cuomo-nypost-300x200-2131548The Cuomo administration’s quarterly budget update includes a warning for the state’s health-care industry: Medicaid cuts could be coming.

The report, released Tuesday, says officials are developing a plan to reduce Medicaid spending that could include “across-the-board rate reductions to health care providers and plans.”

The $79 billion health plan for the poor and disabled covers about one in three New York residents and represents a major source of revenue for hospitals, nursing homes and other health providers.

Tuesday’s announcement follows the recent revelation that the state had quietly postponed $1.7 billion in Medicaid payments from March to April – a step officials said was necessary to avoid violating a “global cap” on the program’s spending for fiscal year 2019.

That unusual maneuver signaled that expenditures on the health plan for the poor and disabled were running about 8 percent over budget – a problem that has not abated.

Medicaid spending “continues to exceed projections,” the update released Tuesday says. “As such, [the Division of the Budget and the Department of Health] are working to develop options to reduce spending within the Global Cap and/or continue to manage the timing of payments. Options to reduce spending include the execution of statutory powers granted to the Commissioner of Health to limit spending, which include across the board rate reductions to health care providers and plans.”

Under “global cap” legislation first enacted in 2011, the bulk of state spending on Medicaid is supposed to grow no more than the 10-year average of medical inflation, which is currently about 3 percent. Because of various exceptions and loopholes added over the years, the 2019 budget allowed growth of more than 6 percent – but actual spending was on track to rise 15 percent.

When spending shows signs of exceeding the cap, the law empowers the health commissioner and budget director to develop a cost-cutting plan – but they refrained from doing so last year. Last fall, meanwhile, Cuomo boosted outlays further by quietly approving rate increases for hospitals and nursing homes, a big election-year win for some of his biggest political supporters.

The fiscal year 2020 budget approved by the Legislature in March does not include a plan for addressing the Medicaid overage, which was not made public until May.

During budget negotiations this spring, however, the governor raised the possibility of reconvening the Medicaid Redesign Team, a panel of officials and industry stakeholders that helped contain Medicaid costs during Cuomo’s first term. Don’t be surprised if Cuomo revives that concept in the near future.

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

You may also like

After Tariff Shock, Albany Should Face its New Fiscal Reality

This year, for once, state lawmakers' failure to pass a timely budget could prove to be a stroke of luck. When President Trump rolled out his on April 2, Albany leaders had not agreed on a spending plan for the f Read More

New York’s Home Health Workforce Jumps by Another 10 Percent

New York's home health employment is continuing to soar, growing by 57,000 jobs or 10 percent from 2023 to 2024, according to newly released data from the U.S. Bureau of Labor Statistics. Read More

Hochul Pushes New Energy Tax Past Next Election

Governor Hochul has further delayed what amounts to a tax on energy until after the next general election.  Almost six years after the state adopted an aggressive emissions-cutting Read More

Sorting Fact from Fiction on the Future of Medicaid

As Washington contemplates cutbacks to federal funding for Medicaid, officials in Albany have reacted in two self-contradictory ways. On one hand, they warn of Read More

The 411 On New York’s 911 Skim

New York for decades has collected, under various names, a special tax on mobile phones. The tax, which today shows up on customer bills as the “public safety communications surcharge,” devolved from being a fee to pay for 911 services to a general revenue source with 911 services as a near second thought. Since 2009, almost half the surcharges paid by customers for public safety communications—more than $1 billion—have been redirected to New York’s general fund. Read More

Immigrant Enrollment in ‘Emergency Medicaid’ Surges to 480,000

One of the biggest drivers of New York's Medicaid enrollment growth over the past decade has been "emergency Medicaid" for undocumented immigrants, newly released state records show. Read More

Medicaid’s Missing Million

The Health Department has been either unable or unwilling to document the eligibility status of almost one million Medicaid recipients, raising further concern about the possibility of large-scale over-enrollment. Read More

New York’s Medicaid Spiral Is Worse Than Hochul Admitted

Although Governor Hochul said last week that the current trajectory of Medicaid spending is "not sustainable," the upward trend is even steeper than she and her budget director have acknowledged. Read More