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CityAndStateNY.com
March 2, 2020
Harsh Treatment by R E B E C C A B E L L A N
Cuomo’s plan would force New York City and state counties to rein in Medicaid spending – or pay the price. But do they even have control over Medicaid?
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EW YORK CITY and other municipalities are up in arms over the additional financial burden they might have to assume if Gov. Andrew Cuomo’s 2021 proposed budget passes. In an attempt to close a $6.1 billion gap, Cuomo has proposed shifting Medicaid costs to counties that don’t adhere to criteria that local officials and some experts say are going to be challenging to meet, especially for New York City. Cuomo’s $178 billion plan would have counties limit property tax growth to 2% and Medicaid spending to 3% growth annually. Localities that exceed the property tax cap, even if they stayed within the 3% Medicaid spending cap, will be required to pay for all local Medicaid spending growth from the prior year. Local governments that stay within the property tax cap but exceed the Medicaid spending threshold will be required to pay for any growth over 3%. Additionally, the governor created a new Medicaid Redesign Team to find $2.5 billion in savings within Medicaid by rooting out waste, fraud and abuse in the system. Last month, state Comptroller Thomas DiNapoli announced that his office could only find nearly $800 million in Medicaid savings, so $2.5 billion seems like a tall order. “The consequences are devastating,” New York City First Deputy Mayor Dean Fuleihan said about the budget proposal. New York City Mayor Bill de Blasio’s administration estimated that the additional Medicaid expenses would cost the city $1.1 billion, although the governor has reiterated that his budget shouldn’t cost localities anything. Westchester County Executive George Latimer also spoke out against the proposal, saying that additional Medicaid costs would destroy the county’s budget. “Covering this cost will mean that roads, services and most importantly our taxpayers will suffer,” Latimer told state lawmakers. Erie County Executive Mark Poloncarz was similarly
pessimistic, stating that this move would result in double-digit property tax hikes and big spending cuts to local programs. “The very purpose of the Medicaid Redesign Team is to reduce the program’s spending growth by $2.5 billion and return spending growth to 3% while continuing to provide high-quality care to 6 million New Yorkers and ensuring the system remains financially stable for the future,” said Freeman Klopott, spokesman for state Budget Division. “The budget does not include any funding from local governments for Medicaid, though it does project that the measures designed to return them to the search for savings in the program will work and reduce growth by $150 million.” Medicaid costs are responsible for about $4 billion of the $6.1 billion state budget gap. The Cuomo administration posits that localities have “no financial incentive to
control costs” and that they have “failed to adequately monitor their programs, leading to overspending.” Medicaid has been around for 55 years. Traditionally, the federal government funds 50%, the state 25% and local governments 25%. Since 2015, the state has picked up all growth in local Medicaid spending, covering something like 35% of the costs of Medicaid. According to background information provided by Cuomo’s budget division, Medicaid growth is costing the state about $4.5 billion per year, while the costs for counties have remained flat. The goal of this budget, then, is to provide an incentive for the state and the counties to work together again to find savings. “For years, when (counties) had local share, they would come and find areas of savings, they would identify inefficiencies in the program, and once we took over the program that completely stopped,” said state Budget Director Robert Mujica during a WNYC radio interview. “So as part of our efforts to control the growth in Medicaid spending, we want local governments to reengage with us and help us to control costs. This is not just the state’s responsibility. That’s a false narrative.” Despite Cuomo’s claims of irresponsible spending, experts hold that it is the state, not localities, that controls the more powerful levers of Medicaid, specifically reimbursement rates and eligibility standards.
