New York’s already high Medicaid spending is growing at a double-digit rate for the second year in a row, recently released state figures show.

After dipping during the first year of the pandemic – due to a sharp slowdown in routine medical care – the state’s share of the government-financed safety-net health plan bounced back with 23 percent growth in 2022 and a 19 percent jump this year, according to the Enacted Budget Financial Plan published on May 20.

Those are the fastest growth rates since 2012, in the aftermath of the Great Recession (see first chart).

Total spending on the health plan Medicaid spending, including federal aid and local government funds, was up 11 percent in fiscal 2022 and another 11 percent this year (see second chart).

Source: NYS Division of the Budget

The pandemic is an obvious factor. The shutdown of spring 2020 threw 1.8 million New Yorkers out of work in a single month. Many of those people lost their health benefits, too, and turned to Medicaid as an alternative. In the two years since, Medicaid enrollment has soared by 1.5 million or 25 percent.

At the same time, policy choices in Washington and Albany have compounded the effects of the crisis.

When federal lawmakers temporarily increased Medicaid funding as a form of fiscal relief for state governments, they attached conditions that barred states from trimming benefits or from routinely pruning their rolls of people who had lost eligibility. 

Source: NYS Division of the Budget

In New York, these federal restrictions prevented officials from following through on many of the cost-cutting reforms recommended by Governor Cuomo’s Medicaid Redesign Team just before the pandemic took hold.

More recently, Governor Hochul has pressed ahead with other changes that will increase costs. This year’s budget included across-the-board increases in Medicaid fees for providers, extra funding for financially distressed hospitals and nursing homes, one-time bonuses for front-line health workers, and a $3 hike in the minimum hourly wage for home health aides.

Figures in the new financial plan indicate that the home health wage hike alone will cost the state $5.3 billion over the next five years – suggesting that the total five-year price tag to the Medicaid program, including federal aid, will be about $10.6 billion.

The recent rapid growth of Medicaid in New York is adding to what was already a large and expensive program.

As of 2018, New York’s per capita spending on Medicaid was the highest in the U.S. and more than double the national average. 

Enrollment has risen to about 37 percent of the state’s population – 7.5 million people as of April – even as the poverty rate has dipped below 13 percent, indicating that more than half of New York’s Medicaid recipients are living above the poverty line.

 

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

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