screen-shot-2017-03-21-at-8-36-57-am-150x150-3505109By eliminating the single largest expense in county budgets, federal legislation mandating a state takeover of local Medicaid costs promises relief for property taxpayers across New York.

However, some counties stand to save more than others. Lower-income counties with high Medicaid populations and small tax bases would see the most relief, and more prosperous counties would see the least relief.

If Albany finances the takeover by diverting a share of sales tax revenue – as recently suggested by Lieutenant Governor Kathy Hochul – a quarter or more of counties would be net losers financially.

An amendment requiring the change, proposed by Reps. Chris Collins of Erie County and John Faso of Columbia County, was added to the House GOP’s American Health Care Act on Monday.

In a statement, Governor Cuomo framed the takeover not as a shift of costs from localities to the state, but as a cut to New York’s overall Medicaid program.

“Congressmen Collins and Faso are calling their amendment a ‘tax savings plan for the county,’ ” Cuomo said. “Really it’s a deathtrap, as there is no way to make up the shortfall.”

Medicaid is a government-operated health plan for the poor and disabled that currently covers about one in three New Yorkers. The federal government pays 51 percent of the costs, the state pays 35 percent, and the counties (including New York City) contribute 13 percent.

Formally sponsored by Collins, the takeover amendment was based on one of Faso’s proposals in the 2016 campaign. The amendment would take effect in two years and exclude the five counties that make up New York City, which has its own income tax.

Such a takeover would collectively save the other 57 counties $2.3 billion a year, which equates to 41 percent of their collective property tax revenue (including payments in lieu of taxes, or PILOTs). The savings would range from as high as 78 percent of property tax revenue for Oneida County down to just 9 percent for low-population, high-acreage Hamilton County.

County taxes represent a fraction of the total property tax burden that also includes revenue for schools, cities, towns, villages, and fire and other special districts. As a share of all property taxes combined, local Medicaid costs account on average for 7 percent – ranging from 2 percent in Hamilton to 17 percent in Chemung County. (See chart. The key data for all counties are summarized in a spreadsheet here.)

screen-shot-2017-03-20-at-2-16-13-pm-7953592

The full impact on taxpayers would depend on how Albany finances the takeover. One option would be for the state to divert a share of county sales tax revenue. The idea has been floated by some county leaders in the past, and Hochul raised it again in a statement criticizing Collins’ proposal: “If the Collins amendment passed, the state would need to raise income taxes or the counties would have to forgo their share of sales tax in exchange for the state picking up the additional Medicaid costs.”

The 57 counties’ collective Medicaid burden, $2.3 billion, equates to about 1.2 percent of taxable sales outside of New York City.

For most counties, a uniform reduction of sales tax revenue by 1.2 points would be less than the cost of Medicaid, making the swap an attractive deal. The biggest winners would be upstate counties with relatively large Medicaid populations and modest sales tax revenues, such as Oswego, Allegany, Sullivan, Orleans, and Fulton.

At the same time, more than a quarter of counties could forfeit more in sales tax revenue than they would save on Medicaid. The biggest potential losers would be Saratoga and Warren counties – with relatively small Medicaid costs and relatively hefty sales tax revenue from tourism.

Also likely to be on the losing end would be several downstate counties, such as Nassau, Suffolk, and Putnam. For Westchester, the sales-tax-for-Medicaid swap would be roughly a wash.

Another factor to consider: Sales tax revenues generally grow in the long term, while counties’ Medicaid costs were frozen by Governor Cuomo and the Legislature in 2012. Over time, the value of lost sales tax revenue would outstrip the Medicaid savings for an ever-growing share of counties.

The House GOP’s health bill would partially repeal and place President Obama’s Affordable Care Act. Among other provisions, it would phase out extra federal funding that has been flowing to New York and other states as part of an expansion of the Medicaid. The Cuomo administration has estimated that the phase-out would cost the state $4.6 billion in aid over the next four years.

 

 

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

Hochul’s Emergency Order Imposes Insurer Restrictions Sought by Hospital Group

Buried in Governor Hochul's emergency order on health-care staffing is a temporary bar against insurance companies challenging claims submitted by hospitals–and an influential hospital association is taking credit. Read More

Home Care Agencies Project Widespread Staffing Shortages in the Next Phase of New York’s Vaccine Mandate

Agencies providing home-based care to elderly and disabled New Yorkers face a large-scale loss of employees when the next phase of the state's vaccine mandate takes effect on Oct. 7, according to a newly released industry s 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

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

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

Report Reveals Albany’s Balanced Budget a Gimmick

Extending the budget window reveals large, yawning budget gaps growing from nearly $8 billion in 2026 to nearly $20 billion by the end of the decade. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s State Share of Medicaid Spending is Due to Jump 22 Percent This Fiscal Year

The state share of Medicaid spending is projected to jump 22 percent under the recently approved state budget, an unusually steep one-year jump for what is already one of New York's biggest expenditures. 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!