Blame Cuomo for New York’s Medicaid crisis

by Bill Hammond |  | New York Post

When it comes to New York’s latest Medicaid mess, the buck stops with Gov. Andrew Cuomo.

Or rather, the buck should stop with him, if only he would enforce his own rules.

Turns out the state’s massive government-run health plan for the poor and disabled, which covers one in three New Yorkers, has been running way over budget for months. And the Cuomo administration secretly finessed the situation by delaying $1.7 billion in payments from late March to early April, thereby shifting the red ink from the previous fiscal year into the current one — while doing nothing to slow the outflow of cash.

The result is that Albany has a $3 billion-plus hole on its balance sheet — and no known plan for closing it.

Most mystifying is that Cuomo had all the tools he needed to prevent this disaster in the first place; he invented them, in fact. But when the time came to use the tools, he left them in the toolbox.

It was Cuomo’s good idea, at the very beginning of his first term in 2011, to impose an inflation-based cap on Medicaid spending growth, bringing a modicum of fiscal discipline to the notoriously bloated program.

To enforce that discipline, Cuomo also requested — and received from the Legislature — unilateral authority to cut Medicaid payments to health care providers as soon as spending showed signs of rising too fast.

Cuomo, who styled himself a fiscally responsible Democrat in those days, presented the measures as a way to tame the program’s sky-high costs. And they seemed to work as promised — for a time.

From 2011 to 2016, the cap held spending growth to just 17%, roughly in line with medical inflation, even though Medicaid enrollment surged by 31%. Per-recipient costs dropped significantly.

After 2016, however, those welcome trends reversed — as documented in a just-published report from the Empire Center. Because it lacked an adjustment for enrollment, which flattened out, the cap allowed spending to keep chugging upward, year after year.

Plus, Cuomo and the Legislature weakened the policy with carve-outs and loopholes. The biggest exemption applied to expenses from a major minimum-wage hike, to as high as $15 an hour. That is now costing Medicaid about $2 billion a year.

Last summer and fall marked a breaking point. State Medicaid spending started overflowing its capped levels even with the extra leeway afforded by loopholes. That was when, according to statute, Cuomo and his health commissioner should have raised the alarm and invoked their authority to cut fees.

Instead, they did just the opposite — quietly ordering rate increases for hospitals and nursing homes effective last Nov. 1. That costly move came two months after the Greater New York Hospital Association secretly donated more than $1 million to the Cuomo-controlled Democratic Party, and one week before the governor easily won re-election.

Disturbingly, Cuomo kept the lid on Medicaid’s worsening financial condition for months, including during all of this year’s budget process. He failed even to disclose the $1.7 billion payment delay when it happened in the throes of final budget talks, throwing the state’s $176 billion financial plan out of balance even before lawmakers voted.

It wasn’t until weeks after passage that Team Cuomo owned up to Medicaid’s overspending problem — and warned that it might finally invoke the power to order across-the-board fee cuts that the gov ducked the year before.

Those cuts will now have to be that much deeper and more painful because of Cuomo’s year-long campaign of deception and delay. Worse, his administration has tried to portray its fiscal shell game as necessary to ensure “compliance” with the cap — an Orwellian framing that turns reality on its head. And get this: His budget aides are also holding open the option of postponing further payments, which would only dig the hole deeper.

Medicaid is state government’s costliest program and most awesome responsibility. The millions who depend on it for care, and the taxpayers who foot the bill, deserve better from their chief executive in Albany.

Bill Hammond is health policy director of the Empire Center for Public Policy. This essay is based on his just-published report: “Busting the cap: Why New York is losing control of its Medicaid spending again.”