A state budget report published last week by the Hochul administration broke several pieces of news about Medicaid and other state health programs.

Here are some of the key revelations in the Enacted Budget Financial Plan, which the Budget Division released on Friday:

No federal aid for health-care worker bonuses. As part of last year’s budget, Governor Hochul and the Legislature approved bonuses of up to $3,000 for the state’s health-care workers. It was pitched as a way of recognizing the workers’ service during the pandemic and encouraging them to stay in their jobs.

Lawmakers had held out hope that the program would qualify for federal matching funds under Medicaid, which would cut the state’s cost in half. According to Friday’s report, however, officials at the Center for Medicare & Medicaid Services have signaled that New York’s application for matching funds will not be approved – leaving the state to contribute an additional $1.3 billion over the next two years.

“Based on initial CMS feedback, the Financial Plan has been revised to reflect the State paying the entire costs of these bonus payments between FY 2023 and FY 2025,” the report said.

A gubernatorial commission on health care. After warning that the growth of Medicaid spending is likely to exceed a statutory cap in years ahead, Friday’s report declared: “The Governor’s healthcare commission will examine and recommend reforms to improve quality and reduce costs.”

“Healthcare commission” apparently refers to a proposal in the printed version of Hochul’s State of the State message, in which she promised to appoint a Commission on the Future of Health Care with a broad but vague mandate to overhaul the state’s health-care system.

She did not discuss this idea during her January speech to the Legislature and appears not to have mentioned it since – raising doubt as to whether she intended to follow through. The reference in the financial plan suggests the proposal remains alive, although Hochul has yet to announce any appointments.

Federal aid surge. The lack of matching funds for bonuses notwithstanding, the state is projecting a big increase in federal money for health care.

The state is now expecting $63.7 billion in federal support for Medicaid and other health programs – which is $6.6 billion or 12 percent more than the previous fiscal year, and $4.7 billion or 8 percent more than projected in February.

Friday’s report did not offer an explanation for this revised forecast, but the year-to-year increase roughly tracks the unusually rapid rise of state spending on Medicaid, which is one of the largest components of the state budget.

A loss for home health aides. Numbers in Friday’s report confirm that a last-minute budget change requested by the health-care union 1199 SEIU will result in a net reduction in state spending on home health aides’ compensation. 

The deal increased funding for the Quality Incentive Vital Access Provider pool, known as QIVAP, which subsidizes home care agencies to provide health insurance coverage for their employees. Much of that money will ultimately flow to a benefit fund operated by 1199, which has been losing money and members in recent years.

To help cover that cost, the deal reduced hourly wage supplements for downstate home health aides by $1.55 an hour.

The budget report estimates that this latter move will save the state $1.6 billion over four years, while the added funding for QIVAP will amount to only $158 million over two years. That’s a net loss of $1.4 billion for the workers as a group – a figure which does not include wage supplements that otherwise would have been paid by programs other than Medicaid.

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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