A Medicaid office employee works on reports | AP Photo
City Hall is bracing itself for a cash grab from state officials looking to plug a $6.1 billion budget gap and Gov. Andrew Cuomo’s budget presentation Tuesday did little to dispel fears of a fiscal blow to the city’s spending plan.
Despite Cuomo’s pledge to spare local governments from the worst impacts of the shortfall, the de Blasio administration is girding itself for hundreds of millions of dollars in Medicaid costs that could be foisted on to city taxpayers.
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“Whether it’s moms turning to our public hospitals for life-saving breast cancer screenings or first graders learning to read in our public schools, New Yorkers should not be held responsible for the State’s Medicaid gap and we’re ready to fight to protect them,” mayoral spokesperson Freddi Goldstein said in a statement.
New York is one of few states in the country that requires local governments to chip in for the cost of Medicaid, a federal and state program that provides healthcare for low-income residents. Contributions from municipalities have been frozen since 2013 in response to rising costs, fixing the city’s annual tab at roughly $5 billion. But Cuomo said Tuesday that localities will now have to pay for any increases in Medicaid spending beyond 3 percent in a given year in an effort to tamp down the rising costs of the program, which has been a major contributor to the state deficit.
That could be bad news for the city, which has far exceeded the cap in the past.
Medicaid costs in the five boroughs rose by 7 percent between fiscal years 2018 and 2019, an increase that would have required the city to pay $645 million under Cuomo’s formula, according to state health data. That would represent a sizable chunk of this year’s $95.3 billion preliminary budget, dwarfing the annual cost to run the Department of Parks and Recreation, for instance.
“So what’s going on here is one, an effort to take money away from New York City, which is an old Albany tradition, and number two, trying to cut health care for needy New Yorkers — and that’s also an old Albany tradition,” said Assemblyman Richard Gottfried, a Manhattan Democrat who chairs the health committee. “Neither of them is very good public policy in my view.”
Cuomo’s office claimed reworking Medicaid spending will actually result in a net savings of $315 million for New York City in the upcoming budget. And a spokesperson noted that the governor enacted the 2013 freeze to take the pressure off of property tax caps that localities had levied in counties outside of the five boroughs.
“As a result, the State has taken on $20 billion in cost that for 50 years would have been the responsibility of the municipalities,” Freeman Klopott said in a statement. “The state has picked up $2 billion in Medicaid costs for New York City, and unlike 57 other counties, they have not reduced property taxes accordingly.”
But blowing such a sizeable hole in the city’s budget would be a politically tenuous move. New York City is home to nearly half of the state’s population and Assembly Speaker Carl Heastie — one of the three politicians in a room who will eventually finalize the budget — hails from the Bronx.
Regardless, Mayor Bill de Blasio unveiled a budget last week that was light on new spending out of concern the city would have to help foot the bill for the state’s deficit, in part by cutting service levels at the New York City Health + Hospitals.
The city’s Office of Management and Budget also typically underestimates revenue during the beginning of the budget process — in part to keep money from the hands of the state or City Council. In the last two budget cycles, for instance, revenue estimates between the preliminary budget and the adopted budget grew by up to $2 billion.
In the meantime, the state budget gap has reignited conversations as to whether local governments should have to pay for Medicaid at all — something that makes New York an outlier in the nation.
Cuomo said the current setup doesn’t give municipalities that are administering Medicaid programs “skin in the game” to reduce costs because the state ultimately picks up the tab for any increases to the program.
“That’s the blank check syndrome — we are signing the check and they’re filling out the amount,” Cuomo said in his Tuesday address.
But the Citizens Budget Commission has long maintained that there shouldn’t be a local share for Medicaid at all, characterizing it as an unfunded mandate because municipal officials have little control over how the program is run, but are required to pay for it, said Ana Champeny, director of city studies at the CBC.
George Sweeting, deputy director of the Independent Budget Office, said “the idea that it’s the localities that have loosened up the floodgates is a little hard to understand.”
“The localities don’t get to decide who’s eligible and they don’t get to decide the services that will be offered and what they’re going to cost — those are state decisions,” Sweeting continued.
He attributed rising costs of the program to the state’s aging population, as long-term care is the most expensive component of Medicaid.
To help plug the deficit, the governor said Tuesday that he’s reconvening a Medicaid Redesign Team to evaluate ways to cut $2.5 billion in costs. The team was first convened in 2011 and has saved the state nearly $20 billion since its proposals were implemented.
It’s likely the team will consider changing eligibility for managed long-term care, a prospect that raises concerns for city officials.
“They’re already talking about cutting services to people who [use] homecare, which is critical to keep patients out of nursing homes where we know health declines rapidly,” said Council Member Mark Levine, chair of the committee on health. “It’s much better for patients to try and stay at home.”