Editorial: Medicaid in trouble; New York needs to reduce its costs, not paper over them with financial trickery

Medicaid is a crucial program for New Yorkers without other health insurance, but you wouldn’t know it from the way the Cuomo administration is playing with its finances: turning to financial gimmicks that paper over unexpected expenses while doing ignoring the problems behind them, including its higher-than-average costs. It’s politically expedient but it counts as both medical and fiscal malpractice.

Medicaid is the federal-state program that provides health care to poor Americans. Its establishment in 1965, along with Medicare, was a signal moment in American life, acknowledging a societal duty to protect those with little or no ability to pay for their own health care or their families’. Preserving it requires responsible stewardship by the governments that oversee it. New York needs to do better.

The problem glows red in a recent report on the state’s current budget: A deficit of $6.1 billion has opened in the budget, triple the $2 billion gap reported just six months earlier. Much of it traces to Medicaid, which is expected to cost state, federal and local governments more than $74 billion this year.

New York’s Medicaid program is facing its own $4 billion deficit, first reported not by the Cuomo administration but a fiscal watchdog. The Empire Center for Public Policy reported this summer that the state played a fast game with its Medicaid expenses as the 2018-19 fiscal year reached its end. Instead of paying some 80,000 providers more than $1.7 billion it owned them, the state pushed that expense into April, where it was recorded in a new fiscal year. With that, the previous cycle appeared to be healthier than it was. It was a classic Albany gimmick.

And the gimmickry continues. As part of dealing with this deficit, the state plans to deal with more than half the deficit – $2.2 billion worth – through what it calls a “permanent adjustment to the timing of payments” owed to providers. That’s a euphemism for paying them late and it does nothing to lower costs or increase revenues.

“You try running your household expenses and then say, ‘I’m going to restructure my payments and that will make the problem go away,’ ” said E.J. McMahon, head of the Empire Center. It won’t. You have to spend less or earn more.

The remainder of the deficit is to be closed by something called “the savings plan,” a solution whose details won’t be revealed until January when Cuomo presents his 2020-21 budget proposal. New Yorkers and health care consumers can only hope it will be a more substantial approach than mooching off the providers who deliver essential care.

One of the biggest problems is in the high cost of New York’s Medicaid program. As the Henry J. Kaiser Family Foundation reported in 2014, New York runs the nation’s eighth-most costly Medicaid program, at a per-enrollee cost of $7,806.

It’s one thing to be a small-population state with a high cost – North Dakota runs the nation’s most expensive Medicaid program at a per-enrollee cost of $10,392, followed by Alaska at $9,956 – but New York is the nation’s fourth most populous state. It’s covering a lot of people at an especially high cost.

By contrast, California, the most populous state – and, like New York, a decidedly blue one – is the fourth least expensive, at $4,193 per enrollee. New York’s cost is 36% higher than the national average of $5,736. Those are red flags.

Several factors may contribute to Medicaid’s problems. One is growth in the program as a function of the Affordable Care Act, aka Obamacare. In addition, as the state’s population ages, so does the amount of medical care needed by all its citizens, including those on Medicaid. Costs also rose when the state increased its minimum wage.

It’s good that the country is providing insurance to those who would otherwise go without. It’s good that people are living long lives and that the minimum wage goes up. What is unsustainable is a Medicaid program so far out of step with national averages.

New York doesn’t have to be penurious about health care for the poor, but it does have to be sensible. Its high costs, especially as compared to many other large states, shows that it isn’t. This would be a good time to start.

© 2019 The Buffalo News

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