Despite his tough-guy persona, New York governor Eliot Spitzer lost his first big Albany showdown a few weeks ago, when members of his own party in the Assembly defied him and appointed one of their own as state comptroller. But Spitzer has bounced back nicely by taking a tough stand against health care’s special interests in Albany.

Spitzer is struggling to reform New York’s bloated, unduly expensive health-care system, which for years has driven up taxes and pushed private-sector jobs out of the state. Spitzer made health-care reform a part of his gubernatorial campaign. And his first budget outlined modest changes in the state’s Medicaid system that he hoped would yield $1.3 billion in savings. Among his proposals: a freeze on increases in payments to hospitals and nursing homes, whose reimbursement levels in New York are far above those in other states, as well as a vow to have the state audit more closely big Medicaid tabs submitted by health providers.

Though Spitzer’s proposals were hardly revolutionary and would have done little more than slow expansion of the $45 billion program, the state’s health-care lobby reacted fiercely to the plan, as they have to every legitimate effort to contain costs over the past decade. An alliance of the health-care workers’ union Local 1199 and the Greater New York Hospital Association fired off TV ads attacking Spitzer’s proposals and urging him instead to squeeze savings out of the profits of health-care insurers and drug companies. The groups’ spokesperson also linked Spitzer’s reforms with Bush administration efforts to control the growth of federal health-care spending—and there’s no more damning way to criticize a New York Democratic governor than to associate him with W.

The ad campaign represents business as usual for the union and the hospital group. In 1999 they launched a similar campaign to derail proposed Medicaid cuts by then-governor George Pataki, running hyperbolic ads that warned of potential hospital closings and service reductions that might leave some New Yorkers without adequate care.

Though the charges were so overblown that even one of the group’s allies branded the ads “scare tactics,” the campaign went largely unanswered by the Pataki administration and helped turn public opinion against the cuts. That solidified the reputation of the union and its hospital allies as Albany’s 800-pound gorillas; since then, they have won numerous battles to boost health-care funding.

One dramatic example of the cost of these victories to taxpayers: a February report by New York City’s Independent Budget Office found that the combined state and local tax burden in Gotham is 47 percent higher than the average of the country’s next eight largest cities. Medicaid spending, the report noted, accounted for about 20 percent of that hefty tax burden.

Eyeing such numbers, Spitzer has taken a more aggressive approach to attacks by health-care interests than Pataki did. He has responded with his own advertisement, financed by money left over in his campaign treasury. In the Spitzer TV spot, an announcer claims that New York State funds “a health-care system that rewards institutions, insurance companies, and unions, not patients.” The ad goes on to say that special interests have given New York “the most expensive Medicaid system in the country and some of the highest rates of chronic disease.”

That second point, about chronic disease rates, must be especially galling to the health-care industry, which has long claimed that the higher rate of spending in New York is necessary to uphold the state’s world-class health-care system. But as the Spitzer ad implies, New York’s heavy government subsidies haven’t just been costly; they’ve also helped support an industry rife with inefficiencies and outdated practices. Spitzer addressed this point in a recent speech to Manhattan business executives, when he complained that hospitals unable to absorb what amounts to a 1 percent cut in reimbursements must not be well managed.

The union and hospital group has decried the “finger-pointing and name-calling” in Spitzer’s ad, a ludicrous rejoinder, considering that finger-pointing and name-calling are what both have been doing themselves for years.

Spitzer still has to get his reforms through the legislature, which has too often done the health-care lobby’s bidding because legislators fear 1199’s ballot-box might. And even if he succeeds, Spitzer’s budget will represent only a first step in the long process of reform, which should also include shutting down hospitals in areas where there are too many beds and slashing state subsidies used by hospitals to train doctors that the state doesn’t need. But in standing up to the health-care alliance’s scare-mongering ads, Spitzer has shown more determination and moxie on this issue than any Albany elected official in recent memory.


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