PRESIDENT Obama is expected to unveil his national health-insurance plan in just a couple of months. But when it comes to expanding government-subsidized coverage, broke and recession-battered New York state has already gotten a jump on him.

Medicaid-enrollment growth in New York is accelerating so rapidly that one out of every four state residents will be in the program by 2013 (up from one in five today), according to Gov. Paterson’s latest financial-plan projections.

Universal-health-care advocates no doubt welcome that prospect — but it should concern taxpayers.

Medicaid enrollment in New York has risen from 3.5 million to 3.7 million people over the last four years. The governor now projects that another 1.1 million New Yorkers will be added to the rolls by 2012-13, bringing the total to 4.8 million, or 25 percent of the current population.

The latest projections are 4 percent to 9 percent higher than those issued just five months ago in Paterson’s Executive Budget. They don’t include roughly 425,000 New York households now covered by Family Health Plus (FHP), a Medicaid offshoot plan that is available to lower-middle-income working families.

Under a waiver now being sought by the Paterson administration, eligibility for FHP could be further expanded to 200 percent of the federal poverty level — so that, for example, it would cover a family of five with income of up to $52,000. FHP enrollment in New York is projected to grow by another 128,000 families over the next four years.

Higher Medicaid enrollment and use will add $975 million to the state-taxpayers’ share of Medicaid costs by 2011-12, according to the governor’s financial plan. Meanwhile, federal stimulus aid is supposed to expire the year after next, which will leave New Yorkers to cover more than $3 billion a year now temporarily underwritten by federal stimulus aid.

The Paterson administration is blaming the expected increase in Medicaid enrollment over the next two years on the sinking economy, which is expected to cause more New Yorkers to lose their jobs and their employer-provided health coverage. But nearly half the Medicaid enrollment growth projected in the governor’s new financial plan will occur after his budget staff expects the recession to end.

Indeed, Paterson’s own policies have promoted an increase in Medicaid enrollment — continuing a trend initiated under former Gov. Eliot Spitzer. The recently enacted budget includes provisions designed to “streamline” the Medicaid-application process by, among other things, eliminating the requirement for face-to-face interviews, fingerprinting and asset tests for determining eligibility.

As if to ensure a steady flow of new customers for publicly subsidized health care, the state has also raised state taxes and fees on employer-provided coverage by $850 million. New York’s regulatory policies already have virtually destroyed the state’s individual health-insurance market.

Recent projections from the governor’s Division of the Budget have consistently overestimated growth in Medicaid enrollment, so perhaps this latest forecast is also too high. Unfortunately, it won’t be for lack of trying.

The larger the number of state residents who become dependent on publicly subsidized health care, the more demand there is likely to be to expand services at the expense of the dwindling number of New Yorkers who still pay for their own, nonsubsidized coverage. State officials may be counting on the federal government under Obama to take over this growing burden — but if that happens, we’ll simply end up sending more money to a different tax collector.

Read article at Manhattan Institute

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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