Most recently, Mayor Eric Adams Adams promised across-the-board cuts to essential services as part of his November budget overhaul and has already promised even more drastic cuts in January for next year’s budget. This draconian approach to blanket cuts and hiring freezes will slow spending on critical services in nearly every agency, which will severely impact the delivery of core city services and undermine the viability of New York City.
To combat this crisis and preserve essential city services, the administration must go through agency budgets and cut programs that have no data metrics to support them instead of the proposed cuts to education, sanitation, libraries, public safety, and other important areas. As we’ve seen before, cutting funding to child care and early education services will hurt New York City families and have negative effects by keeping caregivers out of the workforce. which further reduces revenue streams. There is, however, one area of the budget where with a relatively small allocation of new funding, billions of taxpayer dollars could be saved. That new cost is the newly created Office of Health Care Accountability, which will bring down our rising healthcare costs.
With unacceptable cuts to essential city services on the chopping block, we need to focus on one of the biggest recurring expenditure items in the budget. With healthcare costs accounting for nearly $11 billion in the city budget and hospital rates being the primary driver of those costs, we need to correct this area of overspending. A report by the 32BJ Health Fund found that if the city’s spending standards matched what Medicare paid, it would save $2 billion a year in hospital costs. That’s a huge amount of money, especially given the tight budget.
Earlier this year, the City Council unanimously passed the Healthcare Accountability and Consumer Protection Act, and Mayor Eric Adams signed this critical legislation into law. New York City is now establishing the Office of Health Care Accountability, the first of its kind for a municipality in the country that could be a powerful model to bring an affordable, accessible, and transparent health care system. The office has the authority to publish and compare hospital prices, analyze healthcare costs for city employees, and collect and make recommendations to reduce excessive costs. An Office of Health Care Accountability would finally allow New York City to use its purchasing power to stop the very practices that lead to higher healthcare prices.
Our city cannot handle health care spending that has risen to more than 10% of our annual city budget. In 2000, the city spent more than $1.6 billion on health insurance for its employees, dependents, and retirees. In 2017, this cost increased to over $6.3 billion and will continue to rise to an estimated $11 billion by 2023. The cost of health care is astronomical, with the price of giving birth in New York City alone ranging from $17,000 to $55,000. In our current fiscal crisis, it would be irresponsible not to use federal healthcare price transparency rules that have proven to save the city significant funding.
California, New Hampshire, Massachusetts, and Rhode Island all use price transparency to save taxpayer dollars and reduce costs for consumers. A 2019 analysis of transparency efforts in New Hampshire found that over five years, the cost of medical imaging procedures, such as MRIs, decreased by 5% for patients. Estimates for New York State show that we could save nearly $5 billion a year by taking advantage of healthcare price transparency policies.
By February 2024, city law mandates that the Office of Health Care Accountability be operational. To effectively reduce the city’s healthcare spending, the office must have a core team of analysts, data engineers, and hospital pricing subject matter experts to begin the data collection process and build an internal data warehouse. Reducing health care costs will save billions of dollars each fiscal year, money that the administration can use to balance budget management and city services, making real exemptions for essential quality services. like life, affordable housing, education, and child care services from cuts and hiring freezes that would destabilize the city.
Balancing a budget with no federal COVID-19 stimulus funding coupled with increased costs for asylum seekers calls for a targeted approach that cuts programs without data metrics to support their effectiveness. As someone who has led many city agencies as a commissioner, I have personal experience with PEGs, cutting programs without evidence-based data support, and creating new revenue streams for the city. Even if the $1 billion spent on Thrive or other programs doesn’t produce the rigorous results we need from agency programs, it should be done instead of covering education and cutting sanitation. We cannot ignore one of the biggest recurring budget costs: the increase in out-of-control health care spending, especially when we have a new tool that can lower these costs.
It is important that Mayor Adams adequately staff the Office of Healthcare Accountability to save taxpayer dollars, protect consumers, and bring fairness and transparency to health care services.