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.

The roots of this crisis are explored in Busting the cap: Why New York is losing control of its Medicaid spending again, an issue brief by Bill Hammond, the Empire Center’s director of health policy.

The report traces recent trends in New York’s Medicaid program, assesses the strengths and weaknesses of policy changes during Cuomo’s term and outlines a strategy for renewed reform.

The Empire Center, based in Albany, is an independent, non-partisan, not-for-profit think tank dedicated to promoting policies to make New York a better place to live, work and raise a family.

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