Minimum wage, Medicaid costs

by Bill Hammond |  | NY Torch

cuomo_250xGovernor Cuomo’s $15 minimum wage plan will cost the state’s Medicaid program more than $100 million over the next two years, according to figures in a budget analysis released Wednesday by state Comptroller Tom DiNapoli.

DiNapoli’s report said the 67 percent minimum wage hike will add $12.7 million to New York’s already enormous Medicaid spending in the 2017 fiscal year, which began April 1, and another $88 million in FY 2018.

These are the first official estimates of a little-discussed hit to taxpayers that’s bound to grow many times larger in 2019 and beyond

While the minimum-wage debate focused largely on fast-food and retail businesses, the health-care sector also employs many thousands of workers who make substantially less than $15. A share of the cost of their raises will be passed along to Medicaid, the state-federal health plan for the poor and disabled that covers almost one-third of the state’s population.

Both Medicaid patients and the lower-wage health workers who serve them are concentrated in the New York City area, where the minimum wage is scheduled to increase fastest—to $11 at the end of this year, $13 by the end of 2017, and $15 for all but the smallest employers at the end of 2018. The wage will rise to $15 in Long Island and Westchester County by 2022; in the rest of the state it is scheduled to hit $12.50 by 2021, and thereafter to rise in line with a still-to-be-calculated index.

Because the wage escalates over time – and covers a larger and larger swath of employees – the figures in DiNapoli’s report are the tip of an iceberg.

The $88 million estimate for FY 2018 covers nine months when the New York City minimum wage will be $11 and three months when it will be $13. That suggests that the full-year cost of the $13 minimum wage would be roughly four times as much, or $352 million.

By the way, these figures account just for the state’s share of Medicaid. The federal government, which picks up just over half the tab of New York’s program, will end up chipping in hundreds of millions more in added wages. So, too, will the federal Medicare health plan for the elderly and, of course, private health insurers.

Another hint at the enormous bite of this wage hike for the health-care sector came during a hearing on the governor’s minimum wage proposal by the state Senate Labor Committee.

In answer to a question from Sen. Kathleen Marchione of Saratoga County, an official of the health-care workers union 1199 SEIU said 80,000 of its members were then making $10 an hour, or $1 more than the existing minimum.

Assuming full-time hours, the tab for lifting that group alone to $15 an hour would be more than $800 million a year – all of it ultimately coming out of the pockets of New Yorkers who pay taxes and insurance premiums.