Medicaid is the state's most expensive program, and Spitzer's effort to reduce the cost of the program led to a bruising budget fight with health care groups who engaged in a highly nasty exchange of negative ads against him.

From the governor's statement on Sheehan:

More on Sheehan after the jump.

-- Azi Paybarah

GOVERNOR ELIOT SPITZER AND LIEUTENANT GOVERNOR DAVID PATERSON
NOMINATE NEW YORK STATE MEDICAID INSPECTOR GENERAL

Governor Eliot Spitzer and Lieutenant Governor David Paterson today
announced the nomination of James G. Sheehan to serve as New York State
Medicaid Inspector General.

As Medicaid Inspector General, Mr. Sheehan will oversee the fraud and abuse
enforcement activities of New York's $50 billion Medicaid program. The New
York State Office of the Medicaid Inspector General audits and investigates
Medicaid providers, recovers revenues through its enforcement system, and
develops and operates automated health care data detection systems.

"As a career prosecutor specializing in complex health care enforcement and
recovery matters, Mr. Sheehan has experience rooting out fraud that
dramatically drives up costs and severely threatens the efficiency and
delivery of health care services," said Governor Spitzer. "New York State's
health care spending is the highest in the nation and our system requires
dramatic reform.
Mr. Sheehan will bring his experience and energy to that effort."

Mr. Sheehan currently serves as an Associate U.S. Attorney for Civil
Programs in the Eastern District of Pennsylvania. He has served as an
Assistant U.S. Attorney since 1980, and a supervisory Assistant U.S.
Attorney since 1983.

While serving in the U.S. Department of Justice's Philadelphia office, Mr.
Sheehan personally handled over 500 health care fraud matters, as well as
managed all civil litigation for the federal Eastern District of
Pennsylvania. He has personally led, managed and developed health fraud
and kickback cases from pharmacy benefit firms, pharmaceutical
manufacturers, medical suppliers, hospitals, nursing homes, and physicians.

From 1999 to 2006, Mr. Sheehan led the government investigation against
Medco Health Solutions, which resulted in the recovery of over $155
million, as well as substantial business changes to protect patients and
pharmacists. From 1993 to 1997, he was lead counsel in United States v.
SmithKline Beecham Clinical Labs, which resulted in a $332 million recovery
for the United States.

Mr. Sheehan has supervised joint health care investigation teams that
included the FBI, Federal Inspector Generals from many agencies, and
private investigators, which resulted in more than $600 million in awards.
He has also developed a model Qui Tam Program to identify and pursue fraud
cases.

Mr. Sheehan received his B.A. from Swarthmore College and his J.D. from
Harvard Law School.

Mr. Sheehan comes to New York State through the Intergovernmental Personnel
Act program. This program provides the opportunity for career federal,
state and local employees to work at another level of government. The
program maintains salary and benefits for participating staff, with any
difference paid through the originating agency.

As Medicaid Inspector General, Mr. Sheehan's annual salary will be
$136,000, with the $9,300 difference between that amount and Mr. Sheehan's
current salary to be paid by the U.S. Department of Justice.
###

$350 in health care spending was restored (coupled with federal matching funds will bring a few more million to the health care industry here).

Eliot Spitzer still gets to claim $1 billion in Medicaid spending cuts, namely from health insurance and pharmaceutical companies (not hospitals and nursing homes).

$500 million in additional education spending was added, which should make Long Island Republican senators happy.

To hit the April 1 deadline, and circumvent the rule requiring bills to age for 3 days, Spitzer may have to send a "message necessity," a technique Pataki used often which left rank and file legislator voting on stuff they hadn't read.

I'm done blabbering.

-- Azi Paybarah

This doesn't bode well for an on-time budget.

At what was supposed to be a bipartisan, bicameral meeting in Albany just now to discuss the state budget, only Republicans showed up.

Senate Majority Leader Joe Bruno said that his conference would work through the weekend with Democrats to reconcile differences in Medicaid spending, school aide and other budget issues.

If only everybody would come to the table.

One senator, Thomas Libous of the Southern tier said "the law is being broken," because Democrats weren't participating in the meeting.

Assembly Minority Leader James Tedisco referred to it a "strike against openness and transparency."

Ten days until deadline.

-- Azi Paybarah

Charlie Rangel, who said he doesn't want to see the debate about Medicaid spending turn into a "food fight," seemed ready for one on Saturday in Long Island City, where he was awarded the the Kung Hwa Medal by the Korean government.

[Photo credit: Grace Meng.]

-- Azi Paybarah

A poll conducted by a group opposing Spitzer's health care plan say the governor's popularity has dropped 21 percent.

Bills to restore Spitzer's proposed reductions in Medicaid spending were introduced in the state legislature.

On health care, Republicans are attacking Spitzer from the left.

Senator Charles Schumer wants US Attorney General Alberto Gonzalez to quit.

Rev. Al Sharpton is not on board with Barack Obama.

Spitzer, Schumer and Mayor Bloomberg will meet today to discuss the Javits Center expansion.

Millions a year are spent on education officials who Schools Chancellor Joel Klein can't fire, but wants to.

The number of restaurants closed by health inspectors since rats were seen running around a Village restaurant has tripled.

There is a bill in the Assembly to boost salaries for legislators and judges automatically every four years.

And Tom Suozzi is trying to recruit the Nassau Conservative Party Chairman to run for office.

-- Azi Paybarah

In a brief interview with Rangel just now, he said, "We're going to have to clear the air if we're going to operate as professionals. Period. No further comment."

He went on to say that the whole debate is "very unpleasant for me," and "we're not going to be distracted by television ads."

The conversation also included this fun exchange:

The full transcript is after the jump.

-- Azi Paybarah

Charlie Rangel:
I do have a problem discussing the Spitzer budget because I'm concentrating my time on the Bush budget cuts. But it doesn't help us as legislators with the same constituents, federal and state, to be caught in a food fight and this procedure is one that has caused, that has caused many of us concern. And whether it's labor or hospitals or the city or legislators, we're going to have to clear the air if we're going to operate as professionals. Period No further comment.

ME
Are people acting like professionals right now, when discussing this issue?

CR
No further comment.

ME
Have you spoken with Eliot?

CR
Yes.

ME
How did that conversation go?

CR
All of my conversations go well with everybody. Maybe not Giuliani, because I'm advocating his presidency.

ME
That's true. And with Dick Cheney I imagine.

CR
Dick Cheney? Well, it's improving. We haven't talked for months, so that's improving.

ME
You have his old office, right?

CR
No, he had my office. His lease expired.

ME
But just to go back to--

CR
This is very unpleasant for me. This is very unpleasant. And we're not going to be able to effectively deal with the budgets. You know we only got one patient, one doctor, one nurse. They're not Republican. They're not Democrat. They're not from the city. They're problems are not just from the state, or from Medicaid or Medicare. They're sick people; they need help. And we are not going to get involved in a food fight about how that heath is delivered. We're going to have to work together from the city level, the state level, and the congressional level. And we're not going to be distracted by television ads.

ME
Both sides are running television ads.

CR
Listen. When I made my remarks, the people were there. [Ken] Raske and [Dennis] Rivera and the hospitals and labor. And the governor was down earlier. So, I don't want to get any further involved. I will be getting further involved, but not where you're taking me.

ME
I'm not trying to take you anywhere.

CR
Well you should, if you're a professional reporter, you should know what you're [doing], you're asking the questions [that] should be concise, to the point and driven.

ME
Do you think the mayor has an anger problem?

CR
I have not been trained in psychiatry to be able to determine whether other people have psychiatric problems. I don't really think about it.

ME
You have said you Dick Cheney might have mental problems. So you've obviously evaluated other people in some capacity.

CR
Well, I knew Dick Cheney better than I knew Spitzer.

ME
Where is there room to negotiate on health care?

CR
I have to leave. But let me say this. There's no one is going to disagree with me on any level of government that this is not the way to negotiate. Period.

ME
Got it.

CR
Okay. Great.

The amendments include a salary increase for District Attorneys ($1.1 million) and restores "funding for personal care level 1 in Medicaid" to the tune of $6 million.

The budget amendments can be seen over here.

-- Azi Paybarah

Well, Dennis Rivera and Ken Raske, guys who represent health care workers and hospitals, respectively, are putting Hillary's statements yesterday to work in their public campaign against Eliot Spitzer's budget.

In a letter the two men sent to Spitzer, and reporters, they quoted Hillary saying that GME "is one of the reasons why American health care is so good. Because we invest in the training of those who take care of us. That too is on the chopping block."

One thing worth noting is that before Hillary lavished praise onto the GME program yesterday and, ostensibly, took a swipe at Spitzer's budget, she explained where her information about some of these cuts were coming from.

From Hillary's remarks at yesterday's press conference:

"And Ken Raske just told me the budget eliminates Medicaid payments for something called Graduate Medical Education. Now that would cut, according to Ken's calculation, $1.2 billion to the state of New York."

It's safe to say Spitzer's information about the program was coming from someone else.

-- Azi Paybarah

At a press conference today to denounce the Bush health care cuts, Hillary Clinton and Chuck Schumer both indicated that the president's proposals are different in substance and spirit than Spitzer's.

At the same time, Schumer said he didn't agree with all of Spitzer's cuts, although he declined to specify which ones.

Shortly afterwards, Hillary singled out the president's multi-million-dollar cut to the Graduate Medical Education program (GME).

She said, "And Ken Raske [President of the Greater New York Hospital Association] just told me the budget eliminates Medicaid payments for something called Graduate Medical Education. Now that would cut, according to Ken's calculation, $1.2 billion to the state of New York. Now, what is that money used for? It is used to train physicians, nurses, health care professionals. That's one of the reasons why America's health care is so good. Because we invest in the training of those who take care of us. That too is on the chopping block."

When I asked Hillary about Spitzer's intention to cut the same program, she said, "I don't know."

-- Azi Paybarah

"We face a real challenge on health care that we must confront head on. This is exactly the wrong approach."

She's talking about the president's cuts. But -- and this is just a personal guess -- I'm betting certain unions will be looking to draw comparisons here with the health care spending cuts in Eliot Spitzer's proposed budget.

Hillary's full statement after the jump.

-- Azi Paybarah

STATEMENT OF SENATOR HILLARY RODHAM CLINTON ON THE PRESIDENT'S PLAN TO SLASH FUNDING FOR CHILDREN'S HEALTH INSURANCE, MEDICARE AND MEDICAID

Washington, DC - "It is unconscionable that the President's answer to our health care crisis is to cut the already strained health care safety net for our most vulnerable. The President's plan to cut funding to states for the Children's Health Insurance program and slash tens of billions of dollars from Medicare and Medicaid is more evidence of the President's misplaced priorities. These cuts would take us backward and only magnify our health care challenge. We need to move forward and make health care more affordable and accessible for seniors, families struggling to make ends meet and the millions of uninsured and underinsured Americans. We face a real challenge on health care that we must confront head on. This is exactly the wrong approach. I will work to stop this short-sighted scheme and instead put us on the path to making quality, affordable health care accessible to all Americans."