million in new state financial assistance to nursing homes as well as providing additional funding for other important health care programs.

The bill will also provide an additional $8 million in Medicaid coverage for low-income women diagnosed with breast or cervical cancer; and enable low-income persons with disabilities to join or rejoin the workforce while maintaining their Medicaid coverage; and continues the successful EPIC program that reduces the cost of prescription drugs for senior citizens

In addition, the bill calls for the state to provide $136 million over three years for Excess Medical Malpractice Insurance Coverage to ensure that doctors are able to continue providing vital services in New York State.

The provisions of the bill will be funded partially from the proceeds of the conversion of Empire Blue Cross/Blue Shield from a nonprofit to a for-profit company which is projected to generate more than $1 billion over the next three years. A 39-cent per pack increase in the state tax on cigarettes will raise approximately $790 million in additional revenue over three years.

In addition, the state will seek a three percent increase in the federal Medicaid reimbursement rate which would provide the state with $1.8 billion over three years to help fund the provisions of the legislation. Other measures related to federal Medicaid reimbursements would generate a total of about $319 million.

Highlights of the Bill

Workforce Assistance
Over three years this bill would provide significant assistance to the health care industry ($2.1 Billion) to assist them in recruiting and retaining health care workers in order to be able to continue to deliver high quality health care.

The breakdown of workforce assistance is as follows:
Hospitals- $696 million over three years;
Nursing Homes- $475 million over three years;
Personal Care -$597 million over four years;
Free Standing Health Clinics - $39 million over three years.

Sources of Funding (over three years)
-- Proceeds from the conversion to for-profit status of Empire Blue Cross/Blue Shield ($1 billion);
-- An increase in the Federal Medicaid Match from 50% to 53% ($1.8 billion);
-- from a 39 cent per pack increase in the state cigarette tax; ($789.3 million);
-- Further maximization of Federal Medicaid revenue ($319 million)

Empire Blue Cross /Blue Shield Conversion
Empire BC/BS is authorized to convert to a for-profit company with an estimated $1.1 billion in charitable assets used to support health care access, quality and workforce recruitment and retention and a foundation to improve access to affordable health care.

Empire BlueCross/BlueShield is given authority to convert from a not-for-profit insurance company to a stock company. Empire is the state�s largest health insurer with approximately $4.6 billion in annual gross premiums and 4.4 million policyholders in a 28 county service area (Long Island, NYC, and counties running up the Hudson river to the Canadian border)

Ninety-five percent of the shares of stock, which may include funds from the Initial Public Offering, will be directed into the HCRA tobacco and insurance pools, for initiatives such as workforce recruitment and retention. Transfer of the assets will be overseen by a five member board (3 appointed by the Governor; one by Senate Majority Leader; one by Assembly Speaker).

Five percent of the shares of stock will be directed to a charitable organization for the purposes of expanding access to coverage, improving public health, and identifying and addressing public health needs. A Board will consist of three voting members (one each by Governor, Senate, and Assembly), each having veto power; six non-voting members; and a community advisory board.

The Attorney General is provided the role to comment on the superintendent of Insurance�s determination of fair market value and the opportunity to pursue action in supreme court.

Breast and Cervical Cancer
Provides for an additional $8 million in Medicaid coverage for low-income women undergoing treatment for breast or cervical cancer who were diagnosed under government sponsored early detection programs

Medicaid Coverage for the Working Disabled
Provides Medicaid coverage for persons with disabilities to enable them to join or rejoin the workforce while maintaining their Medicaid coverage (within certain income and resource limits). This provision will allow these individuals to be productive, and maintain their personal dignity while contributing to both the support of their family and the state as a whole.

Excess Medical Malpractice Coverage
The bill provides for the state to pay $136 million over the next three years for continued funding of the Excess Medical Malpractice Program, which provides malpractice coverage above the doctors primary coverage. This program assures that doctors, especially those that provide advanced procedures or treat high risk patients have adequate malpractice coverage and are able to continue to provide these vital services.

Controlling EPIC Drug Costs
The bill would reduce EPIC costs by requiring greater financial participation by drug manufacturers through an expanded rebate program, and by coordinating benefits with other insurance coverage.

Streamlining Child Health Plus
The bill would simplify the application and recertification process for the Child Health Plus program, the Family Health Plus program and Medicaid, to improve access to health insurance for children and families.

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