screen-shot-2019-01-16-at-2-34-01-pm-6977813Governor Cuomo is now backing away from Medicaid spending cuts he pushed less than four weeks ago, his second about-face on health-care funding so far this year.

Even more head-spinning is his stated rationale: the supposed threat to federal aid outlined in President Trump’s budget proposal this week.

This makes little sense on at least two levels.

First, the Trump plan stands virtually no chance of happening with Democrats in charge of the House of Representatives.

Second, if Washington really was about to slash billions in funding for New York, committing more to Medicaid now would only make the future pain worse.

Until last month, Cuomo had cultivated close relationships with groups representing hospitals and their unionized workers, both of which are lobbying powerhouses in Albany. His January budget announcement touted a 3.6 percent increase in core Medicaid spending, which exceeded the inflation-based “global cap” that Cuomo himself imposed on the program early in his first term.

Things changed dramatically in mid-February. Facing a larger-than-expected dip in tax revenues, Cuomo singled out health-care for cutbacks. His budget-balancing plan called for trimming $550 million from the state share of Medicaid, which would result in $1.1 billion less money for providers with the loss of federal matching aid factored in.

His aides emphasized that total Medicaid spending would still go up – by about half as much as before – suggesting that the industry could comfortably absorb the hit.

Yesterday, the tune changed again. In light of the mere threat of Trump’s proposals, Cuomo’s budget director, Robert Mujica, said finding more money for health-care is now the governor’s “No. 1 priority.”

Mujica said the president’s proposals would reduce New York’s federal health aide by $4.3 billion in 2020, $10.2 billion in 2021 and $11.2 billion in 2022.

“We now have to re-look at our budget and make sure, if there are any resources available, we put them into the health-care system,” Mujica said. “We put them into the hospitals and nursing homes. We set aside reserves for the potential that even a portion of [Trump’s] cuts go into effect.”

Increasing the state’s slender reserves is a worthwhile thing to do, whether Trump’s threats are serious or not. Pumping more tax dollars into Medicaid – when New York already spends more per capita on that program than any state – is a questionable way of bracing for lean times.

The governor’s latest message is reminiscent of last year’s budget season, when Cuomo repeatedly used the hypothetical possibility of “attacks” from Washington to justify his health-care proposals.

That threat – which never materialized – was his main rationale for expropriating $2 billion in proceeds from the sale of Fidelis Care health plan to Centene Corp. Although he said initially that he would put the money in a “health care shortfall fund,” to hedge against lost federal aid, it ultimately went into a “health care transformation fund” that the governor could spend on any health-related purpose.

His first use of the fund came in October, when he quietly ordered across-the-board Medicaid fee increases for hospitals and nursing homes – to the benefit of two groups who were important political backers in his re-election campaign.

In February, he called for cancelling those hikes before they took effect, and now he’s seemingly inclined to go forward with them again.

His renewed zeal for maximal health-care funding raises the question: Where is he going to get the cash this time?

 

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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