State budget cuts threaten a shortfall of up to $300 million for health care in New York City, and stimulus spending could affect an even greater amount. With deadlines looming, Linda Gibbs, Deputy Mayor for Health and Human Services, and Alan Aviles, President and Chief Executive Officer of the New York City Health and Hospitals Corporation (HHC) traveled to Albany to make their case to legislators and join City Hall and The Capitol for an On/Off the Record breakfast Feb. 25 sponsored by the Greater New York Hospitals Association.

The discussion ranged from how to sort out the Big Apple’s fair share of cuts, the on-the-ground effects of Medicaid cuts, to what might have been different if their boss, New York City Mayor Michael Bloomberg (Ind.), had been president instead of Barack Obama.

What follows are selections from the on-the-record portion of the morning.



Q: We have an enormous budget hole in the state. The money will have to come from somewhere. Why not from New York City, and, specifically, not from social services and health care?

Gibbs: Well, I don’t think anyone has said that it shouldn’t, in its fair share, come from New York City, and the mayor’s been really clear on this. We manage our own huge budget and have our own budget challenges that we’re trying to resolve, so we know very well that you have to look at program cuts, that you have to look at new revenues, that you have to look at any efficiencies that you can get out of the existing system, and so we can appreciate the seat that the governor is in, in trying to balance the state’s budget and in trying to have sound fiscal planning for the long term for the state. And so, as we assess the state budget, it’s not, “Don’t take any money out of us and take it out of everybody else.” It’s more, “Have you set forth a series of proposals that, programmatically, are maybe ‘it’s the best of the worst’ in terms of what you need to reduce and how you need to constrain spending, and has New York City been treated fairly, or have we been treated unfairly?” So we feel very strongly as we look at the budget, there are some pieces that in fact are fair but then some that are taking more than a fair share out of New York City. So it really is around making the case of where we believe the impacts are disproportionate on the city. And when we look at the health care budget, we have to understand the impact of that on the ability of our public hospital system as well, in order to plan for its own fiscal stability over the long term.



Q: How will the cuts that are being talked about change the way health care services happen in New York City?

Gibbs: There are a number of provisions. Probably our biggest concern with some of the way that the state has reduced spending in the social services area is where they’re reducing funding that comes to localities but they’re not reducing the mandate for that underlying service. And so it’s just a matter of cost shifting to the locality and increasing our fiscal burden in a way that we can’t control. So, for instance, withdrawing all the funds to run our food stamp program, to run our cash assistance offices. The state had basically said, “We’re no longer going to help you to pay for that,” without giving us any increase in resources to accommodate that increase. And you can’t, you obviously can’t close down the offices. There’s no way you’re going to serve poor people, to meet their needs if you’re not spending those administrative dollars. So that’s one where it’s an unfunded shift of a mandate to the localities, taking the dollars away, but not really helping us to figure out how to downsize or reduce programs. So that’s a real unfunded mandate, a burden shift.



Q: Are you surprised, with the leadership of the state all made up of New York City residents, that you are having trouble with this?

Gibbs: Not at all. Because of course, as we all know, whenever you’re in a leadership position you’re the leader of the entire jurisdiction and not just your home jurisdiction. And the leader of the entire state that you represent. And these are natural tensions that will always come up in the budget process—on the other side of the ledger we always try to recognize where there are good actions, we are allies with the governor’s office on a lot of the Medicaid reform activities. We believe the Medicaid rate-setting structure does incentivize some bad behaviors and practices and needs to be restructured to incentivize good practices. The good preventive care, the good community-based care, rather than incentivizing inpatient care. So there are certainly parts of the governor’s plan expanding some of the coverage to some additional populations in need of health insurance.



Q: A lot of people are concerned that New York will take the stimulus money and use it to fill the gaps rather than to create new spending which will create new jobs. Why do you think using it to plug budget gaps is a better use of it?

Gibbs: I think it’s a balance. And I think that both of those objectives are legitimate objectives and, to be clear, the stimulus package was quite specific that budget relief was among the appropriate ways to use the stimulus money. And, if you think about it, if you didn’t use it for budget relief, it just means that the programs would be closing faster, there would be more layoffs, and the people who run those government programs wouldn’t be there to provide services—and it would be counterintuitive to sort of shut down a huge segment of activity at the same time that you’re building a massive new segment. So you get quicker results by retaining some of those government services. But budget relief was a very clear, acceptable and encouraged use of stimulus dollars. But you don’t want to use it all on budget relief, because there is this increase in need, and we have to make sure that we have strategies in place to help those who were hardest-hit. Mortgage foreclosures, homelessness, making sure that we’re using resources to prevent people not only from losing their homes but from actually needing to turn to shelters or, God forbid, to the streets as their only recourse. Jobs. Training. Helping to identify where the new employment is going to be, get the skills, into the workforce, to meet that, both of the traditionally hard to employ and more marginalized segment of our economy that will need our attention now more than ever, as well as people who are recently unemployed. And thinking about how we can use the stimulus to offset on a macroeconomic level some of the worst impacts of the recession at the same time that we pay attention to the fiscal integrity of the city and state budget.



Q: Especially with Medicaid, what do we really need to do to make sure this money is being spent in the best possible way?

Aviles: Well for us, I mean just to focus for a moment on the public hospital system in New York City, we provide a tremendous amount of care to the residents of New York. So 1.3 million New Yorkers receive care through the public hospital system in New York City every year. Last year 450,000 of them were uninsured. That’s an 8-percent increase from the year before, which gives us a sense, not surprisingly, of what the trend lines look like in terms of our role as a safety net, not just to Medicaid patients but for the vast number—and the growing number—of uninsured individuals. … We invest very heavily on that front end of primary care, preventive care, early screening for disease, particularly around cancer and cardiovascular disease, so all of that sort of hangs in the balance. And the real problem at the moment is you have this countercyclical phenomenon for systems like ours, safety net systems not just here but across the country. Because we’re so dependant on Medicaid dollars—65 percent of our revenue comes from Medicaid—that the moment the economy starts to tank, that is the moment that both the need for a safety net increases, but it’s also the moment when states become pressed and have trouble meeting their share of the Medicare costs for sustaining this.



Q: What do you think of what President Obama has been doing on these issues?

Aviles: When the president was talking to the governors, I think he said something that very much bears on the budget situation in New York and across the country—with regard to the Medicaid dollars in particular, the so-called FMAP dollars, where the federal government is increasing the federal match for Medicaid in order to support Medicaid programs across the country: he said, “It is not a blank check.” The purpose of this money is to secure health care for Americans who need coverage and need access to health care, and I think that’s a very important point, because the reality is that the state will get close to $5 billion going into this next fiscal year to deal with what they have characterized as a $1.3 billion state cut that they need to make—so more than adequate numbers to mitigate the deep cuts that were being proposed. Everybody’s expecting shared sacrifice, but it could also move forward the health care reform agenda with some of those dollars.



Q: Maybe if your boss had gone through with his presidential run we might be talking about something different?

Gibbs [laughing]: Well, the recession obviously wouldn’t have happened.