emergency-sign-at-hospital-150x150-3835902At the midway point of the fiscal year, New York’s Medicaid health plan has already spent 61 percent of its state-funded budget, according to the latest cash report from the comptroller’s office – putting the program on track to end the year with a $2.9 billion shortfall.

As of Sept. 30, state operating expenditures on Medicaid totaled $13.1 billion, or 61 percent of the program’s annual state-funded allocation of $21.4 billion. (Including federal aid and contributions from New York City and county governments, the program’s total budget is about $75 billion.)

Core state pending on Medicaid was $556 million over projected cash flow in the enacted budget financial plan, down from $665 million over in July. However, those cash flow figures were unusually front-loaded, reflecting the Cuomo administration’s decision to delay $1.7 billion in Medicaid payments from the end of the 2018-19 fiscal year to the beginning of 2019-20, which effectively doubled expenditures for April.

The plan shows lower than usual spending in the latter half of the fiscal year, but the state has not publicly taken actions that would slow Medicaid expenses.

In recent years, Medicaid spending through September has consistently turned out to be about 54 percent of the annual total, regardless of what the original financial plans projected. If that pattern holds true, Medicaid would end the fiscal year on March 30 at $24.3 billion, or $2.9 billion over budget.

That’s roughly consistent with the $3.5 billion gap projected by the Citizens Budget Commission last week

Medicaid has been running over budget for at least the past year, which should have triggered across-the-board payment cuts under the state’s “global cap” statute. However, the Cuomo administration refrained from invoking those powers, choosing to quietly postpone the $1.7 billion in payments instead. 

This maneuver was not disclosed to the public until May – after the current budget was adopted by lawmakers – and did not become widely known until July. Since then, the governor’s aides have confirmed that spending continues to exceed expectations – and warned that cuts or further payments delays may be necessary in the near future.

As the spending overages mounted last fall, the Health Department quietly awarded Medicaid rate increases to hospitals and nursing homes – not long after the state Democratic Party received more than $1 million in contributions from the Greater New York Hospital Association.

That series of events was examined in a New York Times article earlier this month.

For more background on Medicaid’s budget crunch, see the Empire Center’s just-published report: “Busting the Cap: Why New York is losing control of its Medicaid spending again.”

 

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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