health-ins-150x150-8488738A fact-check of the newly published op-ed by state budget director Robert Mujica, defending Governor Cuomo’s Medicaid proposals, shows it to include a number of exaggerated or misleading arguments.

The article, published in the Daily News, focuses on Cuomo’s proposal to change how the non-federal share of Medicaid expenses is divided between the state and local governments. Currently, New York City and the 57 counties contribute $7.6 billion, or about 10 percent of the program’s budget, which is far larger than the local share in any other state.

Counties previously paid an even higher percentage of Medicaid costs, and their contribution grew in line with the budget for the whole program–putting a heavy and rapidly increasing burden on local taxpayers, especially in areas with concentrations of poverty.

The state agreed to cap the growth of the local share at 3 percent annually beginning in 2005, under the Pataki administration. Between 2013 and 2015, Cuomo and the Legislature phased that cap down to 0 percent.

Under the governor’s proposed budget for fiscal year 2021, the cap on the local share would be unfrozen – and tied to compliance with the state’s cap on property taxes.

“If a locality stays within the property tax cap rate, the state continues to pay the entire increase of Medicaid costs as long as it stays under 3 percent,” Mujica wrote. “If the costs go above 3 percent, the localities will be responsible for increases in excess of 3 percent. Meanwhile, if the locality stays below 3 percent, it will share in 25 percent of the savings.”

The administration’s contention is that the current policy leads to a “blank check syndrome” among local officials, because they face no fiscal consequences for rising Medicaid costs in their jurisdictions. In making that case, however, Mujica misstates, exaggerates or omits important facts.

Here is a check of some of the op-ed’s central claims:

“Recent increases in Medicaid spending coincide with the state’s assumption of financial responsibility from local governments.”

This claim ignores the far larger change that also happened around 2015: a massive enrollment increase following the launch of the Affordable Care Act in 2014. New York’s Medicaid rolls shot up by 900,000, or 17 percent, over the ensuing two years, reaching a peak in late 2015. That trend–which Cuomo actively encouraged–was the dominant driver of higher Medicaid spending in that period, and had nothing to do with freezing the local share.

After enrollment stabilized in 2016, the Cuomo administration stoked expenses in other ways–including a minimum wage hike that has added billions in costs for Medicaid providers, and an unexpected boost in Medicaid rates for hospitals and nursing homes.

“For years, localities, who administer their respective Medicaid programs, were responsible for 25% of the cost.”

This sentence is doubly misleading. First, the state handles the lion’s share of administrative functions–and during Cuomo’s term has taken over duties formerly conducted at the local level.

Second, the local share hasn’t been as high as 25 percent for decades. When Cuomo took office in 2011, the local share was roughly 15 percent, and it has since declined to about 10 percent.

“The state committed to paying all Medicaid spending growth for localities, more than $4.5 billion, and the localities would control their property taxes.”

The $4.5 billion amount is an estimate of how much higher the local share would be if the clock were turned back all the way to 2005–six years before Cuomo took office. The savings from the freeze that took effect in 2015 amount to about $1.3 billion per year.

“Localities determine financial eligibility for Medicaid, which requires diligence to ascertain that assets have not been transferred or disclosed. They determine if Medicaid recipients are better served by a nursing home or home health care. They determine the level of care required for those directed to home health care. They then monitor costs to determine effectiveness and efficiency.”

This passage implies that localities handle all such decision-making, which is not the case. About 60 percent of Medicaid recipients enroll through the New York State of Health, an insurance exchange run by the state–and that number has been growing. A state contractor also handles the medical screening for enrollees in managed long-term care. The level of care for those recipients is determined by private health plans, who also contract with the state.

In short, localities do handle a portion of enrollment and care management, giving them some share of responsibility for Medicaid spending. But the state is by far the dominant player–and its administrative role was growing, not shrinking, during the recent surge in spending.

Another issue with Mujica’s article–and with the underlying proposal–is confusion about how the proposed carrot-and-stick system would work.

Legislation submitted with the governor’s budget says localities in which Medicaid expenses increase more than 3 percent “shall be liable for and remit to the state 100 percent of the such excess amount”–but does not elaborate on how that “excess amount” would be calculated. 

Say, for example, costs in a given year rise by 7 percent. Would the locality’s contribution increase by 4 percent (the difference between 7 and 3)? Or would the locality also have to shoulder 4 percent of the growth of the state share?

Similarly, if a jurisdiction does not abide by the property tax cap, would its local share increase at the same rate as total spending, or would it absorb the entire amount of growth in the non-federal share?

Using the latter assumption, New York City officials have said the policy would have cost them $1.1 billion had it been in place in 2019. The Cuomo administration has disputed that estimate, but its intended methodology remains murky.

Another aspect of Cuomo’s proposal–sharing 25 percent of the savings with localities who keep cost growth under 3 percent–does not appear to be mentioned in the governor’s draft budget legislation.

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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