After holding steady for years, New York’s Medicaid costs are blasting through the roof again — threatening to drown the state in red ink.
In separate new reports, the Empire Center and the Citizens Budget Commission both warn that New York is “losing control” over the costs of the program to provide health care for the poor. Absent corrective action, the problems will mushroom, pushing the state deficit for the next four years to an alarming $22 billion (and even higher if the economy goes south).
The watchdogs take particular issue with Gov. Andrew Cuomo’s response: Rather than rein in costs, the state last year opted to hide them by quietly charging a $1.7 billion payment on this year’s books. That opened a huge fiscal hole that Cuomo and other state leaders have yet to address.
How fast are costs rising? From 2011 to 2016, state Medicaid outlays grew 15%, from $53.7 billion to $61.5 billion. Then, over just the next three years, it surged to $75.5 billion, or 23%.
And that surge wasn’t caused by rising enrollment. Indeed, coverage rolls had grown 25% in 2011-16, but fell slightly over the next three.
The real problem: The cost per enrollee, which was falling through 2016, started heading back up.
Both Empire and the CBC credit Cuomo for taming outlays soon after taking office, when he faced a potential $6 billion Medicaid-funding gap: The gov and the Legislature capped yearly spending and set up a panel to find savings. It worked — and without sacrificing health-care quality.
By 2016, though, costs per enrollee began creeping up. That’s because state leaders didn’t apply the cap to certain outlays — including, notably, minimum-wage hikes that hit health-care providers.
Cuomo and the Legislature can’t say they weren’t warned: In 2016, state Comptroller Tom DiNapoli cited an immediate hit to Medicaid of $100 million from the wage hikes. The Empire Center’s Bill Hammond noted that, considering just the 80,000 health-care workers who had been making $10 an hour, the new $15 rate would eventually add $800 million a year for full-time work, all of it coming from “the pockets of New Yorkers.”
Last year’s gimmick of pushing a payment into this year’s budget was a very temporary “solution” — mainly hiding the problem from the public. Worse, it also made it increasingly hard to control costs and keep spending under the cap.
In a letter on the opposite page, the governor’s budget chief claims there’s nothing surprising about the state’s Medicaid mess — but Team Cuomo has yet to even pretend to have answers for how to pay for it all.
The watchdog groups urge a renewed hunt for savings, applying the cap to all Medicaid costs and banning payment delays. But what’s needed most is political leadership, instead of budget tricks.