ALBANY - Hundreds of thousands of older New Yorkers will be eligible for a discount pharmacy card, a program to fight alcoholism will be revamped, and the cigarette tax will rise as part of the state budget being completed this week.

The new pharmacy cards will provide discounts of 30 percent off brand-name drugs and 60 percent off generic drugs. New Yorkers who meet income qualifications and who are 50 to 64 years old, or without insurance or disabled could qualify.

The program will achieve the savings by leveraging mass buying power to get rebates and discounts for the eligible group estimated at 400,000 people.

New Yorkers whose moderate incomes qualify for the EPIC pharmaceutical program for the elderly will qualify for the new program, expected to begin this year.

“Today we took an important step forward in transforming our health care system to lower costs, increase access and invest in primary and preventive care,” Gov. David Paterson said. “I thank the Legislature for partnering with me to move the budget process forward.”

The Paterson administration contests a claim of victory by hospitals and other powerful health care interests. The hospital lobbyists say they were able to temporarily derail a multiyear effort to drive more government funding to outpatient care instead of institutions as a way to save money and improve care.

“This budget begins in earnest that essential shift, and we look forward to future policy discussions concerning how health care providers and state leaders can work together to drive the reforms necessary to effectively and efficiently provide the very best patient and resident care,” said Daniel Sisto of the Healthcare Association of New York State, which represents hospitals.

Paterson administration officials say the first year of their planned transition to save Medicaid dollars by redirecting more patients away from hospital care remains intact. The next three years of the plan, however, will be subject to review by an advisory group that will include officials from hospitals critical of the plan.

The future changes will also have to go through the Legislature, which has worked closely with the power hospital lobbyists.

“This legislation restores much-needed funding for hospitals, nursing homes, and home care and at the same time makes important reforms to make our health care system more cost-efficient and effective,” said Senate Republican leader Joseph Bruno.

The health care budget also includes:

• $25 million to expand the State Children's Health Insurance Program to insure children in moderate income families. This will help provide preventive and primary medical care to more of the 400,000 uninsured children statewide.

• Beefing up Medicaid fraud investigations to recover misappropriated funds.

• $15.6 million worth of grants and student loan forgiveness to place more physicians in needy rural and urban areas under the Doctors Across New York program.

• Shifting $170 million from hospital inpatient care to less expensive outpatient programs.

• Revenues from an increase in the tobacco tax, although the size of the increase hasn't yet been released. The original proposal calls for a doubling of the state cigarette tax to $3 per pack, which would raise $200 million to $500 million.

• Revamping the detoxification program to help alcoholics avoid a cycle of failing in one program after another, sometimes spending as much as 150 days a year in the short-term programs. The reforms will include more outpatient treatment, better referrals to follow-up programs, and more “observational beds” in treatment facilities that could determine what outpatient care is best.

In all, the Legislature's health care spending will restore $273 million of the reduced growth in spending that Paterson sought to deal with a $5 billion deficit and declining revenues. That's about 75 percent of Paterson's plan.