cash-pile-notes-1792301New York would pay a price for running a high-cost Medicaid program if the Senate GOP health plan becomes law.

A little-discussed provision of the Senate’s Better Care Reconciliation Act would dock a portion federal funding from states that spend the most per Medicaid enrollee, while boosting aid to the lowest-spending states.

Based on current funding levels, this “equity” adjustment could cost New York between $325 million and $1.3 billion a year in federal aid starting in 2020.

Also vulnerable to losing money from the provision are Rhode Island, Missouri, Pennsylvania, Minnesota, New Hampshire, the District of Columbia, and Massachusetts (see chart).

screen-shot-2017-06-27-at-3-28-15-pm-4905345

Low-spending states likely to receive a boost in federal aid would include Alabama and Illinois.

(This listing is based on per-enrollee Medicaid spending amounts from National Health Expenditure data from the U.S. Centers for Medicare & Medicaid services. The Kaiser Family Foundation has calculated different per-enrollee figures, but New York still lands in the high-spending category.)

The proposed rule would attempt to address a long-standing inequity in the Medicaid financing system: Because the federal government reimburses a fixed percentage of each state’s costs, states that spend the most also draw the most federal aid.

New York, as a high-wealth state, receives the lowest possible matching rate of 50 percent. Yet because it spends so much of its own money on the program, it receives more federal matching aid per capita than poor states such as Mississippi, with the maximum matching rate of 75 percent.

Like the House bill, BRCA would for the first time cap how much aid states can draw – based on current levels of per-enrollee spending, trended forward by inflation. On top of that cap, the Senate bill would further restrict aid to states with per-enrollee spending that exceeds 25 percent of the national average – a category that includes New York. The rule would reduce the cap on aid to these states by between 0.5 and 2 percent, depending on the discretion of the secretary of Health and Human Services.

States with per-enrollee spending more than 25 percent below the national average would see their caps lifted by 0.5 to 2 percent.

High-cost states such as Alaska, North Dakota, and Montana, would be exempted from this rule on grounds that low population density tends to drive high per-person healthcare spending.

The equity rule would come on top of other cuts New York is facing under both BCRA and the House’s American Health Care Act.

Both the House and Senate bills would phase out the extra aid to state under the Affordable Care Act’s Medicaid expansion, which would ultimately cost New York about $4 billion. They would compel Albany to absorb $2.3 billion in Medicaid costs that are currently shifted to counties other than New York City. And they would also substantially reduce funding for the $4 billion Essential Plan, an optional benefit under the ACA that only New York and Minnesota exercised.

 

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

Even With Federal Cuts, New York’s Health Funding Would Remain High

New York's health-care industry stands to lose billions of dollars in federal funding under the major budget bill being debated in Washington – a rare and jarring turn of events for a sector accustomed to steadily increas Read More

As Albany’s Session Ends, Watch for Rising Health Costs

Every session of the state Legislature brings a fresh crop of proposals that would drive up health-care costs, and 2025 is no exception. Here is a sampling of pending bills that, if Read More

House Budget Would Burst New York’s Essential Plan Bubble

The extraordinary cash bonanza associated with New York's Essential Plan – which has generated billions more than state officials were able to spend – would come to a crashing end under the budget bill advancing in Cong Read More

The House GOP’s Shrinking Budget Plan Could Still Cost New York Billions

The likely impact of federal health-care cutbacks has diminished in recent days as House Republican leaders backed away from some of their bigger-ticket proposals, reducing the estimated savings to $625 billion from previous figures of $715 billion and $8 Read More

Feds Move To Close Medicaid’s ‘MCO Tax’ Loophole, Spelling Trouble for New York

New York's budget has sprung its first major leak just five days after being finalized by Governor Hochul and the Legislature. On Tuesday, federal officials announced a that would Read More

Highlights of Albany’s Bloated and Belated Budget

The state Legislature approved the last of nine budget bills Thursday evening, 38 days after the start of the fiscal year. Here are some highlights of the fiscal impact of final spending plan: Top lines Read More

How Medicaid ‘Expansion’ Changes Could Affect New York

As House Republicans consider cutbacks to federal Medicaid funding, their focus has turned to the so-called expansion population. Although the details of remain undetermined, the s Read More

How Albany Could Save Millions by Closing a Medicaid Loophole

A glitch in state insurance law is allowing doctors to collect Medicaid fees that are sometimes hundreds of times higher than the program normally pays, costing taxpayers millions of dollars a year. Read More