The Cuomo administration recently revealed that New York’s Medicaid program is running over budget by an astonishing 16 percent, or $4 billion, even though enrollment is flat and medical inflation is at historic lows.

This seemingly out-of-nowhere spending spike has triggered the Empire State’s worst fiscal crisis since the Great Recession. It raises an awkward question for fans of single-payer health care in Albany: If state government can’t properly manage the fraction of the health-care system it already controls, why should it be trusted to take over the whole thing?

State lawmakers are giving ­serious consideration to a sweeping proposal known as the New York Health Act, Albany’s version of Medicare for All. If ­enacted, it would replace virtually all existing insurance, public and private, with a government-operated system financed entirely by tax dollars.

The bill’s supporters are pitching it as a model of efficiency that will somehow cover everyone for everything at an afford­able price. Yet already, the state’s existing single-payer plan — Medicaid — is busting its budget in spectacular fashion.

Lawmakers allocated it $25 billion in state funds this year, a bump of 5 percent, or about double the medical-inflation rate. On top of what already was the highest per-capita Medicaid spending in the 50 states, that should have been plenty.

According to the latest official estimate, however, the program’s actual spending is on track to hit $29 billion, for a whopping year-to-year increase of 23 percent. That’s the definition of out-of-control.

What makes the spike especially troubling is that it’s happening at a time when the economy is growing, overall enrollment is steady and federal funding is on the rise. The crisis is ­almost entirely the result of feckless management.

To cite a few examples:

Overpromising. In 2016, Gov. Andrew Cuomo committed to reimburse Medicaid providers for the ­impact of his big minimum-wage hike — but underestimated the cost by a factor of four. The full tab for this year is now projected at $3 billion, half state and half federal, which is more than the entire Medicaid budget for the state of Maine.

Ignoring warnings. Medicaid spending showed clear signs of running over budget as early as the summer of 2018, but state ­officials kept the situation quiet and failed to promptly exercise their cost-cutting authority, which allowed the problem to snowball.

Cutting deals. In October of last year, when the program was already deep in the red, Cuomo unilaterally ordered Medicaid rate hikes worth hundreds of millions of dollars for hospitals and nursing homes. The decision, taken without prior notice or public debate, was a victory for two of the governor’s biggest political allies and donors, the Greater New York Hospital ­Association and health-care ­labor union 1199SEIU.

Cooking the books. Cuomo continued hiding Medicaid’s deficit throughout this year’s budget negotiations, then secretly ­delayed $1.7 billion in payments from March to April, effectively punting the problem from one fiscal year to the next. A private insurance firm that tried such a trick would probably be shut down by state regulators.

Fumbling reform. Two rule changes meant to control long-term-care costs were recently blocked in court, largely because judges found that the state had failed to follow proper legislative and regulatory procedures.

Delaying action. In a budget update last month, the administration said it intended to cut $1.8 billion in spending before the end of the fiscal year in March. But it put off announcing the ­details for another two months, which will make them that much more painful to enact.

Although Cuomo was the primary actor in all of these decisions, the Assembly and Senate either actively supported or meekly accepted everything he did — up to and including the $1.7 billion payment delay, which was a stark violation of budgeting norms.

So all of official Albany has been complicit in badly mismanaging a health plan that covers 6 million lower-income and dis­abled New Yorkers, some of whom literally couldn’t survive without the care that Medicaid finances.

Albany would undoubtedly slip into the same bad habits when running a single-payer system, only the stakes would be astronomically higher. Overspending a statewide health plan’s budget by 16 percent would translate to a deficit not of $4 billion, but $48 billion, or $2,400 for each state resident.

Instead of spreading their dysfunction to the entire health system, lawmakers better get their act ­together on Medicaid.

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

How NY businesses get shafted — as Albany boosts Idaho’s Micron with $5.5B

Every business owner in the state, looking at his or her own challenges, their tax bills, their regulatory burden, should be asking the question: How different would things be if my company was a politically favored project being announced by the governor? What favors would Albany do for me? What would Micron get? Read More

Can New York Survive a Cuomo Comeback?

Andrew Cuomo picked a portentous day to launch his New York City mayoral campaign. Sunday was the fifth anniversary of his announcement, as governor, of the city’s first confirmed case of Covid-19. Read More

Hochul invites havoc as wildcat prison strikes spread

A central provision of New York state law — its prohibition on public-employee strikes — is at risk of breaking into pieces, as Gov. Hochul frantically tries to tape the shards back together. Read More

NY’s own researchers warn of state’s off-the-charts school spending

What was expected to be a mundane state-ordered study into how Albany doles out cash to local school districts turns out to be required reading for New York taxpayers — and state lawmakers. Read More

Hochul’s mad Medicaid spending woos health honchos

Perhaps the most damning commentary on Gov. Hochul’s Medicaid spending plan — which made up roughly half of the $252 billion state budget she released Tuesday — was the silence of the attack dogs. Last year, the hospital lobby spent millions on TV ads falsely accusing Hochul of “cutting” the state-run health plan, which covers 7 million lower-income New Yorkers. This year, the ad campaign has gone quiet, a sign she is giving hospitals everything they could want and more. Read More

New York Is a Cautionary Tale on Home Care

Fans of ’s “Medicare at Home” proposal should study up on New York’s bloated home healthcare system, which covers about 850,000 people. Its large scale and rapid growth embody a cent Read More

Hochul bows to health-worker union’s $9B senior-care power play that could bust NY’s budget

Gov. Hochul’s overhaul of the  reached a milestone last week when she named a Georgia-based company as the winning bidder to be the program’s statewide “fiscal intermediary” — and to replace  that currently handle those duties. The  dre Read More

Another Voice: Albany’s MTA congestion pricing battles have implications for Western New York

Gov. Kathy Hochul has taken blistering criticism for postponing congestion pricing, a long-planned $15 toll on drivers entering lower Manhattan meant to reduce traffic — and collect $15 tolls. Most of the drama may be playing out in New York City, but pay attention, upstate: you stand to lose — or win — in this fight. Read More