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Skyrocketing medical costs fuel city’s growing budget woes
City Hall’s mounting budget woes are fueled by the exploding cost of providing municipal employees and retirees health care — which could potentially add $3 billion annually to the Big Apple’s deficits by 2027, statistics obtained by The Post show.
The analysis from the Independent Budget Office and provided to the paper shows that the cost of providing medical, dental and optical care and prescriptions for employees will hit $8.2 billion by 2027 — up from $6.1 billion in 2023.
Retiree costs will spike to $3.9 billion from $3.1 billion over the same four-year window, the IBO projects.
“Something’s got to give and if you wait until you’re in a crisis situation, that’s when you slash budgets and everyone suffers: the public, unions,” said Andrew Rein, the executive director of the Citizens Budget Commission.
Nowhere have costs risen faster than at the major hospitals across the region — which has brought together an unusual coalition of employers, labor unions and city lawmakers, who are demanding the major medical systems rein in costs.
A recent report by building services union 32BJ used medical billing data provided by its members to uncover that private hospitals across New York City are charging far more than the city’s own public hospital system for identical procedures.
For example, an outpatient colonoscopy runs $10,368 at New York-Presbyterian, but costs just $4,139 at Mt. Sinai Hospital. At the city’s public hospital system it’s even cheaper: $2,185.
The union projects that containing hospital costs could save the Big Apple $2 billion annually.
That stunning figure has helped line up a super-majority of the City Council behind legislation that would require hospitals disclose their prices to city officials, who would then post them on a searchable website in a bid to drive costs down.
“What this bill does, among other things, is it will for the first time ever, allow the city to harness its purchasing power to drive down costs, because we will finally know what it is that we are being charged by these hospitals for various procedures,” said the bill’s chief sponsor, Manhattan Councilwoman Julie Menin (D-Manhattan).
The bill is slated for a full hearing on Thursday before the City Council, where powerful hospital lobby group, the Greater New York Hospital Association, is expected to testify.
“Mayor [Eric] Adams inherited a broken and bloated healthcare and hospital pricing system. But the city can’t keep paying billions more than it should for past mistakes while businesses and workers struggle to afford the cost of care. The city needs to lead on this problem by using its legislative powers to expose and attack rising hospital prices that are eating more and more of our budgets and threaten the health and financial stability of working people,” said Manny Pastreich, President of SEIU 32BJ.
The effort to crack down on hospitals — which is one of the most powerful industries in the state — for exorbitant pricing has even won fans at one of the state’s most prominent conservative think tanks, The Empire Center.
“Of the various aspects of health care spending, hospitals are the largest, and even as health care has evolved away from in-patient care,” said Bill Hammond, health care policy analyst for the Empire Center told The Post. “In New York their costs are both higher than the national average and rising faster than the national average.”
Hammond says data collected by the federal government shows New York spent 22 percent more per person on hospital stays than the national average — and that the gap had grown to 43 percent by 2020.
He added: “That gap has roughly doubled in 10 years and if you want to think about why healthcare is so expensive, you can’t ignore the dominant role of hospitals.”
