Some forms of mutual political back-scratching are business as usual, while others rise to the level of corruption. Then there is the gray area in the middle.

There is nothing illegal in Gov. Andrew M. Cuomo’s decision to raise Medicaid reimbursement rates shortly after a powerful union donated $1 million to the state Democratic Party. The rates have been low and the increase is small.

But the context stinks. The quiet way in which it was executed suggests the Cuomo administration did not consider it among its proudest moments.

A New York Times story last week reported that during Cuomo’s 2018 re-election bid, his campaign asked the Greater New York Hospital Association for a donation to the state Democratic Party, according to a source. The association, which represents large New York City health care institutions, wrote checks totaling more than $1 million, twice as much as the group had given to any campaign in a decade or more.

A short time later, the Cuomo administration authorized an increase in Medicaid reimbursement rates to hospitals and nursing homes, by 2% and 1.5% respectively. The Health Department announced the increases in a short item on Pages 90-91 of the State Register one day before they went into effect in November.

And the Hospital Association’s donation was placed in the Democratic Party’s housekeeping account and not publicly disclosed until several weeks after the election.

A Cuomo spokesman, Rich Azzopardi, disputes the conclusions of The Times’ story. First, he told The News on Tuesday, the housekeeping account is controlled by the state Democratic Party and cannot be used to help individual candidates, either in primaries or general elections. He says the party asked for the donations, not the Cuomo campaign.

“And the only news is how low our increases have been: 1.5% and 2% after flat funding for more than eight years,” Azzopardi told The Times.

The rise in reimbursement rates is expected to cost the state about $140 million.

Part of the increase in Medicaid funding was covered by $2 billion in proceeds the state received from the sale of a nonprofit Catholic health insurance company, Fidelis.

Robert Mujica, the state budget director, told The Times that the Medicaid reimbursement rate increase was directly linked to the Fidelis sale.

“They lobby for it every year,” Mujica said. “I was very matter of fact: If I have the money, I’ll be able to do it; if I didn’t have the money, I won’t be able to do it.”

Azzopardi says the rate increases were done in November because that’s when the Fidelis sale funds became available.

The Fidelis proceeds are a one-shot windfall that won’t help the state out of future jams.

The Times report also says state officials pulled a fiscal gimmick to deal with a shortfall in the Medicaid budget, delaying $1.7 billion in payments for three days, pushing them into the next fiscal year. That made it appear the state stayed within its spending cap.

“It’s everything that’s wrong with Albany in one ugly deal,” Bill Hammond, a health policy expert at the fiscally conservative Empire Center, told The Times.

The pressures on the Medicaid system are considerable. In addition to rising labor costs, the federal government eventually will cut about $4 billion in Medicaid disproportionate-share payments to hospitals.

Those are offsets to costs incurred by facilities that treat a large share of Medicaid and uninsured patients. The cuts were mandated under the Affordable Care Act, but Congress has postponed them several times, most recently until late November.

Citizens Budget Commission, a nonpartisan fiscal watchdog group, estimates the state’s Medicaid shortfall could rise to more than $7 billion over the next four years.

Medicaid is a critical program that provides health care to the country’s poor and is funded by federal and state governments. Its problems demand serious attention, not shortcuts and windfalls and deceptions.

© 2019 Buffalo News

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The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.