UPDATE: In response to a query from the Empire Center, the Budget Division has lowered its estimate of total Medicaid spending in fiscal year 2021, correcting a table that had erroneously double-counted $2.2 billion in federal stimulus aid. The new total is $80.3 billion, which is a 6 percent increase from the year before. The post below has been revised accordingly.

Despite a round of cost-cutting this spring, New York’s Medicaid spending is on track to jump by 6 percent 9 percent this year thanks to a massive influx of federal aid.

According to the Cuomo administration’s updated financial plan, posted on Thursday (and later revised), total Medicaid spending is projected to hit $80.3 billion $82.5 billion in fiscal year 2021, which began in April. That’s $4.5 billion or 6 percent $6.7 billion or 9 percent more than was spent on the program in fiscal 2020, and $1.9 billion or 2 percent $4.1 billion or 5 percent more than projected in May (see chart).


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.


The revised spending total reflects a startling 17 percent 23 percent increase in federal aid, to $48 billion $50.2 billion in 2021 compared to $40.9 billion last year. That includes $2.2 billion in “enhanced” matching aid under federal coronavirus relief legislation, plus an additional $4.8 billion $7 billion in matching aid.

Source: New York State Division of the Budget

The state used the relief funding to offset its own contribution to Medicaid, which dipped from $26.5 billion to $24.9 billion.

All of these numbers come with a major caveat: The budget as adopted was significantly out of balance. In the absence of a further bailout from Washington – which remains uncertain – Governor Cuomo has been empowered by the Legislature to cut billions from various programs, including Medicaid. He was also given authority to close gaps with borrowed money.

What specific steps Cuomo intends to take are left unclear in Thursday’s document. Instead, its gap-closing plan shows “TBD” – for “to be determined” – in place of dollar amounts possibly to be taken out of Medicaid, school aid, higher education, social services, transportation and other programs.

Further complicating the outlook is a surge in Medicaid enrollment triggered by the pandemic-induced recession and widespread layoffs. The revised financial plan anticipates that another half-million New Yorkers will join the rolls, which had already increased by about half that amount as of May.

The adopted budget included $2.2 billion worth of cost-cutting changes to Medicaid recommended by Cuomo’s Redesign Team – some of which have been on hold because of strings attached to federal aid. It’s increasingly clear that those moves, characterized by critics as “slashing” health care, are destined at most to modestly slow Medicaid’s rapid growth.

New York’s per capita Medicaid spending rose to more than double the national average as of 2018, and costs have continued surging since then. Although reforms adopted during Cuomo’s first term give him broad power to contain costs, he has failed to invoke that authority. Instead, he has repeatedly resorted to delaying payments to put the state’s books in superficial balance.

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

The Wacky Math of New York’s Essential Plan

Thanks to an absurdly wasteful federal law, New York's Essential Plan is expected to continue running billion-dollar surpluses even as state officials more than double its spending over the next several years. Read More

In a Tight Budget Year, New York’s Hospital Lobby Shoots for the Moon

As Governor Hochul calls for spending restraint next year, influential hospital lobbyists are pushing what could be the costliest budget request ever floated in Albany. In a , the G Read More

Putting the Mission in Hochul’s Health Commission

Last week Governor Hochul answered one big question about her Commission on the Future of Health Care – the names of its members – but left a fundamental mystery unresolved:  W Read More

Medicaid Drug ‘Carve-Out’ Led to Double Payments

The state's Medicaid program has effectively been double-paying for prescription drugs for the past six months due to a glitch with the roll-out of its pharmacy "carve-out." Since A Read More

DFS Pulls Back Draft Regulations That Would Have Added a Fee for Prescriptions

A package of proposed regulations that included a $10.18 fee for filling most drug prescriptions was withdrawn Tuesday by the Department of Financial Services in the face of broad opposition. Read More

DeRosa Is Still Hiding the Truth About Cuomo’s Pandemic Response

As the long-time top aide to former Governor Andrew Cuomo, Melissa DeRosa ought to have useful information to share about the state's pandemic response – especially about what went wrong and how the state could be better Read More

Hochul’s Promised Health Care Commission Has Yet To Be Appointed

A health-care commission that is supposed to be helping the state control soaring Medicaid costs – which Governor Hochul promised in January and described as "under way" last month – appears not to exist. Thre Read More

New York’s Medicaid Spending Is Running Billions Over Budget

New York's Medicaid program ran billions of dollars over budget during the first half of the fiscal year, adding to signs of a brewing fiscal crisis in Albany. According to the fro Read More

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!