Opinion: NYC can save, not cut, billions through the Office of Health Care Accountability

The budget deficit should not stop this watchdog agency from launching.

New York City Council Member Julie Menin

New York City Council Member Julie Menin (Photo by Gary Gershoff/Getty Images)

Recently, Mayor Eric Adams Adams pledged overarching and decimating cuts to essential services as part of his November budget modification and already promised more drastic cuts in January for next year's budget. This draconian approach of blanket cuts and hiring freezes that slashes spending for critical services across almost every agency will drastically affect the delivery of core city services and hurt New York City’s recovery.

To actually combat this crisis and preserve vital city services, the administration must go through agency budgets and cut programs that do not have the data metrics to support them rather than the proposed blanket cuts to education, sanitation, libraries, public safety and other key areas. As we have seen before, cutting funding to childcare and early educational services is detrimental to New York City families and will have adverse effects by keeping caregivers from the workforce that 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 that can lower our skyrocketing healthcare costs.

With unacceptable cuts to vital city services on the chopping block, we need to instead focus on one of the biggest recurring cost items in the budget. With health care costs accounting for roughly $11 billion of the city budget and hospital prices being the main driver of those expenses, we must take direct aim at this area of overspending. A report by the 32BJ Health Fund found that if the city’s spending patterns matched what Medicare pays it could save $2 billion annually on hospital prices. That’s a massive amount of money, especially in light of the budget deficit.

Earlier this year, the City Council unanimously passed my Healthcare Accountability & Consumer Protection Act and Mayor Eric Adams signed this critical legislation into law. New York City is now establishing the Office of Healthcare Accountability, the first of its kind for a municipality in the country that can be a powerful model to bring affordable, accessible, and transparent healthcare systems. The office has the authority to publish and compare hospital pricing, analyze expenditures on healthcare costs for city employees, and collect and make recommendations that will lower excessive costs. An Office of Healthcare Accountability will finally allow New York City to use its purchasing power to stop the very practices that lead to higher health care prices.

Our city simply cannot manage the healthcare spending that has risen to over 10% of our annual city budget. In 2000, the city spent over $1.6 billion on health insurance for its employees, dependents, and retirees. By 2017, this cost had risen to over $6.3 billion and continued to skyrocket to an estimated $11 billion in 2023. Healthcare costs are astronomical with the price of childbirth alone in New York City ranging from $17,000 to $55,000. With our current fiscal crisis, it is irresponsible to not utilize federal health care price transparency rules that are proven to save vital city funding.

California, New Hampshire, Massachusetts, and Rhode Island have all utilized price transparency to save taxpayer dollars and reduce costs for consumers. A 2019 analysis of New Hampshire’s transparency efforts found that over a five-year period, the cost of medical imaging procedures, such as MRIs, decreased by 5% for patients. Estimates for New York State have shown we could save almost $5 billion a year by taking advantage of healthcare price transparency policies.

By February 2024, City law mandates that the Office of Healthcare Accountability be operational. In order to effectively drive down city health care spending, the office must have a core team of analysts, data engineers, and hospital pricing subject matter experts to begin the process of data collection and building an internal data warehouse. Reducing health care costs would conserve billions of dollars each fiscal year, money the Administration can use to balance management of the city’s budget and services, creating real exemptions for vital quality of life services, affordable housing, education and childcare services from the sweeping cuts and hiring freezes that can destabilize the city.

Balancing a budget that no longer has federal COVID-19 stimulus funds coupled with increased costs of asylum seekers calls for a targeted approach that cuts programs that do not have the data metrics to support their efficacy. As someone who has led several city agencies as a commissioner, I have firsthand experience with PEGs, cutting programs that do not have the support of evidenced based data and creating new revenue streams for the city. Whether it was the $1 billion spent for Thrive or other programs that simply don’t bear out the rigorous results we should require from agency programs, this must be done rather than blanket education and sanitation cuts. We cannot ignore one of the largest recurring costs in the budget – spiraling out-of-control health care spending particularly when we have a new tool able to drastically lower these costs.

It is critical that Mayor Adams adequately staff the Office of Healthcare Accountability to save taxpayer dollars, protect consumers and bring fairness and transparency to healthcare services.