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Reports that county officials in Albany are threatening to challenge some incumbent legislators to protest a rise in Medicaid costs that they say has made it hard for them to govern. Results of the rise, including having to raise local taxes in order to cover the costs of health care for the poor; Challenge to the Republicans who have ruled the Senate and the Democrats who have controlled the Assembly for almost 25 years; Reasons for Albany's incumbent protection syndrome, including the fact that most voters blame their local governments for their problems rather than distant Albany.

Reports the July 1, 1999 collapse of New York state budget talks. Disagreement over Medicaid spending; History of Medicaid cuts by Governor George E. Pataki; Other difficulties, including lapses in governing loft units and Medicaid cuts; Comments from New York Senator Joseph L. Bruno and others; Outlook.

Discusses the ways in which Governor-elect George E. Pataki could cut New York's Medicaid system. Comments of the Lieutenant Governor-elect, Elizabeth P. McCaughey.

Reports the appointment of New York's incoming Lieutenant Governor Elizabeth P. McCaughey as head of a team studying the possibility of cost-reduction in the state's Medicaid program. Cost of the program.

Discusses the report by the Citizens Budget Commission, which found that Medicaid, not welfare, has been the prime engine of growth in public spending on the poor in New York City, and that welfare, when adjusted for inflation, declined by 20% since 1975. Questions raised on whether government spends too much on medical care as compared with food, shelter and other basic needs; Spending skewed toward elderly and away from children.

States that New York Governor Mario M. Cuomo renewed his push for a complex plan to ease the large and growing costs of Medicaid on New York City and county governments and offered to sweeten the deal with more money sooner from the state. Rising burden on counties; Terms of the plan.

Reports on the likely impact of Mayor Rudolph W. Giuliani's proposals for cuts in Medicaid reimbursement rates for the New York City. Details of the proposal; Views of Dr. Bruce Siegel, president of New York City's Health and Hospitals Corporation and Mayor Giuliani, on the subject.

Looks into New York Budget Director Marc V. Shaw's directive to the commissioners to be prepared for deeper fiscal cuts than what Mayor Rudolph W. Giuliani had announced for 1995-96. Details of original and modified plans; Opposition of Governor George Pataki to cuts in Medicaid.

Informs about the endorsement of a change by the Senate Finance Committee which is aimed at benefiting high-income states. Details of the provision negotiated by Senators Alfonso M. D'Amato and Daniel Patrick Moynihan; Benefits of the same; Views of the political observers on the same. INSET: States that could benefit..

States that New York hospitals will receive $1.25 billion in Federal aid to prepare for the age of managed care. The agreement by the Clinton and Pataki administrations to require New York's Medicaid recipients to enroll in health maintenance organizations; The views of supporters and opponents of the plan.