Governor Cuomo says the state of Wisconsin is the model for his unusual collaborative approach to attempting to reduce Medicaid costs in New York — but a report in today’s Wall Street Journal (subscription required) cites “little evidence of savings” in the Wisconsin program.

Cuomo announced in his State of the State speech last week that he would appoint a 25-member “redesign team” of “stakeholders,” including health care union bosses and hospital lobbyists as well as government officials, to find alternative ways of meeting his Medicaid “savings target” for fiscal 2011-12.That target will not be formally proposed by Cuomo until he releases his budget on Feb. 1.The team is due to report March 1, and the next fiscal year begins April 1.

The governor said he had been inspired by the “hybrid alternative dispute resolution meets binding arbitration process” used to find Medicaid savings in Wisconsin.”The industry came in, they worked with the government, they accepted the budget target and then redesigned the program to meet those targets,” Cuomo said.

Cuomo also announced that he had “seduced” Wisconsin’s former Medicaid director, Jason Helgerson, to run the New York effort. The process overseen by Helgerson in Wisconsin reportedly had resulted in savings of 10 percent.

However, Jacob Gershman of the Journal reports:

Medicaid spending overall has shot up in Wisconsin—12% in the last fiscal year—and the amount of money that officials from that state say they’ve saved due to their recent cost-cutting measures is based on estimates, not actual results.

A chunk of what they treated as savings is a change in payment schedules that pushes costs into future fiscal years. And the majority of actual cuts came out of the pharmacy and managed-care sectors.

A tiny percentage was shaved from nursing homes and other long-term care providers, while hospitals saw a rise in reimbursement rates.

[snip]

While the project has won plaudits from Wisconsin health-care providers, Republican lawmakers monitoring the efforts say they’re skeptical.

“The former administration promised increased access would lead to greater savings. It just doesn’t work like that and now the next administration will be forced to clean up the mess when we finally know the full extent of the problem,” said Robin Vos, co-chairman of the Wisconsin Legislature’s budget-writing committee. Republicans took control of the Legislature and governorship in January.

Skepticism about Helgerson’s accomplishments was expressed earlier this week in a New York Post guest op-ed by Patrick McIlheran, an editorial columnist for the Milwaukee Journal Sentinel.

People are enthusiastic about this new hire, Jason Helgerson. An expert for an Albany think tank, the Health Policy Research Center’s Courtney Burke, praised him for cutting collaboratively. The Wisconsin AARP’s boss, D’Anna Bowman, burbled to an Albany paper that were she a New Yorker, “I would be excited.”

Except Wisconsin didn’t actually cut Medicaid spending. The state budgeted an increase in Medicaid spending for the two years ending this June. Then it blew the budget by about $200 million. This isn’t just the recession; Wisconsin has raised Medicaid spending an average of 8 percent a year over the last decade.

When the Journal asked Cuomo’s press office to comment on the fact that Medicaid costs were actually rising in Wisconsin, a spokesman for the governor said that Wisconsin Medicaid spending had been “dramatically reduced on a per person basis as a direct result of Jason Helgerson’s cost cutting plan.”

McIlheran, however, already had anticipated that comeback:

Helgerson notes that Wisconsin’s per-person share of the Medicaid tab fell because the state got better at shifting costs to federal taxpayers. Thanks for that, New York federal taxpayers. Perhaps now that you employ him, Helgerson can shift your costs to the rest of the country.

Of course, New York is already a national leader in shifting Medicaid costs to the federal tax base; that’s one reason why our Medicaid program is so big and unaffordable to begin with.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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