Cuts in Medicaid May Mean Billion-Dollar Loss to New York for Training Doctors


New York’s public and private hospitals stand to lose more than $1 billion in state and federal funds for the training of doctors because of changes to the Medicaid program backed by the Bush administration, according to an analysis by the city’s Independent Budget Office released on Tuesday.

The change would end a revenue stream that the medical residencies have relied on for more than 40 years and that have widespread ramifications, because New York hospitals train a large share of the nation’s doctors, many of whom work in poor neighborhoods during their residencies.

“The cuts that are being proposed by the Bush administration will cause a massive hemorrhaging of resources in New York, including undercutting the ability of many of our institutions to train tomorrow’s doctors,� said Kenneth E. Raske, president of the Greater New York Hospital Association, which represents both public and private hospitals. “This is a senseless and very damaging policy.�

Administration officials, though, say that the cuts are necessary to restore the “fiscal integrity� of Medicaid, and that underwriting medical education is beyond the scope of the program, which combines federal and state money to provide health insurance to more than 60 million low-income people, including 30 million children.

A year-old moratorium on the cuts is set to expire on May 25; President Bush has threatened a veto if the Senate votes this week to extend it, as the House did last month, according to Doug Turetsky, a spokesman for the Independent Budget Office.

Jeff Nelligan, a spokesman for the Centers for Medicare and Medicaid Services, said on Tuesday that the Medicaid program was “reeling� financially, and that “one of the reasons that it’s reeling is that states have operated a kind of shell game with Medicaid funding.� He said that using Medicaid money for graduate medical education “is not even authorized in the statute,� but that “states have taken it upon themselves to divert funds to that end.�

“In a time of limited federal and state resources,� he added, “it is important to prioritize Medicaid spending and target it to its primary purpose: directly improving the health outcomes of Medicaid beneficiaries.�

In 2006, 40 percent of all Medicaid funds for medical training nationwide, or $1.36 billion, went to New York State. The Medicaid money also accounted for 40 percent of the $3.4 billion spent on graduate medical education in the state.

Of the nation’s 107,000 medical residencies, 16,500, or 15 percent, are in New York State, and 12,200 of them in New York City according to the Independent Budget Office.

Mr. Raske of the hospital association estimated that because of demographic changes, the nation needs to produce at least 30 percent more physicians by the year 2020, noting that because medical education takes 7 to 11 years, training programs need to expand now, not shrink.

The Independent Budget Office analysis found that the proposed cut would cost the city’s public hospitals about $390 million in federal and state funds, about 7.5 percent of their overall budget. It would cost the city’s private hospitals about $790 million, 4.4 percent of their total revenue, the report said.

Some of the worst-hit public hospitals in New York City would be Lincoln Medical Center in the Bronx, Woodhull Medical Center in Brooklyn, Metropolitan Hospital and Bellevue Hospital Center in Manhattan, and Elmhurst Hospital Center in Queens, the report says.

Ultimately, the analysis suggested, the state’s consumers would feel the cuts in the form of higher salaries for the smaller number of doctors being trained. The budget office argued that contrary to the Bush administration’s contention that it was focusing Medicaid resources on poor people, the cut would hurt health care in poor neighborhoods, where doctors in training are a major source of medical care.

Although New York receives by far the largest amount of money for teaching hospitals, other states also get substantial amounts, like California, which stands to lose $180 million, and Florida, which would lose $150 million.

The report warned that “an abrupt termination� of the financing “could cause severe disruptions to the finances of both public and voluntary hospitals, to patient care and to the city’s economy.�

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