The budget crisis in New York’s Medicaid program stems from the failure of a key cost-control measure adopted during Governor Cuomo’s first term, according to a new report from the Empire Center for Public Policy.
In 2011, Cuomo and the Legislature imposed a “global cap” on state Medicaid spending that was tied to the medical inflation rate. The measure showed signs of working at first, but lost its effectiveness as circumstances changed, loopholes multiplied and compliance faltered.
The policy suffered its worst breakdown last summer and fall, when Medicaid started running hundreds of millions of dollars over budget. Instead of using their authority to cut costs – as the cap statute provided – officials resorted to postponing $1.7 billion in payments into fiscal year 2020. The result is a growing hole in the state’s finances that the Cuomo administration has yet to resolve.