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

You may also like

The Essential Plan’s accumulated surplus balloons to $8 billion, with no fix in sight

The state's Essential Plan has generated billions in surpluses as the program automatically drew pandemic relief money that it did not need Read More

New federal health funding is headed for Essential Plan limbo in New York

Washington's newly enacted climate, health and tax package harbors an only-in-New York glitch: It pours even more money into the state's Essential Plan, which is sitting on a multi-billion-dollar surplus that officials have Read More

New York’s health insurance price controls are not working

In what has become a rite of summer, the state Department of Financial Services on Wednesday approved substantially higher health insurance premiums for 2023 Read More

New York’s health insurance affordability problem gets worse

New York's health insurance affordability gap surged to a new high last year, with state residents paying an average of 16 percent more. Read More

As the session winds down, watch for health costs to go up

The closing days of the legislative session could prove costly for New York health insurance consumers as lawmakers push a raft of proposals that would make coverage more expensive, harder to find, or both. Read More

Budget’s Historic Spending Hike Shown in Financial Plan Update

Amidst spiking inflation, a market downturn and recession fears, state spending will soar to new heights under the April budget deal, as per (Plan) that the Governor’s budget office quietly i Read More

Minimum wage for home care aides is likely to mean bigger raises for downstate than upstate

The newly enacted wage hike for home care aides is likely to increase workers' pay more than three times as much in the New York City area as in other parts of the state, according to a review of labor data. Read More

The flawed arguments behind ‘Fair Pay for Home Care’

As they contemplate a major increase in Medicaid spending on home care for the elderly and disabled, state legislators are relying on information that's outdated, incomplete or inaccurate – and neglecting to think through the predictable consequences. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

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!