capital-1-pic-copy-300x178-4434805With the state facing its grimmest budget outlook in years, the legislative session shows signs of becoming a tug-of-war between public schools and health care—the two biggest recipients of state spending and, not coincidentally, the two heaviest-hitting lobbying forces Albany.

Senate Finance Chairman John DeFrancisco (R-Syracuse) got things going last month when he suggested that Medicaid rather than school aid should take the brunt of budget cuts. “It will never happen in education,” DeFrancisco said.

Now, Kenneth Raske of the Greater New York Hospital Association is pulling hard the other way: “New York’s financially struggling hospitals were living austerely within the state’s Medicaid spending cap well before the recent avalanche of federal health care cuts,” Raske told the Daily News’ Kenneth Lovett, “while other sectors, such as education, have not been held to theirs.”

That comment came as Raske announced that GNYHA and the health care workers union 1199 will spend $6 million on an ad campaign to sway budget negotiations in Albany.

So how do the spending numbers compare for health care and education? It depends how you slice them, as seen in the chart and graph below.

screen-shot-2018-01-11-at-5-38-23-pm-1258324
(Sources: NYS Budget Division, NYS Education Department, US Center for Medicare & Medicaid Services, US Bureau of Labor Statistics. Enrollment and CPI figures through 2017.)

In terms of the state-financed portion of each program, education has indeed been growing faster. Annual school aid increased $5.5 billion or 24 percent from fiscal years 2012 to 2018, while the state share of Medicaid grew $3 billion or 14 percent.

(Data from 2011 were omitted, because the state was still receiving post-Great Recession stimulus aid from Washington that would distort year-to-year comparisons.)

screen-shot-2018-01-11-at-12-36-10-pm-7993883
(Click to enlarge)

In terms of total spending (including state, federal, and local government funds), Medicaid comes out ahead of schools. The overall Medicaid budget not only increased faster, but at some point in the last few years surpassed total school spending for the first time in New York history.

On a per-enrollee basis, however, the picture is different. The state’s Medicaid rolls jumped by one-third, largely due to the Affordable Care Act, while public school enrollment declined slightly. New York’s per-enrollee Medicaid spending is not the outlier it once was, ranking as eighth-highest as of 2014, while its per-enrollee school spending is No. 1.

Of course, budgets should be calibrated according to the best interests of the public, not the relative treatment of competing interest groups. In the bigger picture, both education and health care have been funded generously compared to national norms, and lavishly compared to the rest of state government.

While school aid and Medicaid saw double-digit growth between 2012 and 2018, everything else—parks, transportation, the state police, environmental regulation, prisons, etc.—was held to a combined increase of just 6 percent, a third less than the inflation rate.

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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