New York Gov. Eliot Spitzer vowed to overhaul the state’s health care system to guarantee health insurance for all children and to extend Medicaid coverage to all eligible adults in the state.

At the same time, Spitzer vowed to trim state spending on health care.

In his first “state of the state” address to the New York legislature Jan. 3, the state’s new governor insisted health care in New York was in need of fundamental reform.

“No one can afford health care anymore, not New York’s working families, not our businesses and not our government,” Spitzer said. New York’s uninsured population totals 2.8 million, he said.

In addition to guaranteeing access to health insurance for the state’s 500,000 uninsured children, Spitzer vowed to enroll the state’s 900,000 Medicaid-eligible adults who are now uninsured. He said he would propose a simplified Medicaid enrollment process that would make it easier for qualified individuals to join the program while guarding against fraud.

[U.S. Census Bureau data shows that about 15% of New Yorkers are uninsured. That is just slightly better than the national average of 16%. An analysis by the New York Times estimates Spitzer's plan, if effected, would give New York the lowest rate of uninsured in the nation.]

In the last 15 years, state Medicaid spending rose from 14% of New York’s general budget fund to 35%, Spitzer noted.

Expanding access to health care for New York residents would actually cut state spending extensively, he said, because increasing the availability of primary care would reduce the need for expensive emergency-room care.

“We will also invest in better management of high-cost cases involving patients with multiple chronic illnesses,” he said, noting such care makes up a disproportionately high share of health care costs.

“Better managed care will not just save money for patients and the state but will lead to better overall care,” he insisted.

Spitzer offered a number of other proposals to revamp health care in the state, including plans, originally proposed last year under the administration of Gov. George Pataki, to close hospitals in communities with excess capacity.

He also called for revamping the long term care industry in the state. “We must shift spending away from expensive institutional nursing homes toward community and home-based alternatives, so seniors can have the care they want at a price they can afford,” he said.

Spitzer also promised New York would use its extensive bargaining power under state-sponsored health care programs to negotiate lower costs for prescription drugs from both drug companies and pharmacy chains.

In other news, Spitzer has nominated Eric Dinallo, general counsel of the insurance broker Willis Group Holdings, New York, to be state insurance superintendent in his new administration. Dinallo would replace Howard Mills.