As state lawmakers debate the Medicaid budget during a public health crisis, here are seven things they should keep in mind:

(1) Categorically rejecting any cost-cutting measures because of the coronavirus crisis is unrealistic. The state has seen $10 billion to $15 billion in revenue evaporate almost overnight. Even if lawmakers raise taxes, substantial reductions in spending will be necessary. Allowing Medicaid to keep growing at its current pace would necessitate far deeper cuts to school aid and other programs.


This is an installment in a special series of #NYCoronaVirus chronicles by Empire Center analysts, focused on New York’s state and local policy response to the Coronavirus pandemic.


(2) The extra Medicaid funding from Washington does not come close to filling the gap. Although Senator Chuck Schumer and others have said it would be worth $6 billion per year or more to New York, other estimates (including my own) have put the number between $4 billion and $5 billion. Either way, it’s misleading to use that annualized figure because the aid will be provided on a quarter-to-quarter basis. When the president declares an end to the coronavirus emergency declaration – which everyone hopes will be less than a year from now – the money will quickly stop.

(3) Accepting the aid has downsides. First, it comes with strings attached that would inhibit the state from implementing the recommendations of the Medicaid Redesign Team or other cost-cutting reforms. Governor Cuomo may be overstating the obstacles, but his underlying complaint is valid. The state needs to be able to manage its Medicaid costs in a fiscal crisis, and decisions about the right way to do that should be made in Albany, not Washington.

(4) The second downside is that using temporary aid to paper over a long-term imbalance in Medicaid is dangerous, as Governor Cuomo knows from personal experience. The last time Washington provided extra Medicaid funding, in the aftermath of the Great Recession, it expired on December 31, 2010 – the day before Cuomo took office. The loss of that funding was a major cause of the $10 billion gap he had to close in his first budget.

(5) Although it’s commonly said that Cuomo is trying to “cut” Medicaid by $2.5 billion, it would be more accurate to say that he’s slowing the growth. Even if the full $2.5 billion in savings are enacted into law, state-share spending on Medicaid will still increase by about $1.5 billion, or 6 percent, compared to the budget as originally approved for this year.

(6) None of the measures proposed by the Medicaid Redesign Team would directly impair the coronavirus response, and most of them would not affect hospitals. One proposal, for example, reduces a state subsidy for doctors’ malpractice premiums, which should not be the taxpayers’ responsibility in the first place. The largest number of proposals seek to contain the rapidly rising costs of long-term care, especially non-medical “personal assistance” provided to recipients at home, in some cases by friends and family members. Controlling these costs would free up resources, making it easier for the state to finance its coronavirus response.

(7) In the absence of targeted reforms, the state would have little choice but to resort to across-the-board cuts in payments to providers and health plans – which hurts the efficient and lower-paid caregivers along with the wasteful and higher-paid ones. The Health Department formally warned of that possibility in a notice published in Wednesday’s New York State Register, declaring that it intends to make $2.5 billion in across-the-board cuts unless other savings are found. Paradoxically, this move likely would not jeopardize the state’s ability to draw down federal aid – putting Washington in the position of blocking smarter, more surgical changes in favor of the meat-ax approach.

 

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

You may also like

Remembering the scandal that brought down Health Commissioner Howard Zucker

The resignation of Dr. Howard Zucker as state health commissioner marks the end of a term marred by scandal over his role in managing the coronavirus pandemic. The much-debated compelling nursing homes to admit COVID-positive patients, though it origi Read More

After 10 weeks, all but five of the Empire Center’s 63 requests for pandemic data remain unfulfilled

Over the 10 days that Hochul has been in office, there has been no further progress on the Empire Center's record requests. Read More

New York’s health benefits remain the second-costliest in the U.S.

New York's health benefit costs increased faster than the national average in 2020, leaving it with the second-least affordable coverage in the U.S. The state's average total cost f Read More

Another Hochul To-Do: Timely Financial Reporting

The state will spend a record $212 billion in the current 2022 Fiscal Year, under the budget its elected leaders adopted in April. Read More

Can Cuomo still be impeached?

Andrew Cuomo and Donald Trump have more in common than boyhood homes in Queens. Like Trump, Cuomo could still face impeachment and an impeachment trial despite a promise to resign as Governor later this month. Read More

The Gov’s pension

There are several (dozens? hundreds?) of unanswered questions as the fallout from Andrew Cuomo's resignation earlier today continues. Among those are questions related to his pension, some of which can be answered, sort of. Read More

The ARP Opportunity

Some New York local governments  are soliciting input from residents as they decide how to spend  billions in pandemic emergency dollars Read More

The Health Department’s FOIL Responses Signal an Indefinite Wait for Pandemic Data

The quest for comprehensive data on New York's coronavirus pandemic hit a bureaucratic roadblock this week Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

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.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!