Caroline Lewis

During state budget discussions in March, Governor Andrew Cuomo was adamant that the pandemic would not stop him from pushing through changes to Medicaid that he said were necessary to contain the growth of its more than $70 billion annual budget.

To the governor’s ire, a $192 billion stimulus package passed by the federal government increased federal funding for Medicaid during the pandemic only on the condition that the state refrain from making certain changes to the program. Cuomo initially said he would forgo billions of dollars in federal funding to move forward with Medicaid cuts, but he later backed down, agreeing to delay certain changes.

That would have been the end of the story, except that now, a new $3 trillion stimulus bill introduced this week by Democrats in the House of Representatives could mean that Cuomo may get his way after all.

Known as the HEROES Act, the legislation would give New York more flexibility to increase restrictions on Medicaid eligibility and implement other cost-cutting measures during the pandemic. It would also boost federal Medicaid funding, offering 14 percent for a one-year period. The previous coronavirus aid package increased federal matching funds for Medicaid by 6.2 percent during the crisis.

The bill, while facing slim chances of passing the U.S. Senate, nevertheless suggests the formidable influence Cuomo has on elected officials in Congress as well as his hellbent desire to control spending on the program. It includes a line essentially reversing a condition of federal aid that was previously put in place to prevent New York from tightening Medicaid eligibility during the coronavirus outbreak.

Although fiscal watchdogs have said spending needs to be contained one way or another in order for the program to be sustainable, patient advocates say such measures would hurt the more than six million New Yorkers who rely on the subsidies. Of particular concern are cuts to home care services for elderly and disabled New Yorkers, which has been identified as costly and in need of trimming.

“The state clearly needs more money from the federal government but it should come with strings attached,” said Gail Myers, deputy director of the New York Statewide Senior Action Council. “And the budget should not be balanced on the backs of people who are vulnerable and need care at home in the middle of a pandemic.”

Myers noted that restricting access to home care could force more people into nursing homes.

“Now is not the time you want to have someone be in a congregate setting,” she said, alluding to the spate of coronavirus-related deaths in nursing homes in New York. “I would also say on behalf of our organization that while there are many fine nursing homes, we have always been concerned about staffing and quality of care being appropriate to maintain the dignity of residents. Now it’s even more dramatic.”

Ultimately, many of the state’s cost-cutting measures made it into the budget, but the budget director was given the ability to delay any changes that might conflict with federal aid. Some reforms also came with delayed start dates from the outset. For instance, a measure allowing for greater scrutiny of people’s assets and income when they are applying for home care through Medicaid is set to go into effect in October.

State budget legislation passed this year also gave Cuomo the ability to make further cuts on a rolling basis based on changing revenue estimates. The governor’s Medicaid Redesign Team only identified about $1.6 billion in savings, rather than the $2.5 billion it set out to find. Overall, Medicaid spending is set to increase by 3 percent, or about $500 million, in fiscal year 2021, despite cuts.

But the short-term boost from the HEROES Act would lower the incentive for New York to bump up any proposed cuts, according to Patrick Orecki, a senior research associate at the Citizens Budget Commission.

Myers and some other advocates say the state should base Medicaid spending primarily on need, rather than fiscal considerations.

But Bill Hammond, director of health policy at the Empire Center, argues that restricting the ability of Cuomo and state legislators to make strategic changes to Medicaid will only force them to rely on less precise cost-cutting measures such as across-the-board reductions in the rates Medicaid pays to health care providers. Those types of cuts wouldn’t necessarily prioritize higher-need Medicaid recipients.

“The Medicaid Redesign Team included an across-the-board cut, but the meat of the report was to do targeted savings and to look for areas where spending was out of line,” Hammond said. “That to me is what everybody should want. Assuming you have to do some kind of cost control on Medicaid, which we had to do even before the coronavirus crisis, you want it to be smart and targeted and not braindead.”

Reached for a comment, Freeman Klopott, a spokesman for the New York State Division of Budget, said the House “acted responsibly” when it proposed the HEROES Act and included the changes that would allow the state to move forward with making its desired changes to Medicaid.

“We are carefully evaluating other flexibility or savings opportunities included in the Act as well,” he added, in a statement. “The Senate should follow the House’s lead and make this change, and provide the nearly $1 trillion in critical funding to states and local governments that was also included in the HEROES Act.”

© Gothamist

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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.