ALBANY — Fiscal watchdogs and some industry insiders fear Gov. Cuomo’s plans to tackle the state’s $6 billion Medicaid-induced budget deficit could lead to service cuts and higher health insurance taxes.

Cuomo’s proposal to make the state’s Medicaid program “fiscally sustainable” by capping spending for the city and other local governments and creating a task force to find savings could have repercussions across the industry, some observers said Wednesday.

Bill Hammond of the Empire Center, a conservative think tank, said some of the language Cuomo used in his budget address presented an ominous sign that the Medicaid Redesign Team, tasked with finding $2.5 billion in saving, could shift the burden to New York businesses and residents in the form of health insurance taxes.

“In his remarks he mentioned that ‘industry revenue’ could be one way to close the gap… and when his budget director was asked about it, he did not rule it out,” Hammond told the Daily News.

Robert Mujica, Cuomo’s budget czar, said the task force could call on the health care industry to provide “new resources,” eliminate inefficiencies or root out waste, fraud and abuse.

“There are obviously impacts from doing certain things that drive up other costs,” Mujica said. “We’re leaving that up to the MRT and they’ll come up with whatever solutions they do to deal with it.”

Medicaid, the state-run health insurance program serving the poor, elderly and disabled, is the largest contributing factor to the state’s ballooning budget deficit thanks to growing enrollment, state-approved increases in reimbursement rates to providers and minimum wage increases.

“The Medicaid system has to be fiscally sustainable,” Cuomo said during his budget address on Tuesday. “If it is not fiscally sustainable then we accomplish nothing.”

One health care insider said that Cuomo’s language has insurance and even prescription companies on edge over possible tax hikes that could be passed on to businesses or consumers.

“It seems like a real possibility and it’s not good,” the source said. “We are concerned, after the tax on opioids last year, that the MRT is going to expand into other prescriptions.”

Eric Linzer, president of the New York Health Plan Association, said insurers are concerned about shouldering more of the burden, but are willing to work with the governor.

“Increasing taxes only exacerbates the challenge for employers and individuals to have access to affordable coverage and the focus really needs to be on controlling rising healthcare costs,” he said.

The other part of Cuomo’s plan, punishing local governments that exceed a 3% spending cap by making them pay the difference, has city officials nervous that they’ll be forced to pass the bill on to taxpayers.

Hammond said the move is simply passing to buck for costs the state controls.

“The state sets the rules (for Medicaid),” he said. “It’s decisions made in Albany that ultimately drive costs up, a lot more than decisions made in New York City or any other locality. The idea that you would penalize localities for cost increases that are beyond their control makes no sense.”

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