Health Care Reform Act (HCRA)

The Health Care Reform Act (HCRA) is the state’s main funding formula for health care services in NY. HCRA disbursed $6.5 billion dollars in 2003-04. It is projected to disburse $4.5 billion in 2004-05.

HCRA was started in 1997. HCRA initially moved New York hospitals from a system of State-established rates for inpatient care to negotiate rates for most payers. The first round of HCRA also significantly expanded the Child Health Plus program.

HCRA 2000 established the Family Health Plus program for adults and provided new insurance coverage subsidies for small businesses and working individuals. It also allocated a portion of the State’s tobacco settlement to pay for FHP and other program costs (a deal that was rescinded in future state budgets) and raised taxes on cigarettes. It also shifted several State health care programs, included EPIC, from the general fund to HCRA.

2002 amendments to HCRA provided additional funding for health care worker recruitment and retention. It also took the controversial step of authorizing the nonprofit Empire Blue Cross Blue Shield to a for-profit health insurer, with 95% of the assets from the conversion being dedicated to various HCRA programs. (Note: many health care advocates believe that this does not meet the legal requirement to invest the funds in a foundation that continues to meet the goals of the prior nonprofit organization.)

The legislature reauthorized HCRA for another 2 years in May 2003.

In January 2004, the Governor proposed amendments to allow any nonprofit health plan to convert to for-profit status. The legislature eventually agreed to establish several new programs while reducing funding for several existing ones, without authorizing more health plan conversions.