The Biden administration appears to have shaved $2 billion or more off New York’s budget gap with a boost in Medicaid funding that does not need congressional approval.

In a letter to governors on Jan. 22—two days after President Biden’s inauguration—the U.S. Department of Health and Human Services said that the pandemic-related federal public health emergency “will likely remain in place for the entirety of 2021.”

That has the effect of extending an increase in Medicaid funding that was part of the Families First Coronavirus Response Act, a relief package enacted in March 2020. The bill added 6.2 percentage points to federal matching aid for the program, worth about $1 billion per fiscal quarter to state coffers, until after the pandemic emergency declaration is ended.

Governor Cuomo’s proposed budget, released on Jan. 19, assumed that the extra Medicaid money would continue only through the first quarter of the state’s fiscal year, which ends in June. The HHS letter indicates the extra aid—known as the enhanced federal medical assistance percentage, or eFMAP—will continue to flow for at least two more quarters and possibly a third.

The governor’s financial plan projected that eFMAP would be worth a total of $4.5 billion to the state government, including $3.5 billion in fiscal 2021 and just under $1 billion in 2022. If the public health emergency ends on Dec. 31, the state stands to receive another $2 billion on top of that amount. If it extends even one day into 2022, the state would be entitled to another full quarter’s worth, or about $1 billion.

A portion of the money also goes to New York City and county governments, to partially offset their share of Medicaid costs. According to estimates in the financial plan, they collectively stand to receive more than $200 million per quarter so long as the public health emergency continues.

The extended Medicaid boost should help to fill New York’s budget hole, which, despite recently improved tax receipts, remains the largest New York has faced since the Great Recession.

In presenting his proposed fiscal plan, Cuomo said he was hoping for as much as $15 billion in additional relief from Washington. It assumed as a “worst-case scenario” that a forthcoming stimulus bill would give the state at least $6 billion more in federal aid, out of which he earmarked $3 billion for fiscal relief in each of the next two years.

That seemed to leave the state’s fate at the mercy of a narrowly divided Congress, and how much additional aid the House and Senate would be willing or able to approve.

The Biden administration’s extension of eFMAP, announced three days after the governor’s presentation, would cover at least two-thirds of the governor’s bottom-line request even before Congress acts on a further relief package.

 

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

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The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo "Readers will recall that the Empire Center is the think tank that spent months trying to pry Covid data out of Mr. Cuomo’s government, which offered a series of unbelievable excuses for its refusal to disclose...five months after it sued the government, and one week after a state court ruled that the Cuomo administration had violated the law and ordered it to come clean—Team Cuomo finally started coughing up some of the records."   -Wall Street Journal, February 19, 2021

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