Medicaid is a public health insurance program that provides coverage to millions of low-income New Yorkers and is a primary driver of state and local government spending. This page covers CBC’s work on Medicaid spending growth, long-term and home care costs, the Consumer Directed Personal Assistance Program, federal funding and waiver impacts, and program administration.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
Identify reforms to rein in Medicaid spending growth, with a focus on home care and long-term care.
Redirect $2.25 billion originally budgeted for lawfully present immigrants to reserves in fiscal year 2027 and the $3 billion annually thereafter to gap closing.
Control Medicaid growth by restraining home care and long-term care costs while improving outcomes.
The State should reform Medicaid with an eye toward rapidly increasing long-term and home-care costs.
Key Data
In March 2026, the CBCNY reported that State Operating Funds spending growth was driven by an increase of $3.7 billion in State Medicaid between fiscal years 2026 and 2027.
In December 2025, the CBCNY highlighted that New York State's per-capita Medicaid spending was the highest in the nation and nearly 80% greater than the national average, while the state budget supported health care coverage for more than 8 million New Yorkers at that point in time.
In April 2025, the CBCNY noted that approximately 80% of federal aid to New York State, which equals $58 billion, was dedicated to Medicaid for fiscal year 2026.
In January 2025, the CBCNY reported that the State's share of Medicaid costs was growing at 7.1% annually, exceeding the average Global Cap growth rate of 4.9% by as much as $3 billion per year.
In March 2024, the CBCNY pointed out that costs for the Consumer Directed Personal Assistance Program (CDPAP) had grown 1,200% over the past decade, making it a major driver of Medicaid's rapid growth.
New York State's budget faces pressure from rapid Medicaid spending growth, which is a primary driver of increased state expenditures. To address this, the state should implement reforms to control home and long-term care costs while redirecting $2.25 billion in fiscal year 2027—and $3 billion annually thereafter—previously earmarked for immigrant healthcare toward reserves and gap closing.
Recommendations related to Medicaid
Identify reforms to rein in Medicaid spending growth, with a focus on home care and long-term care.
Redirect $2.25 billion originally budgeted for lawfully present immigrants to reserves in fiscal year 2027 and the $3 billion annually thereafter to gap closing.
Control Medicaid growth by restraining home care and long-term care costs while improving outcomes.
Key Data
$3.7 billion
— Increase in State Medicaid spending driving overall budget growth.
$2.25 billion
— Amount in fiscal year 2027 originally budgeted for lawfully present immigrant Medicaid coverage that is no longer needed due to federal waiver approval.
$3 billion
— Amount annually thereafter originally budgeted for lawfully present immigrant Medicaid coverage that is no longer needed due to federal waiver approval.
$263 billion is the size of the FY27 State budget proposed by Governor Hochul. With strong tax receipts, the State has enough to close next year's gap and put a dent in future gaps, plus fund universal childcare. But risks abound, including a structural budget gap and federal changes to…
New York State's fiscal plan includes efforts to control rising costs by consolidating the fiscal administration of the Consumer Directed Personal Assistance Program (CDPAP). Further action is required to restrain growth in CDPAP and long-term care spending, particularly given the challenges posed by federal policy changes.
Recommendations related to Medicaid
The State should take additional steps to restrain growth in CDPAP and long-term care.
New York State should prioritize fiscal responsibility by shifting funds from ineffective programs to high-impact priorities while avoiding tax increases. Specifically, the state needs to improve service delivery and control costs, including restraining high spending on long-term and home care within the Medicaid program.
Recommendations related to Medicaid
Refocus the Future of Health Care Commission on improving quality and controlling Medicaid costs by restraining exceptionally high spending on long-term and home care.
New York State's Medicaid per-capita spending is the highest in the nation, nearly 80 percent above the national average, yet health outcomes remain only average. To address this, the state should reform its Medicaid program with a specific focus on curbing the rapidly increasing costs associated with long-term and home care.
Recommendations related to Medicaid
The State should reform Medicaid with an eye toward rapidly increasing long-term and home-care costs.
Key Data
nearly 80 percent
— New York State’s per-capita Medicaid spending is greater than the national average.
8.0 million
— New Yorkers receive health care coverage supported by the State budget.
Federal policy changes threaten to reduce aid for programs like Medicaid, necessitating that the City proactively realign funds and improve administrative efficiency to protect vulnerable residents. The City should implement rigorous eligibility checks and work requirements for Medicaid to ensure benefits reach those who qualify while minimizing errors and misuse.
Recommendations related to Medicaid
The City should effectively and fairly administer work requirements and eligibility checks for SNAP and Medicaid to protect benefits for those who qualify while minimizing errors and misuse.
Download the Presentation The New York State and New York City budgets are unaffordable and unprepared both for a recession and for federal budget cuts that will start hitting this fiscal year and grow in the future. Check out CBC’s New York State and New York City Fiscal…
The state is utilizing temporary MCO tax revenue to increase base Medicaid spending, a move that threatens to create a future fiscal cliff once this revenue source expires. This decision further destabilizes an already fiscally unsustainable program by failing to account for the long-term implications of these rate increases.
New York's budget process is currently delayed, with almost two-thirds of state spending allocated to Medicaid and education. To ensure long-term fiscal stability, the state must prioritize services by reining in long-term care and home care costs within the Medicaid program.
Recommendations related to Medicaid
The State should prioritize services by reining in long-term care and home care costs within Medicaid.
Federal funding cuts pose a significant risk to New York's healthcare system, as Medicaid and related programs account for approximately 80 percent of the $91 billion in federal aid received by the state. These potential reductions threaten the financial stability of safety net hospitals, which rely on Medicaid for over half of their patient services revenue, and could increase demand for services if residents lose coverage.
Recommendations related to Medicaid
The City should preserve the services that provide the most critical support for high-need New Yorkers, such as those funded by Medicaid, rather than attempting to backfill all federal reductions.
The City should hold the line on new spending in the Executive and Adopted Budgets to prepare for potential federal funding losses.
The City should buttress the General Reserve with at least another $1 billion in fiscal year 2026 to help absorb the immediate blow of federal cuts.
The City should strengthen the Rainy Day Fund by depositing $500 million and reserve the Fund for a short-term emergency like a recession.
The City should implement a Program to Eliminate the Gap (PEG) to restrain spending growth, focused on streamlining administration and increasing efficiency.
The City should end the budget gimmickry and present accurate, reasonable estimates of expenses and revenue, as required by the City Charter.
Key Data
80 percent
— of federal aid to New York State is for Medicaid, the Essential Plan, and Child Health Plus.
$58 billion
— in federal aid to New York State is allocated specifically for Medicaid.
4 million
— City residents are covered by Medicaid.
5.3 million
— City residents receive health insurance through Medicaid, the Essential Plan, and Child Health Plus.
more than half
— of patient services revenues for safety net hospitals in the City are provided by Medicaid.
$252 billion is the Governor Kathy Hochul’s New York State Executive Budget for Fiscal Year 2026. How much does it matter that New York State and its localities are already #1 in taxes and #2 in spending nationwide? On today’s episode we talk with New York State’s Budget Director, Blake…
New York State faces a $15.6 billion structural imbalance, necessitating a focus on restraining spending to ensure long-term financial stability. Specifically, the State must implement major savings plans to curb the growth of Medicaid costs and education aid to maintain critical services.
Recommendations related to Medicaid
Major savings plans are needed to reduce the growth in Medicaid costs to make the program affordable so the State can sustain critical services.
New York State's share of Medicaid costs is growing at an unsustainable 7.1 percent annually, exceeding the Global Cap growth rate by as much as $3 billion per year. To address this, the state must implement recurring savings and ensure that new federal Managed Care Organization tax revenue is used for one-time health transformation investments rather than propping up baseline spending.
Recommendations related to Medicaid
The State should address the current imbalance in the budget to provide recurring savings and reduce Medicaid costs while preserving access to care.
The State should use the federal government-approved Managed Care Organization (MCO) tax for a one-time investment in health transformation that improves quality and lowers cost.
The State should not use the MCO tax to increase or prop up baseline Medicaid spending and create a fiscal cliff when the waiver ends.
Key Data
7.1 percent
— Annual growth rate of the State's share of Medicaid costs.
4.9 percent
— Average Global Cap growth rate for Medicaid spending.
$3 billion
— Amount by which annual Medicaid spending exceeds the Global Cap growth rate.
$1.5 billion
— Expected annual funds from the federal government-approved Managed Care Organization (MCO) tax for three years.
New York City's operating expenditures for Medicaid fluctuated between $5.8 billion and $6.4 billion over the five-year period ending in fiscal year 2024. Meanwhile, the State of New York's total disbursements for Medicaid saw a consistent increase, rising from $62.3 billion in fiscal year 2020 to $84.5 billion in fiscal year 2024.
Key Data
$6,376 Million
— New York City's operating expenditure for Medicaid in fiscal year 2024.
$84,458 Million
— State of New York's total disbursements for Medicaid in fiscal year 2024.
$6,286 Million
— New York City's operating expenditure for Medicaid in fiscal year 2020.
$62,341 Million
— State of New York's total disbursements for Medicaid in fiscal year 2020.
The New York State fiscal year 2025 budget fails to adequately control the growth of Medicaid costs, as the legislature rejected most proposals to stabilize the program. Instead of using short-term funding to restructure the system for long-term sustainability, the budget relies on uncertain federal funds to support recurring expenses.
Recommendations related to Medicaid
Short-term funds should be used to restructure the Medicaid system to be more sustainable.
The conceptual New York State budget agreement is criticized for increasing the structural budget gap and rejecting the Governor's proposals to restrain Medicaid spending. Transparency is needed, as the State should publish basic financial plans before the Legislature votes on the $237 billion budget.
New York State's structural budget gap has grown to between $16 billion and $20 billion, driven by a pattern of increasing spending supported by short-term revenues. A proposed new tax on Medicaid and managed care plans to leverage $4 billion in federal funds risks repeating this pattern by using speculative, temporary revenue to fund permanent spending increases.
Recommendations related to Medicaid
The State should only use federal funds from the proposed Medicaid and managed care tax to finance one-time programs, as these funds would be time-limited.
The State should only pursue the Medicaid and managed care tax proposal after it has identified and publicized the planned one-time programs.
The State needs to break its bad habit of ratcheting up spending on the back of temporary receipts like the proposed Medicaid tax.
Key Data
$16 billion to $20 billion
— The size of New York State's structural budget gap.
$4 billion
— The amount of federal money the State aims to leverage through a new tax on Medicaid and other managed care plans.
New York State faces significant fiscal challenges with out-year budget gaps approaching $10 billion and a structural gap exceeding $16 billion. To achieve fiscal stability, the state must exercise greater scrutiny over its largest expenses, specifically school aid and Medicaid, while limiting annual spending growth to 2 percent.
Recommendations related to Medicaid
Extra scrutiny should be given to the State’s two biggest expenses—school aid and Medicaid.
The Legislature should identify spending reductions to offset added spending, including addressing runaway Medicaid spending.
New York's Medicaid program is facing rapidly rising costs due to elevated enrollment and utilization, with total spending projected to exceed $100 billion this year. To address this, the state must implement significant savings, such as targeting high-growth areas like home- and community-based care and improving program transparency, to avoid exceeding the state's Global Cap.
Recommendations related to Medicaid
The State should identify savings that maintain quality services to those in need, as it cannot sustain spending growth of 7 percent annually in its largest program.
Manage Medicaid spending within a stronger Global Cap by applying it to all State share costs and preventing the use of fiscal gimmickry.
Focus on accelerated growth areas such as long-term care and home- and community-based care, specifically targeting unsustainable cost growth in services like CDPAP.
Require the Commission on the Future of Health Care to issue long-term cost savings recommendations this year to drive improvement and savings.
Improve Medicaid data reporting to inform further savings by increasing transparency regarding federal and local funds, utilization, and unit costs.
Key Data
$6 billion
— Amount of federal funds the State recently received waiver approval to reinvest for system reforms.
600,000
— Number of additional Medicaid enrollees in 2024 compared to pre-pandemic levels.
1.3 million
— Number of enrollees the State projected would leave Medicaid following the expiration of federal pandemic-related rules.
1,200%
— Growth rate of CDPAP costs in the past decade.
7.0%
— Annual growth rate of the State share cost of Medicaid from fiscal year 2025 to fiscal year 2028.
$100 billion
— Medicaid spending benchmark that will be exceeded this year.
New York faces a fiscal reckoning that requires curbing significant spending growth, particularly within the Medicaid program which has seen costs rise by nearly 40% over the last three years. To maintain fiscal stability, the state must prioritize reducing high costs associated with long-term care and home-based services while ensuring continued access to quality care.
Recommendations related to Medicaid
The State must reduce Medicaid spending growth while ensuring access to needed high-quality care and a strengthened safety net.
The State must reduce its high and growing costs of long-term care and home and community-based services.
Key Data
nearly 40%
— Medicaid spending growth in New York over the last three years.
fifth-highest
— New York's ranking for Medicaid spending per enrollee in the US.
New York faces significant fiscal pressure from Medicaid, with costs projected to grow at nearly 6 percent annually through fiscal year 2027. Additionally, the state faces potential budget gaps if fewer than the expected 1.2 million enrollees exit the program during the current coverage shift.
Recommendations related to Medicaid
The sustainability of Medicaid spending rests on continued efforts to identify cost savings opportunities.
Key Data
1.2 million
— Medicaid enrollees expected to exit the program by May.
$1.1 billion
— Potential annual spending increase if fewer Medicaid enrollees exit the program than projected.
6 percent
— Projected annual growth rate of Medicaid costs through fiscal year 2027.
New York's Medicaid program, the state's largest budget item at $101 billion, requires improved data transparency regarding home care services to better manage costs and workforce needs. Signing legislation like A1926A/S1683A would mandate annual reporting on service utilization, helping stakeholders identify fiscal impacts and develop necessary health care system transformations.
Recommendations related to Medicaid
The Governor should sign A1926A/S1683A, a bill to require annual reporting on home care services.
The Department of Health should aggressively enhance its transparency efforts to provide the public access to cross-tabular, longitudinal spending, and utilization data disaggregated by geography, demographics, and other categories.
Key Data
$101 billion
— The cost of the Medicaid program this year, which is the single largest program in the State’s budget.
New York faces significant structural budget gaps driven by spending growth in major programs like Medicaid and education, which have outpaced revenue growth. To avoid future service cuts, the state must restrain spending growth in these key areas rather than relying on temporary tax increases or reserve funds.
Recommendations related to Medicaid
The state should focus on understanding and reversing rapid cost growth in long-term care and other areas to reduce Medicaid costs.
New York State Budget Fiscal Year 2024 Major Actions and Fiscal Risks As of First Quarter Update New York City Fiscal Year 2024 Adopted Budget and Outlook
New York should reject proposals to shift Medicaid costs onto local governments, as this is an inappropriate and regressive fiscal policy that ignores the state's responsibility for broad social needs. Instead, the state should empower a comprehensive Health System Reform task force to identify efficiencies and ensure the program remains fiscally sustainable.
Recommendations related to Medicaid
The State should reject the proposal to shift Medicaid costs onto local governments.
The State should empower a comprehensive Health System Reform task force to identify specific initiatives that improve the effectiveness, efficiency, and equity of public health, primary and acute health care delivery, long-term care, and behavioral health.
The State should reverse the policy of capturing New York City sales tax revenue to fund supplemental payments to hospitals.
Key Data
$6 billion
— The lower end of the annual cost range debated for counties and New York City to contribute to Medicaid.
$8 billion
— The higher end of the annual cost range debated for counties and New York City to contribute to Medicaid.
1 million
— The number of current enrollees expected to move off public programs and into private coverage over the coming year.
The New York State Fiscal Year 2024 Executive Budget includes approximately $2.4 billion in recurring new spending, with roughly half of that amount allocated to the Medicaid program. This new spending is partially offset by the final tranche of enhanced federal Medicaid funding provided in response to the COVID-19 public health emergency.
Key Data
$2.4 billion
— Annual recurring new spending proposed in the budget, with roughly half allocated to the <b>Medicaid program</b>.
New York's Medicaid program faces significant fiscal challenges as costs grow at twice the rate of state receipts, compounded by the addition of over 1 million enrollees in three years and the expiration of federal pandemic support. To prevent future budget deficits, the state must implement measures to ensure the program's long-term fiscal sustainability and quality.
Recommendations related to Medicaid
The State should put Medicaid on a fiscally sustainable path to address rising costs and budget risks.
The budget should take specific steps to ensure fiscal sustainability and quality of the Medicaid program.
Key Data
1 million
— Number of Medicaid enrollees added over the past three years.
twice
— Rate at which Medicaid costs are growing compared to the State’s receipts.
New York's Medicaid program faces significant cost pressures as pandemic-related federal aid expires and enrollment levels remain high. To ensure fiscal sustainability, the state must bring program costs in line with available revenues by implementing cost-effective interventions and improved management.
Recommendations related to Medicaid
The State needs to bring the costs of Medicaid, education, transportation, housing, and environmental mitigation and sustainability in line with available revenues.
The State should focus on ensuring the Medicaid program uses cost-effective interventions and is managed well.
Key Data
$1.7 billion
— State payment delayed to keep the Medicaid program on budget.
$3.5 billion
— Annual extraordinary federal aid received by the State to offset Medicaid costs since 2020.
$10 billion
— Minimum amount of pandemic-related federal aid received by the State for Medicaid.
one million
— Number of enrollees added to the Medicaid program since 2020.
New York faces significant future budget gaps, necessitating a focus on restraining spending growth, particularly in the areas of Medicaid and education which account for half of the state's budget. To address these costs, the state should convene a diverse panel of stakeholders to transform the health system and identify strategies to improve health outcomes while controlling expenditures.
Recommendations related to Medicaid
The state should charge a diverse panel of stakeholders to identify ways to transform Medicaid and New York’s health system overall to improve health and control costs.
The state must control Medicaid and education spending, which comprise about 50% of the budget, to restrain overall spending growth.
Key Data
50%
— Medicaid and education spending comprise about 50% of the state budget.
New York State's fiscal outlook faces widening budget gaps due to downward revisions in tax forecasts, despite strong fiscal year 2023 receipts. While enhanced federal Medicaid funding provides $801 million in relief, the continued public health emergency keeps 1 million New Yorkers enrolled in Medicaid at a state cost of $893 million, effectively neutralizing those savings and increasing financial risk.
Recommendations related to Medicaid
The State should seek to reduce recurring spending, especially in high-growth areas such as Medicaid and school aid.
Key Data
$801 million
— Enhanced federal Medicaid funding for the next quarter, which offsets an equal amount of State costs.
1 million
— New Yorkers allowed to remain enrolled in Medicaid due to the continued federal public health emergency.
$893 million
— Estimated State cost for the 1 million New Yorkers remaining enrolled in Medicaid, which fully eliminates the State share savings from enhanced federal funding.
New York State's budget faces long-term fiscal risks due to rapidly rising spending in key areas like Medicaid, which has seen enrollment grow by over one million people in the last two years. To ensure future stability and preserve service quality, the state must develop strategies to control the growth of this spending while maintaining necessary services.
Recommendations related to Medicaid
The State should actively develop plans to restrain Medicaid and education spending growth while delivering needed services and quality.
Key Data
one million
— Number of additional Medicaid enrollees added in the last two years.
New York maintains the highest per capita Medicaid spending in the country, yet the state lacks a comprehensive management and accountability system to ensure these funds are used efficiently. To improve fiscal stability and service delivery, the state must implement rigorous performance measurement and management across its major spending programs, including Medicaid.
Recommendations related to Medicaid
The Governor and Legislature should implement statewide performance measurement and management to ensure that high per capita Medicaid spending delivers efficient results for New Yorkers.
The state should develop plans, identify goals, measure activities and results, and ensure accountability by managers and local governments to improve oversight of Medicaid spending.
The state should adopt a budget that restrains spending growth to ensure fiscal stability, which is necessary to manage large programs like Medicaid effectively.
Key Data
$3,420 Million
— Enhanced Medicaid Funding received by the state in fiscal year 2021.
$2,984 Million
— Enhanced Medicaid Funding received by the state in fiscal year 2022.
$995 Million
— Enhanced Medicaid Funding received by the state in fiscal year 2023.
$702 Million
— Medicaid Deferrals (net) recorded in fiscal year 2021.
New York's Medicaid program requires significant reforms to its global cap and transparency measures to ensure fiscal sustainability and prevent the destabilization of state finances. The current cap is neither global nor a true cap, necessitating a shift toward accrual-based accounting and growth limits tied to tax receipts to better manage costs.
Recommendations related to Medicaid
The State should adopt appropriate and meaningful changes to the Medicaid global cap and dramatically improve the program’s transparency.
To be fiscally sustainable, the rate of growth should be limited to the lesser of common rate and base tax receipts growth or the proposed federal calculation of Medicaid cost growth.
Any growth in excess of base tax receipts should be offset by savings within the Medicaid program or from other areas of the budget.
Reporting requirements for the Medicaid program should be improved to ensure timely data is available.
New York's fiscal plan includes an unprogrammed $1 billion allocation for health care transformation, which should be utilized to catalyze systemic improvements without increasing recurring costs. To maintain fiscal stability, the state must ensure that projected growth in Medicaid spending remains affordable and does not exceed the Medicaid Global Cap.
Recommendations related to Medicaid
The State needs to ensure Medicaid spending growth is affordable.
The State should support a concerted effort to identify actions to improve access, coordination, quality, equity, and to control costs for the State, residents and businesses.
The unprogrammed $1 billion for health care transformation should be used to catalyze changes in Medicaid and the health system overall but should not increase recurring spending without offsetting savings elsewhere.
Key Data
$1 billion
— Unprogrammed funding included in the budget for health care transformation.
New York State could significantly reduce its coverage gap by implementing strategies such as state-funded premium assistance, a public option plan, and a state-funded Essential Plan for low-income immigrants. These initiatives, alongside enhanced outreach and enrollment efforts, aim to provide affordable health insurance to the roughly 1 million New Yorkers who currently lack coverage.
Recommendations related to Medicaid
New York could provide additional subsidies to reduce the cost of individual market plans for more people.
New York could procure and offer a plan through the State Marketplace with lower premiums and less cost-sharing than plans currently available.
New York could use a State-only funding strategy to create a State-only funded Essential Plan for immigrants who are ineligible for federally-funded coverage.
New York could provide additional funding for the State Navigator program to target areas where fewer people are insured than average.
New York could enable enrollment through tax returns similar to the Maryland Easy Enrollment Health Insurance Program.
New York could adopt policies to expand enrollment opportunities outside of open enrollment for those who missed deadlines or lost coverage.
Key Data
1 million
— Number of New Yorkers who remained uninsured in 2019.
$803 million
— Estimated annual State cost for the deep premium subsidy strategy.
$345 million
— Estimated annual net State cost for a State-funded Essential Plan for low-income immigrants.
65,000
— Estimated number of uninsured people who would obtain coverage through an expanded Navigator program.
$20 million
— Estimated total cost for expanding the Navigator program.
10,000
— Estimated number of additional people who would obtain health insurance through tax return-based enrollment.
New York should restructure its Medicaid Redesign Team into a Health System Transformation Team to improve healthcare access, quality, and fiscal sustainability. This new body should identify specific efficiencies and program improvements to manage the influx of approximately 1 million new enrollees added during the pandemic.
Recommendations related to Medicaid
The State’s Medicaid Redesign Team should be reconstituted as a Health System Transformation Team with a mandate to make recommendations to improve healthcare access, affordability, quality, and equity.
The Transformation Team should identify efficiencies and changes to eligibility and program redesign to ensure Medicaid is fiscally sustainable.
The State should take steps to improve the program’s fiscal stability by charging the Transformation Team to identify Medicaid efficiencies, program improvements, and savings.
Further improvements are needed in transparency by bolstering the State’s reporting requirements to coordinate care for the highest-needs enrollees and to fix the State’s global Medicaid spending cap.
Key Data
1 million
— Number of new enrollees brought into the Medicaid program during the pandemic.
New York State's fiscal health faces challenges as pandemic-driven increases in Medicaid enrollment and significant school aid spending contribute to future budget gaps. The state must address these pressures and avoid a projected $3.5 billion fiscal cliff by improving financial transparency and abandoning accounting maneuvers that obscure true spending levels.
Key Data
$3.4 billion
— Federal fiscal relief in fiscal year 2021 that was used to offset Medicaid costs.
$1.7 billion
— Medicaid payments that were deferred from fiscal year 2019 into fiscal year 2020.
At this time last year, New York State estimated that tax receipts would fall short of pre-pandemic estimates by $15 billion annually on average, totaling $60 billion over four years. Receipts, however, have been much stronger than expected. By April 2021, the State reduced its four-year tax receipt shortfall estimate by 80 percent, to $11.8 billion. Over the four-year period, the State also will receive at least $21.1 billion of targeted and general federal fiscal…
New York State has utilized accounting maneuvers, such as deferring Medicaid payments, to manage budget growth and mask spending levels. These deferrals, totaling $1.7 billion in fiscal year 2020 and expected to continue at the same level for fiscal year 2021, highlight the state's reliance on shifting costs to maintain the appearance of controlled spending.
Key Data
$1.7 billion
— Medicaid payments deferred into fiscal year 2020.
$1.7 billion
— Expected Medicaid payment deferral to close out fiscal year 2021.
Proposed significant increases in Medicaid spending threaten to return the state to a period of severe fiscal stress. To avoid this, the state should prioritize reviving the Medicaid Redesign Team to identify efficiencies, fix the Global Cap, and create a long-term plan for improving the effectiveness and equity of health care delivery.
Recommendations related to Medicaid
The State should revive the Medicaid Redesign Team (MRT) and expand its charge to Health System Transformation to identify additional Medicaid efficiencies and program redesign.
The State should fix, rather than eliminate, the Medicaid Global Cap to ensure long-term fiscal stability.
The State should develop a long-term plan to improve the effectiveness, efficiency, and equity of New York’s public health, primary and acute health care delivery, long-term care, and behavioral health systems.
New York State's Medicaid program faces ongoing structural budget gaps and transparency issues, necessitating a shift toward a more comprehensive health system redesign rather than relying on temporary fixes. The state should prioritize taking over more of the local share of Medicaid costs and improve fiscal accountability by fixing the Global Cap and providing regular, transparent expenditure reporting.
Recommendations related to Medicaid
Revive and transform the Medicaid Redesign Team into a Health System Transformation Team.
Reject the elimination of State-share Medicaid Indigent Care Pool for public hospitals.
The State should be moving toward taking over more of the local share of Medicaid rather than pushing additional Medicaid costs onto local governments.
For Medicaid, the new Team should identify possible efficiencies and program redesign, confirm what data should be made publicly available on a regular basis, and fix the Global Cap.
The Team should affirm the importance of providing monthly expenditure reports and recommend additional content that would allow better monitoring, evaluation and identification of program improvements and efficiencies.
Key Data
$4.5 billion
— Amount of enhanced Medicaid funding provided to the State by federal aid packages since March 2020.
$1.5 billion
— Amount of likely additional enhanced Medicaid funding that the Executive has not yet included in the Financial Plan.
$2.5 billion
— Amount of recurring savings the Medicaid Redesign Team was tasked to identify after the State acknowledged Medicaid spending was growing faster than budgeted.
New York State's budget relies on lower-than-expected Medicaid utilization to help close fiscal gaps, with managed care plans seeing reduced costs during the pandemic. However, the state lacks transparency regarding the specific policy changes driving these Medicaid savings, which are projected to reduce state spending by $599 million annually in the near term.
Key Data
$1.5 billion
— in additional federal Medicaid matching funds provided by the continuation of the federal emergency declaration.
$631 million
— in planned State Medicaid spending reduced in fiscal year 2021 due to lower utilization of services in managed care.
$599 million
— in estimated annual State Medicaid spending reductions from proposed legal and administrative policy changes.
3.6%
— increase in annual State share Medicaid spending in fiscal year 2021.
3.2% to 6.2%
— annual increase in State share Medicaid spending in each of the out-years.
6 million
— Medicaid enrollees in New York State covered by managed care organizations.
New York State has historically shifted Medicaid costs between fiscal years to balance budgets on paper, while also relying on intercepting local sales tax revenue to offset program expenses. With Medicaid enrollment rising and the program consuming over 20 percent of state operating funds, further savings are necessary to address future budget gaps.
Recommendations related to Medicaid
The State should avoid balancing this year’s budget using cost shifts or revenue intercepts that harm local governments, and should especially avoid shifting Medicaid costs onto localities.
With Medicaid enrollment growing and the program accounting for more than 20 percent of State Operating Funds spending, additional savings will have to be achieved in order to reduce future budget gaps.
Key Data
$1.7 billion
— Amount of State Medicaid costs shifted from March 2019 into April 2019 to move the expense from fiscal year 2019 to fiscal year 2020.
$2.5 billion
— Goal for savings in fiscal year 2021 set by the reconstituted Medicaid Redesign Team.
$1.6 billion
— Total savings identified by the Medicaid Redesign Team.
20 percent
— Portion of State Operating Funds spending accounted for by the Medicaid program.
$200 million
— Amount of sales tax revenues intercepted from New York City to offset Medicaid expenses in fiscal years 2021 and 2022.
$50 million
— Amount of sales tax money intercepted outside of New York City to offset Medicaid expenses in fiscal years 2021 and 2022.
New York State and City face significant multi-year budget gaps totaling $73.3 billion, which federal aid—including past and projected enhanced Medicaid funding—is unlikely to fully resolve. Leaders must prioritize the development and implementation of credible fiscal stability plans to address these substantial long-term financial challenges.
Key Data
$3 billion
— Amount of enhanced Medicaid funding included in the most recent New York State financial plan.
Two-thirds
— Portion of federal fiscal relief provided to New York State between fiscal years 2009 and 2012 that was additional reimbursement for Medicaid.
$2.2 billion
— Amount of federal aid provided to New York City between fiscal years 2009 and 2012 that was for increased Medicaid reimbursement.
$740 million
— Amount of enhanced Medicaid funding New York City expects to receive in fiscal years 2020 and 2021.
New York City's local contribution to Medicaid is projected to be $948 million lower in fiscal year 2021 compared to the previous year. This reduction is primarily attributed to increased federal aid through the Federal Medical Assistance Percentage (FMAP) and a timing adjustment that shifted a payment across fiscal years.
Key Data
$948 million
— The local contribution to Medicaid is lower in fiscal year 2021 due to federal funding via the Federal Medical Assistance Percentage (FMAP) and timing, which shifted one payment across fiscal years.
New York State's budget has been impacted by significant Medicaid payment deferrals, with $1.7 billion deferred from fiscal year 2019 into 2020 and plans to return to that deferral level in 2021. While the state faces an $8 billion budget gap, it expects to receive $726 million in additional federal Medicaid funding to help offset planned spending reductions.
Key Data
$1.7 billion
— Medicaid payments deferred from fiscal year 2019 into fiscal year 2020.
$650 million
— Portion of deferred Medicaid payments the State accelerated during fiscal year 2020.
$1.1 billion
— Remaining amount of Medicaid payments the State continued to defer during fiscal year 2020.
$726 million
— Additional federal Medicaid funding expected to benefit the State as of July 1.
CBC hosted a special panel discussion of prominent fiscal experts who helped New York overcome some of the most dire crises of the past. They provided insights and lessons from past experiences to help us understand and navigate the looming crisis. Stephen Berger Chairman, Odyssey Investment Partners; Former Executive Director,…
New York State faces significant budget gaps that require careful management of the Medicaid program to ensure its long-term sustainability while maintaining essential services. By continuing Medicaid Redesign Team efforts and securing federal support, the state can achieve necessary savings without resorting to drastic cuts to healthcare coverage.
Recommendations related to Medicaid
Medicaid Redesign Team efforts should continue in order to find additional savings starting in fiscal year 2022.
Given the size and recent growth of the Medicaid program, the State should be able to find savings in line with Executive Budget projections, which would still allow the state’s share of Medicaid to grow more than 4 percent annually.
Key Data
$1.5 billion
— Federal government commitment to increased Medicaid funding covering the period of January 1, 2020 to June 30, 2020.
$1.5 billion
— Medicaid savings that were less than planned in fiscal year 2024.
$100 million
— Medicaid savings that were less than planned in fiscal year 2021.
New York's fiscal stress, exacerbated by the pandemic, requires difficult choices regarding budget balancing, including potential expenditure reductions and revenue adjustments. The state's current approach to Medicaid financing places an inequitable burden on localities that should be reversed rather than accelerated.
Recommendations related to Medicaid
New York's large financing role for localities regarding Medicaid financing should be reversed rather than accelerated.
The New York State Fiscal Year 2021 Enacted Budget includes up to $4.5 billion in federal aid for Medicaid, though the state still faces an underlying structural problem in the program that requires attention. Additionally, the budget shifts $250 million in support for distressed hospitals from the state to local governments, a move that adds to local fiscal burdens.
Recommendations related to Medicaid
The State still has an underlying structural Medicaid problem that should be addressed without harming the health system’s ability to respond to the pandemic.
Key Data
$4.5 billion
— Federal aid for Medicaid in fiscal year 2021.
$250 million
— Support for distressed hospitals that local governments are now responsible for.
New York's Medicaid program faces significant fiscal gaps, exacerbated by the COVID-19 pandemic and federal restrictions that limit the state's ability to implement planned cost-saving measures. To ensure long-term sustainability, the state must continue the redesign efforts started by the Medicaid Redesign Team while incorporating transparency improvements and avoiding the shifting of costs to local governments.
Recommendations related to Medicaid
The State should include the MRT recommendations in the budget, implementing those that do not risk federal funding immediately.
The State should lobby federal lawmakers to clarify and revise the COVID-19 response law to allow New York to implement planned cost savings.
The State should include transparency improvements to the Medicaid program to help prevent another budget blunder.
The State should omit the provision for local share growth, as its inclusion would reverse an important achievement in State Medicaid finance policy.
The State should continue collaborative redesign and reform of the health care system to address persistent delivery challenges.
Key Data
$4.5 billion
— Annualized value of enhanced federal funding provided by the Families First Coronavirus Response Act.
$1.6 billion
— Total savings recommended by the Medicaid Redesign Team for fiscal year 2021.
$851 million
— Shortfall in the Medicaid Redesign Team's recommended savings against its $2.5 billion target.
$4 billion
— Fiscal gap in the Medicaid program for fiscal year 2020.
$3 billion
— Fiscal gap in the Medicaid program for fiscal year 2021 and beyond.
$474 million
— Amount of recommended savings likely to be prohibited under federal law.
The Medicaid Redesign Team's proposals fall $851 million short of the required $2.5 billion in fiscal year 2021 savings, while failing to address necessary improvements to program transparency and the structure of the Medicaid Global Cap. Although the plan includes some beneficial policy changes, such as reforms to the Indigent Care Pool, the state must refine these proposals and provide greater fiscal detail to ensure the program's long-term sustainability.
Recommendations related to Medicaid
The State should improve transparency in Medicaid spending by publicly providing data, including spending for all agencies and unit costs of services.
The State should amend the structure of the Medicaid Global Cap, which serves as the annual limit on growth in State Medicaid disbursements.
The Executive and Legislature should commit to making fiscal and statutory details available promptly regarding the Medicaid Redesign Team's proposals.
The final negotiated budget should include fundamental fixes to the Medicaid program that ensure reforms meet fiscal goals while minimizing negative impacts on the health care system and patients.
The State must refine the Medicaid Redesign Team's plan during the adoption and implementation phases to address the current lack of detail.
Key Data
$2.5 billion
— The savings target for Medicaid in fiscal year 2021.
$851 million
— The amount by which the Medicaid Redesign Team's proposals fall short of the $2.5 billion savings target.
$1.7 billion
— The value of a payment delay in March 2019 that went unreported for months.
$1 billion
— The amount of funding provided by the Indigent Care Pool to hospitals serving predominantly Medicaid and uninsured patients.
$1.6 billion
— The total savings identified in the Medicaid Redesign Team's own proposals.
New York's Medicaid program faced unsustainable, unbudgeted expenditure growth that contributed $18 billion to the state's five-year budget gap prior to the pandemic. To address this, structural reforms are necessary, and emergency federal aid should not be used as a substitute for these essential changes or to shift costs onto local governments.
Recommendations related to Medicaid
The enacted budget should not shift Medicaid costs to New York City and counties as proposed in the Executive Budget.
The state should leverage and continue as needed the work of the Medicaid Redesign Team (MRT) to design appropriate responses to unsustainable expenditure growth.
Emergency federal aid provided through a temporarily increased federal share for Medicaid should not substitute for the structural reforms to the State Medicaid program needed to close the pre-existing gap.
Key Data
$18 billion
— The amount of the State’s $35 billion five-year budget gap caused by unsustainable, unbudgeted expenditure growth in the Medicaid program.
$4.5 billion
— The potential relief provided through a temporarily increased federal share for Medicaid.
New York's Health Care Reform Act (HCRA) taxes, which generate nearly $6 billion annually, are increasingly used to offset the state's Medicaid costs rather than their original purpose of funding specific public health programs. Because these taxes increase health insurance premiums and depress wage growth, policymakers are urged to avoid further tax increases while reviewing the program's role in state health care funding.
Recommendations related to Medicaid
HCRA tax increases should be avoided as a strategy for balancing the Medicaid budget because that action increases the cost of health insurance premiums and likely depresses wage growth for a majority of New Yorkers.
As lawmakers negotiate this year’s budget and evaluate the State’s five-year financial plan, they should review HCRA’s role in health care funding and its impact upon privately insured New Yorkers.
HCRA taxes should not be increased.
Key Data
$2.5 billion
— The amount the Medicaid Redesign Team is charged with finding in State budget savings.
4.3 percent
— The combined impact of the Surcharge and Covered Lives Assessment on health insurance premiums.
$1,000
— The statewide average annual cost of HCRA taxes for a family health insurance plan.
80 percent
— The portion of HCRA revenue used in recent years to pay for the State’s share of Medicaid.
$4 billion
— The amount of HCRA revenue that pays for Medicaid services that would otherwise be paid from the General Fund.
$2 billion
— The estimated amount of HCRA taxes annually substituting for general fund revenues required to support Medicaid services.
New York State should prioritize Medicaid restructuring as the primary mechanism for achieving necessary spending restraint to ensure fiscal preparedness for economic downturns. This strategy is intended to help close state budget gaps without relying on tax increases or fiscal gimmicks.
Recommendations related to Medicaid
The state should prioritize Medicaid restructuring as the primary method for achieving necessary spending restraint.
New York's Medicaid program faces significant fiscal challenges due to unsustainable spending growth, necessitating reforms to the Global Cap, improved transparency, and targeted cost-containment measures. The state should avoid raising health care taxes, which increase insurance premiums for families, and instead focus on structural changes to long-term care and supplemental payments to ensure long-term sustainability.
Recommendations related to Medicaid
Make the Global Cap global by including all spending.
Medicaid spending for purposes of the Cap should be accounted for on a modified accrual basis in accordance with generally accepted accounting principles (GAAP).
The State should index Medicaid spending to the rolling average of medical inflation as a sound strategy and metric for growth.
The State should publish monthly Medicaid Cap updates and enhance the requirements for their contents.
Supplemental payments should be better targeted to hospitals in order to promote equity and reduce total costs.
The State should not raise health care taxes, as these are passed on to New Yorkers as higher health insurance premiums.
Key Data
$2.5 billion
— State-share Medicaid savings identified by the Medicaid Redesign Team.
10 percent
— Reduction in the Medicaid budget.
$1.7 billion
— Medicaid payments deferred by the State in fiscal year 2019.
$500 million
— Cost for the health homes care coordination model in its first five years.
$1,000
— Annual increase in health insurance premiums paid by the average commercially insured family in New York due to healthcare taxes.
47.6 percent
— Estimated share of the Global Cap budget comprised by long-term care.
New York faces significant budget gaps driven largely by over $18.0 billion in previously unbudgeted Medicaid spending, necessitating careful fiscal management. To address this, the state should implement targeted Medicaid spending controls, avoid shifting costs to local governments, and eliminate the practice of deferring Medicaid payments.
Recommendations related to Medicaid
Support appropriately targeted, prudent, and publicly vetted spending controls recommended by the Medicaid Redesign Team (MRT).
The State should reject any increase in the local Medicaid share, as counties and New York City have very limited control over the program.
The State should make efforts to eliminate the Medicaid payment deferral that was initially implemented at the end of fiscal year 2019.
Given Medicaid’s rising long-term care costs, the State should not remove incentives for New Yorkers to acquire long-term care insurance.
Key Data
$18.0 billion
— The portion of the $38.6 billion five-year budget gap attributed to previously unbudgeted Medicaid spending.
$1.9 billion
— The amount of Medicaid payments the Executive Budget proposes to permanently delay.
$2.5 billion
— The amount of Medicaid savings the Executive Budget relies on that are yet to be determined.
The New York State fiscal year 2021 budget relies on $2.5 billion in unspecified Medicaid savings to keep spending growth under 2 percent. Additionally, the state has deferred $1.9 billion in Medicaid payments to fiscal year 2021 to artificially lower reported spending figures.
Key Data
$2.5 billion
— The amount of Medicaid savings the Fiscal Year 2021 Executive Budget is dependent on to hold spending growth below 2 percent.
$1.9 billion
— The projected growth of the deferral of Medicaid payments in fiscal year 2021.
$315 million
— The amount of Master Settlement Agreement revenues used to pay certain Medicaid expenses off-budget in fiscal year 2020.
$371 million
— The amount of Master Settlement Agreement revenues used to pay certain Medicaid expenses off-budget in fiscal year 2021.
7 days since the start of budget season, which commenced this year with the New York City Preliminary Budget released on January 16th. The State Budget, released just yesterday, may have a significant impact on the City’s finances this year: with the State facing a large budget gap, the Executive…
New York's fiscal year 2021 executive budget relies on an unsound $1.7 billion Medicaid payment delay and proposes shifting costs to local governments by unfreezing Medicaid expenses. While the reconvening of the Medicaid Redesign Team to find $2.5 billion in savings is a necessary step, the state should pursue a full takeover of the program rather than forcing localities to shoulder the burden of state-set policies.
Recommendations related to Medicaid
The Medicaid Redesign Team should aggressively pursue the $2.5 billion in savings to bring Medicaid spending back in line with the State’s Global Cap.
The Medicaid Redesign Team should recommend additional savings to eliminate the annual Medicaid payment deferral.
Local governments should work with the State to identify and realize Medicaid savings through a joint effort.
The State should pursue a full State takeover of the Medicaid program to relieve local governments of the fiscal burden of state-set policies.
Key Data
$1.7 billion
— The amount of the unsound Medicaid payment delay continued in the fiscal year 2021 executive budget.
$2.5 billion
— The savings target the reconvened Medicaid Redesign Team is tasked with finding to restore spending discipline.
3 percent
— The threshold of nonfederal Medicaid cost growth above which local governments and New York City will be required to pay.
New York State's budget is facing significant gaps due to structural imbalances and a failure to account for the true costs of the Medicaid program, which accounts for roughly one-quarter of the state's operating budget. To address these issues, the state must stop using fiscal gimmicks like deferring Medicaid payments and instead implement structural reforms, such as reconstituting the Medicaid Redesign Team to identify sustainable cost savings.
Recommendations related to Medicaid
The State should reconstitute the Medicaid Redesign Team (MRT) to identify savings that can be quickly implemented and those that can significantly restrain costs over time.
The Medicaid Redesign Team should focus on containing long-term care costs, implementing targeted rate reductions, and improving allocations of Medicaid supplemental payments.
The State should not reverse the important progress made in assuming a larger portion of the local share of Medicaid.
Key Data
$1.7 billion
— Medicaid payments deferred from fiscal year 2019 into fiscal year 2020.
$2.2 billion
— Medicaid payments deferred in the mid-year financial plan.
$62 million
— Savings from a 1 percent across-the-board Medicaid rate cut in fiscal year 2020.
one-quarter
— Portion of the State operating budget accounted for by Medicaid spending.
$14,535 million
— Cumulative four-year total of unbudgeted Medicaid spending.
New York City's public hospital system faces a significant operating deficit, largely driven by payments from Medicaid that fall short of the actual costs of providing care. To address this, the state should reform its hospital financing by better targeting Medicaid supplemental payments, aligning payment rates with service costs, and more equitably distributing surplus revenue from commercial insurance.
Recommendations related to Medicaid
The State should better target Medicaid supplemental payments to H+H and other facilities with the greatest need, and finance the nonfederal portion of these payments with State revenues rather than local intergovernmental transfers.
The State should better align Medicaid hospital payment rates to reasonable unit costs of services, and fund with better use of Medicaid supplemental payments, more equitably allocated high commercial insurance payments and other broad based sources.
The State should develop and pursue a multiyear plan for more equitable financing of hospital services including changes in three areas: Medicaid supplemental payments, commercial insurance payments, and Medicaid rates.
The State should redesign the Medicaid supplemental payment programs to ensure funds are better targeted to the institutions doing the most for Medicaid and uninsured patients.
The State should redistribute more broadly the surplus from commercial insurance payments to help finance the nonfederal portion of Medicaid supplemental payments targeted to the hospitals with large indigent care volumes.
Key Data
56 percent
— Portion of H+H's operating deficit caused by payments below cost from Medicaid.
53 percent
— Share of associated costs H+H recovers from Medicaid, compared to 77 percent among safety net institutions.
$5 billion
— Amount the State provides annually in supplemental Medicaid payments to hospitals.
$1.1 billion
— Annual amount the City provides as the nonfederal share of H+H's supplemental Medicaid payments.
$3 billion
— Average annual operating deficit for H+H in fiscal years 2015 to 2017.
New York faces a significant fiscal imbalance driven by rapidly accelerating Medicaid costs, which have grown by 6.1 percent annually between fiscal years 2017 and 2020. To address this, the state should reform its Medicaid spending, including supplemental payments and long-term care policies, while exercising fiscal discipline under the Medicaid global cap.
Recommendations related to Medicaid
Reconstitute the Medicaid Redesign Team to identify savings.
The approach should be holistic, not only evaluating rates but also policies to address high and rapidly rising long-term care costs and to reform the $3.6 billion in Medicaid supplemental payments so they are better directed to safety net hospitals in need.
The Executive, with the support of the Legislature, should exercise powers granted under the Medicaid global cap to prevent Medicaid spending from exceeding budgeted amounts in future periods.
Key Data
6.1%
— Average annual increase in Medicaid State spending between fiscal years 2017 and 2020.
50%
— Amount by which New York’s cost per Medicaid enrollee exceeds the national average.
$12.5 billion
— Amount of previously unbudgeted Medicaid spending contributing to the total four-year State budget gap.
$3.6 billion
— Amount in Medicaid supplemental payments that should be reformed to better direct funds to safety net hospitals.
$2.2 billion
— Amount of the budget gap that the state assumes is "solved" by permanently delaying annual Medicaid bill payments.
The New York State FY 2020 Midyear Update reveals a significant fiscal challenge, with previously unbudgeted Medicaid spending adding $4 billion in fiscal year 2020 and up to $4 billion annually thereafter, increasing the four-year budget gap by $14.5 billion. To address this, the state relies on a $2 billion payment deferral, though a more comprehensive solution should look beyond Medicaid to include reforms in areas like school aid and economic development programs.
Recommendations related to Medicaid
The State should develop and implement a plan to solve the budget problem by considering other portions of the budget, including mistargeted school aid and unproductive economic development programs, rather than relying solely on the Medicaid program.
Key Data
$4 billion
— previously unbudgeted Medicaid spending added to the financial plan in fiscal year 2020
$3 billion to $4 billion
— previously unbudgeted Medicaid spending added to the financial plan annually thereafter
$14.5 billion
— increase to the four-year budget gap resulting from recognizing unbudgeted Medicaid spending
$2 billion
— permanent payment deferral implemented to address the Medicaid-driven budget gap
New York State faces a significant Medicaid budget shortfall, with estimates suggesting a cumulative four-year gap of over $9 billion due to underreported costs and delayed payments. To address this, the state must stop relying on payment delays to balance the budget and instead implement a detailed, multi-year plan that includes specific programmatic changes to control spending.
Recommendations related to Medicaid
The Mid-Year Update should identify multiyear savings targets, approaches to make programmatic changes, and programs to target to address the Medicaid shortfall.
The Fiscal Year 2021 Executive Budget should not delay payments to forestall a more serious reckoning regarding Medicaid costs.
To realign the fiscal year 2020 budget with fiscal reality, the budget should include the cost of the delayed fiscal year 2019 payment and a full year of Medicaid payments for fiscal year 2020.
Absent any programmatic action to reduce spending, the financial plan should reflect increased annual spending and concurrent increases to out-year deficits over the previous financial plan.
Key Data
$9 billion
— Cumulative four-year budget gap caused by understating Medicaid costs.
$1.7 billion
— Medicaid payments delayed from fiscal year 2019 into fiscal year 2020.
$3 billion to $4 billion
— Estimated State share gap in fiscal year 2020.
$2.0 billion
— Expected savings in fiscal year 2020 realized from adjusting the timing of payments.
$3.5 billion
— Amount that would be added to State Operating Funds spending in fiscal year 2020 to include the cost of the delayed fiscal year 2019 payment and a full year of Medicaid payments.
New York State has deferred billions in Medicaid payments to adhere to a spending cap, obscuring the program's true costs and creating significant budget gaps. To address this, the state must align its budget with actual costs by reducing Medicaid spending or cutting other areas of the budget.
Recommendations related to Medicaid
The State should reduce spending for Medicaid to align with budgeted amounts.
The State should reduce planned spending for other services to offset the unrecognized rising costs of the Medicaid program.
The State should not continue to obscure the true cost of Medicaid or financial plan spending obligations.
The State should align the budget with actual costs to ensure fiscal transparency.
The State should reinvigorate the previously successful Medicaid Redesign Team to achieve substantial reductions in spending.
The State should slow the rapid growth in school aid by better targeting aid to needy districts.
The State should cut wasteful economic development spending to help balance the budget.
Key Data
$1.7 billion
— The amount of State funds in deferred payments that should have been made in March 2019.
$9 billion
— The cumulative total by which the State's financial plan understates Medicaid costs.
$80 billion
— The approximate annual cost of the New York State Medicaid program.
$3.5 billion
— The projected budget gap in fiscal year 2020 after accounting for deferred and unaccounted Medicaid costs.
$6.6 billion
— The projected budget gap in fiscal year 2023 after accounting for deferred and unaccounted Medicaid costs.
6 million
— The number of New Yorkers provided health care coverage by the State's Medicaid program.
New York State's fiscal condition is obscured by the deferral of Medicaid payments, which masks a significant funding shortfall that threatens to increase the four-year budget gap to over $20 billion. To address this, the State must provide an accurate financial picture and implement cost-control measures, such as reviving the Medicaid Redesign Team, to bring its finances back into balance.
Recommendations related to Medicaid
The State should provide a clear, accurate financial picture and take actions to reduce spending to bring the State’s finances into balance regarding Medicaid payment delays and funding shortfalls.
The State should reinvigorate the previously successful Medicaid Redesign Team efforts to control costs.
The State should slow the rapid growth in school aid by better targeting aid to needy districts to help address the State's fiscal imbalance caused by Medicaid costs.
The State should cut wasteful economic development spending to help balance the budget in light of Medicaid funding shortfalls.
Key Data
$3 billion
— Medicaid State funding shortfall in the current year.
$1.5 billion
— Annual Medicaid State funding shortfall thereafter.
$7 billion
— Estimated shortfall in funds needed to pay budgeted obligations over the next four years.
$12.8 billion
— Cumulative budget gap already projected by the State’s most recent financial plan.
$20 billion
— Cumulative four-year projected State budget gaps.
New York State has utilized tobacco Master Settlement Agreement revenues to pay for certain Medicaid expenses off-budget, totaling $444 million in fiscal year 2019 and $315 million in fiscal year 2020. These accounting maneuvers, alongside other shifts, obscure the true growth of state spending, which has been driven by increases in areas like Medicaid and education.
Key Data
$444 million
— Tobacco Master Settlement Agreement revenues used to pay certain Medicaid expenses off-budget in fiscal year 2019.
$315 million
— Tobacco Master Settlement Agreement revenues used to pay certain Medicaid expenses off-budget in fiscal year 2020.
The proposed New York Health Act would require federal waivers to maintain funding for the more than half of New Yorkers currently enrolled in programs like Medicaid and Medicare, while potentially increasing administrative costs compared to the current 7 percent rate for Medicaid. This legislation would necessitate significant tax increases and legal challenges, prompting a need for alternative, targeted reforms to improve health coverage and affordability.
Key Data
7 percent
— The current administrative costs for New York State’s Medicaid program and Medicare.
6 percent
— The assumed administrative costs in the RAND analysis for the New York Health Act, which are lower than the current costs for Medicaid.
New York's Medicaid program serves 6 million residents at an annual cost of over $70 billion, with dually eligible individuals accounting for 15 percent of the population but 36 percent of total costs. To improve care coordination for these individuals, the state should consider strategies such as expanding partnerships between Medicare Advantage D-SNPs and Medicaid MLTC plans, targeting health home enrollment, and improving the marketing of integrated care models.
Recommendations related to Medicaid
The state should better market integrated care plans with more extensive consumer education to ensure beneficiaries understand their potential benefits.
Policymakers should constrain competition from alternative care arrangements by requiring entities sponsoring integrated plans to not offer competing MLTC plans.
The state should expand partnerships between Medicare Advantage D-SNPs and Medicaid MLTC plans to better coordinate services for those with significant long-term care needs.
The state should target enrollment in health homes among eligible fee-for-service dual enrollees through outreach and marketing tied to passive enrollment.
The state should support broader marketing of Medicare Advantage D-SNPs to engage individuals with less intensive needs in coordinated care plans.
Key Data
$70 billion
— Annual cost of New York State's Medicaid program.
6 million
— Number of residents served by New York State's Medicaid program.
880,000
— Number of people enrolled in both Medicaid and Medicare in New York State.
15 percent
— Share of New York's Medicaid population comprised of dually enrolled individuals.
36 percent
— Share of New York's Medicaid program costs consumed by dually enrolled individuals.
224,857
— Number of enrollees in Managed Long-term Care (MLTC) plans as of January 2019.
New York State's $78 billion Medicaid program relies on $5.3 billion in supplemental payments to support hospitals, but these funds face significant threats from looming federal cuts and criticism regarding inequitable distribution. Legislative and executive leaders must develop strategies to mitigate the impact of a potential $2.9 billion annual reduction in federal funding while reforming the allocation methods to better target hospitals with the greatest financial need.
Recommendations related to Medicaid
The State should create a plan for mitigating and equitably distributing scheduled federal DSH cuts in advance of their implementation.
The State should establish a more equitable distribution policy for the full set of supplemental programs, taking into account the role and magnitude of all supplemental payments and their interactions.
Key Data
$78 billion
— Total size of New York State’s Medicaid program.
$5.3 billion
— Amount of supplemental payments not directly associated with the provision of medical services.
$2.9 billion
— Annual cut to New York State's DSH funding that will be phased in beginning October 1, 2019.
$3.7 billion
— Total funding for the Disproportionate Share Hospital (DSH) Program.
$1.1 billion
— Funding allocated to the Indigent Care Pool within the DSH program.
$330 million
— Annual funding from the Value Based Payment Quality Improvement Program directed to four hospitals in Brooklyn.
New York State should pursue targeted health care reforms, such as expanding value-based payment targets for Medicaid managed care and implementing bundled payments for Medicaid and state employee coverage. These strategies aim to restrain costs, improve access, and enhance health outcomes by refining delivery systems and better targeting services for high-need populations.
Recommendations related to Medicaid
Extend and expand NYS Value Based Payment (VBP) roadmap targets, specifically for Medicaid managed care payments.
Require selected bundled payments for Medicaid and State employee coverage.
Implement a geographic global budget pilot for Medicaid and the uninsured, or an all-payer system if possible.
Refine Health Homes to better target individuals with severe mental illness for coordinated care and service management.
Key Data
80%-90%
— Goal for Medicaid managed care payments that are value based.
>35%
— Goal for Medicaid managed care payments that include provider risk sharing.
New York State is utilizing $435 million in fiscal year 2019 and $327 million in fiscal year 2020 from the $10 billion Master Settlement Agreement to pay for Medicaid expenses off-budget. This accounting maneuver, among others, obscures the true rate of state spending growth, which is higher than the reported figures suggest.
Recommendations related to Medicaid
As the Legislature considers the budget and its wish list, it should be mindful that spending growth is already larger than it appears.
Key Data
$435 million
— Master Settlement Agreement revenues used to pay certain Medicaid expenses off-budget in fiscal year 2019.
$327 million
— Master Settlement Agreement revenues used to pay certain Medicaid expenses off-budget in fiscal year 2020.
$10 billion
— Total settlement between various governments and the five largest tobacco companies related to the impact of tobacco use on public health.
New York faces significant fiscal uncertainty regarding federal health funding, including potential impacts on Medicaid eligibility and the Essential Plan program following federal court rulings. To maintain fiscal stability, the state should continue to adhere to and expand the Medicaid Global Cap while exploring targeted measures to reform the health care delivery system and support the safety net.
Recommendations related to Medicaid
The State should continue to adhere to, and expand, the Medicaid Global Cap to restrain spending growth.
The State should pursue targeted measures to improve access, reform the delivery system, and support the safety net to transform the health care system.
The State should prepare for the potential loss of federal funds for programs like increased Medicaid eligibility in light of federal court rulings.
Key Data
$3.1 billion
— Funding for increased Medicaid eligibility.
$425 million
— Additional Medicaid spending included under the cap as part of the fiscal year 2019 budget.
$5 billion
— Funding for the Essential Plan program under the Affordable Care Act.
$530 million
— Funding for tax credits to subsidize health insurance purchases.
New York City's emergency medical services face significant financial and operational inefficiencies, with Medicaid reimbursement rates failing to cover the full cost of ambulance transports. Integrating Medicaid-funded community health programs and addressing the disproportionate use of emergency services by Medicaid enrollees could help optimize resource allocation and reduce unnecessary system strain.
Recommendations related to Medicaid
The FDNY could also take advantage of the New York State Health Home program that already provides community health care visits for Medicaid enrollees with chronic conditions.
The City should build on New York State’s Delivery System Reform Incentive Payment Program to incentivize hospitals to reduce unnecessary care by penalizing providers for potentially preventable readmissions.
Key Data
$210.44
— The amount Medicaid typically reimburses per ambulance transport in New York State.
New York's Medicaid spending grew from $54 billion to $70 billion between fiscal years 2011 and 2019, with enrollment increasing by 28 percent between 2011 and 2018. Despite cost-containment efforts by the Medicaid Redesign Team, the state's program remains among the most expensive in the nation on a per-enrollee basis.
Key Data
$54 billion to $70 billion
— Medicaid spending growth in New York between fiscal year 2011 and fiscal year 2019.
18 percent
— Medicaid spending growth in New York between federal fiscal years 2011 and 2016, compared to 35 percent nationwide.
4.7 million to 6.2 million
— Medicaid enrollment increase in New York from fiscal year 2011 to fiscal year 2016.
28 percent
— Total Medicaid enrollment increase in New York between fiscal years 2011 and 2018.
13 percent
— Decrease in per enrollee Medicaid costs in New York over the first five years of the Medicaid Redesign Team's operation.
$10,169
— New York's per enrollee Medicaid costs in federal fiscal year 2016, compared to a national average of $7,714.
New York State's unique requirement for local governments to fund a portion of Medicaid costs creates an inequitable and regressive financial burden, particularly for the poorest counties. To address this, the state should implement a comprehensive takeover of the local Medicaid share, potentially financed through a combination of state efficiencies, sales tax adjustments, or the elimination of the School Tax Assessment Relief (STAR) program.
Recommendations related to Medicaid
New York should adopt measures that will completely eliminate the required local share of Medicaid.
The State should design a way to eliminate the mandated local share in a reasonable time period.
Takeover proposals need to include provisions for the continued exclusion of supplemental Medicaid payments from the takeover.
A requirement could be placed on counties to reduce their property tax levies in concert with the local takeover.
Flexibility should exist for elective local shares if the local government desires to participate in special initiatives.
Key Data
$7 billion
— The annual cost burden on local governments for the Medicaid local share.
$7.6 billion
— The frozen annual local share of Medicaid statewide.
$15 billion
— The amount saved by local districts from fiscal year 2005 through fiscal year 2018 due to the cap and freeze of Medicaid local share growth.
8.6 percent
— The average portion of local districts' gross expenditures consumed by the Medicaid local share in 2016.
$3.3 billion
— The annual cost of the School Tax Assessment Relief (STAR) program.
$1.3 billion
— The amount of additional annual Medicaid costs exempt from the local share freeze.
176,000 is the number of New Yorkers statewide currently enrolled in Health Home, a Medicaid program that coordinates care for individuals with complex health needs. CBC Research Associate Patrick Orecki summarizes the state's experience with the Health Home initiative. You can read CBC's report "Options for Enhancing New York's Health…
New York's Medicaid Health Home initiative, designed to coordinate care for individuals with complex needs, has faced challenges in meeting enrollment targets and demonstrating cost-effectiveness. The program requires improvements in targeting priority subpopulations, strengthening ties between managed care organizations and health homes, and enhancing data-driven performance evaluation to better serve eligible residents.
Recommendations related to Medicaid
Better targeting of priority subpopulations to ensure the program reaches those who can receive the greatest benefits and cost savings.
Greater reliance on specialized Health Home entities to improve enrollment efforts by leveraging staff from agencies with which clients are already familiar.
Stronger ties between Managed Care Organizations and Health Homes to facilitate better information flow and mutual accountability.
Implementation of alternative payment rates that include options for reduced payment for adults who have reached a duration of enrollment where greater self-management should be practical.
Centralized development of marketing and training materials to overcome the lack of economies of scale and improve understanding of Health Home services.
New initiatives to encourage and speed interoperability of Health Home electronic record systems with Managed Care Organization and provider electronic health records.
Key Data
$72 billion
— Annual cost of New York State's Medicaid program.
175,000
— Current enrollment in New York's Health Home initiative.
240,000
— Initial three-year enrollment target for the Health Home program.
$558 million
— Annual spending on Health Homes in 2017.
9,247
— Number of children enrolled in specialized Health Homes as of December 2017.
1 million
— Number of Medicaid beneficiaries enrolled in Health Home programs across 20 states and the District of Columbia.
New York's current distribution of Medicaid Disproportionate Share Hospital (DSH) payments is inequitable, prioritizing certain hospital systems while leaving NYC Health + Hospitals at a disadvantage. With federal DSH cuts looming, the state must reform its allocation formulas to direct funding to the hospitals with the greatest need and ensure payments are disbursed promptly.
Recommendations related to Medicaid
The State should follow through on the recommendation to convene a workgroup to evaluate revisions to the DSH distribution methodologies.
Reforms to the State’s DSH program should be enacted in the current legislative session.
The distribution formulas, particularly that for the Indigent Care Pool, should be revised to direct DSH payments to the hospitals with the greatest need.
State priorities for distributing DSH payments should be adjusted so they do not leave NYC Health + Hospitals to suffer DSH cuts alone.
The State should disburse DSH funds without delay after they have been earned and cash is available.
Key Data
$3.6 billion
— Amount New York State distributes annually in DSH payments.
$1.8 billion
— New York's share of the $12 billion in federal DSH funding.
$724 million
— Loss of federal funding for New York's hospitals in federal fiscal year 2020 under the latest schedule of DSH cuts.
$1.4 billion
— Annual loss of federal funding for New York's hospitals thereafter.
73 percent
— Share of Medicaid patients among NYC Health + Hospitals' inpatients.
$759 million
— Losses reported by the 11 hospitals of NYC Health + Hospitals from serving the uninsured.
The Governor's proposal to fund the Medicaid program using speculative, one-time revenue from nonprofit health insurer conversions is fiscally imprudent and risks creating future budget gaps. These irregular, finite proceeds should instead be used to bolster reserves or fund one-time costs rather than supporting recurring state operations.
Recommendations related to Medicaid
The State budget and financial plan should not depend on $2 billion from this precarious source.
Any proceeds earned by the State should not be used for multiyear budget balancing.
These revenues are episodic and finite and should be used to bolster reserves or fund one-time costs after proceeds are received by the State.
Nonrecurring resources are best used to repay debt, support capital investments, increase reserves, or make possible other desirable one-time expenses.
Key Data
$3 billion–$750 million
— Annual revenue proposed by the Governor from nonprofit-to-for-profit health insurer conversions.
$4.6 billion
— Total proceeds generated for the State from the Empire conversion from fiscal year 2006 to fiscal year 2010.
$1.2 billion
— Projected revenue from the Empire conversion in the fiscal year 2005 enacted budget.
$2.4 billion
— Projected revenue from the Empire conversion from fiscal year 2009 to fiscal year 2012.
$95 million
— Actual revenue received by the State from fiscal year 2009 to fiscal year 2012.
$3.75 billion
— Publicized price for the acquisition of nonprofit Fidelis by for-profit Centene.
New York's Medicaid spending remains controlled under a 3.2 percent growth cap, and further efficiency is sought through value-based payment models and the Delivery System Reform Incentive Payment program. To continue these cost-containment efforts, the state is urged to adopt the Governor's proposals, specifically the repeal of spousal refusal, and prioritize health care capital grants that drive systematic reform.
Recommendations related to Medicaid
The Legislature should accept the Governor’s Medicaid proposals, including the repeal of spousal refusal, to help contain Medicaid costs.
The State should dedicate $125 million for health care capital grants if such funds are utilized to effectuate systematic reforms that lead to improved care with decreased State costs.
Key Data
3.2 percent
— The State’s share of Medicaid spending continues to remain under the Global Growth Cap of 3.2 percent.
$125 million
— The State should dedicate $125 million for health care capital grants if such funds are utilized to effectuate systematic reforms that lead to improved care with decreased State costs.
Gov. Andrew Cuomo this week gave Republican lawmakers in the state Senate a choice: Back his proposed tax and fee increases or face potential cuts to schools and health care. Watch the original segment here .
$72.4 billion is total Medicaid spending in the NYS Executive Budget for FY 2019. CBC's Senior Advisor for Health Policy Dr. Charles Brecher joined WT[D]P to discuss progress on Medicaid reforms and the potential impact of federal actions on health care in New York.
$168.2 billion is the NYS Executive Budget for Fiscal Year 2018-2019. Dave Friedfel joins WT[D]P to discuss budget growth, school aid, medicaid, economic development, and proposals to deal with the impact of federal tax law changes.
The New York State Executive Budget for Fiscal Year 2019 relies on short-term fixes and speculative revenues rather than addressing the structural issue of spending outpacing revenue. It fails to implement necessary reforms for growing costs like Medicaid and school aid, while also shifting financial burdens onto New York City.
Recommendations related to Medicaid
The state budget should be conservative in its forecasts and include spending constraints if threats to federal revenue for Medicaid and other programs are real.
Key Data
$850 million
— The threshold for federal Medicaid revenue decline that would trigger the authorization for the Division of the Budget to cut state spending.
NYC Health + Hospitals faces a significant fiscal crisis, with the city subsidy growing to $1.8 billion in fiscal year 2016 and a projected baseline gap of $1.9 billion by fiscal year 2020. Addressing this deficit requires structural changes, including potential shifts of uninsured outpatient services to the private sector and adjustments to Medicaid reimbursement rates to better align with actual costs.
Recommendations related to Medicaid
New State policies with respect to Medicaid payments for outpatient services may be needed to aid H+H’s bottom line.
A strategy for improving H+H finances may require shifting selected services, notably uninsured outpatient visits, from the public to the private sector.
Decreasing the concentration of psychiatric patients in H+H would potentially improve their care and enable H+H to improve its operations.
Attention can be given to improving the outpatient payor mix.
Bold moves may be needed to achieve or expand the $748 million in savings sought by 2020 in the current plan.
Key Data
$1.8 billion
— City subsidy to H+H in fiscal year 2016.
$1.9 billion
— Projected baseline gap for H+H in fiscal years 2020 and 2021.
$20,170
— Average cost per discharge at a H+H facility in 2015.
25.9 percent
— City subsidy to H+H as a percentage of annual revenues in fiscal year 2016.
$748 million
— Expenditure reductions sought by fiscal year 2021.
$1.1 billion
— Revenue raising initiatives sought by fiscal year 2021.
New York faces significant budget uncertainty regarding federal funding for health programs, including the Essential Plan which serves low-income residents not eligible for Medicaid. Potential declines in federal revenues exceeding $850 million could trigger executive actions to impose spending cuts, while the state may also need to determine how to fund the Essential Plan if federal support is withdrawn.
Key Data
$4 billion
— federal funding remains uncommitted for the State’s Essential Plan, which provides health insurance to low-income New Yorkers who are not eligible for Medicaid.
$1 billion
— annual cost to restrict Essential Plan coverage to only legally mandated enrollees if federal funding is not provided.
$850 million
— threshold for a decline in Medicaid or other federal revenues that could trigger the Governor's power to impose cuts.
The first of a series of symposiums This event is the first of a series of symposiums on challenges in implementing Medicaid redesign strategies. Keynote address and presentation were given by NYS Medicaid Director Jason Helgerson.
New York's Medicaid redesign, specifically the DSRIP program, aims to improve care through Performing Provider Systems but faces challenges in effectively engaging Community Based Organizations. The state must address obstacles like limited evidence for CBO roles, difficult business models, and uncertainty regarding the future sustainability of these provider systems to ensure successful long-term health outcomes.
Recommendations related to Medicaid
The State should pursue intensified State action to promote replication of effective arrangements with Community Based Organizations that have demonstrated success in specific arenas.
Both Community Based Organizations and lead organizations should reach a mutual acceptance of more modest expectations for financial arrangements in areas where clear and effective roles for Community Based Organizations are not readily apparent.
The State and CMS should provide early and explicit attention to planning future arrangements for effective Community Based Organization engagement after the DSRIP waiver terminates.
The State should provide strategic attention to identifying future funding streams for Community Based Organization participation in health care delivery to ensure a reliable funding base.
The State should prioritize better coordination with current categorical, non-Medicaid funding streams to make arrangements more cost-effective.
Key Data
$70 billion
— Annual cost of New York State's Medicaid program, which funds medical care for 6.3 million residents.
164,000
— Number of people enrolled in Health Homes as of September 2017, representing 70 percent of the 224,000 identified eligible individuals.
$184,235,967
— Total amount budgeted for Community Based Organizations across the 14 New York City region Performing Provider Systems.
$11.8 million
— Total amount disbursed by Performing Provider Systems to Tier 1 Community Based Organizations during the first two years of the program.
82 percent
— Share of payments that will be based on performance in the final year of the DSRIP program.
New York State provides $5 billion annually in Medicaid supplemental payments to support hospitals, but these funds are facing significant reductions due to federal policy changes. To ensure equitable distribution of these shrinking resources, the state must reevaluate its current allocation priorities rather than placing the burden of cuts solely on municipal hospitals.
Recommendations related to Medicaid
The State should reconsider its priorities in distributing Medicaid supplemental payments.
Pending cuts should not fall only on H+H, and adjustments, such as reduced payments to voluntary hospitals with limited reliance on supplementary payments, may be needed.
Key Data
$5 billion
— Total annual supplemental payments provided through four separate programs.
$3.6 billion
— Portion of total supplemental payments comprised by Disproportionate Share Hospital (DSH) payments.
$811 million
— Combined annual authorization for Upper Payment Limit (UPL) payments in 2016.
$659 million
— Projected impact on New York from scheduled federal DSH payment decreases.
$370 million
— Net annual cuts to New York City municipal hospitals slated for 2018.
$645 million
— Combined annual disbursement for VAPAP and VBP QIP programs going forward.
New York's Health Care Reform Act taxes, which generate over $4.3 billion annually, rely on regressive levies on health insurance premiums and hospital revenues that disproportionately burden lower-wage workers. These funds, which are increasingly diverted to the State General Fund rather than their original health care purposes, should be replaced by more equitable revenue sources while re-evaluating the state's funding of graduate medical education.
Recommendations related to Medicaid
The Legislature should think creatively about how to replace the Health Care Reform Act taxes in future budgets.
Shifting the financing of health care to broader based taxes such as the income tax or sales tax would lower health insurance premiums and ease the burden on lower wage workers.
Alternative waivers or other special provisions should be explored to retain the federal Medicaid funding while shifting to a more progressive revenue stream.
Whatever money the State decides to allocate to graduate medical education should be raised from a tax levied uniformly across the State.
The Governor and the Legislature should develop a new strategy for raising equivalent revenue in the future that is less burdensome for those who pay for health insurance.
Key Data
$4.3 billion
— Annual yield from HCRA taxes.
$500 million
— Annual federal reimbursement for the Medicaid portion of the hospital revenue surcharge.
$3.2 billion
— Annual yield from the hospital revenue surcharge.
$1.1 billion
— Annual yield from the Covered Lives Assessment tax.
9.63%
— Surcharge rate on private insurance revenue.
New York's requirement for local governments to fund a portion of Medicaid creates an inequitable financial burden on taxpayers in lower-income counties and misaligns incentives for cost control. Eliminating this local funding requirement would improve state financing and provide necessary tax relief to local governments.
Recommendations related to Medicaid
The state should take steps to fix a long-standing problem with how it pays for the program: its unusual requirement for substantial local government financing.
The State should assume responsibility for the local share liability over a period of four or five years.
Full state financing is the best way to achieve continued cost control in a program fully controlled by the State.
New York's elected leaders should face up to the issue of eliminating the local funding requirement.
Eliminating the local share policy would significantly improve the way New York State finances its Medicaid program.
Key Data
$7.1 billion
— The amount New York's counties are projected to pay for Medicaid in state fiscal year 2012.
$6.5 billion
— The amount New York's counties paid for Medicaid in fiscal year 2008.
16 percent
— The portion of total expenditures that New York's counties paid for Medicaid in fiscal year 2008.
$4.6 billion
— The total local Medicaid payments made by New York City, which ranks first in the state.
$555
— The amount of local Medicaid spending per capita in New York City.
13 percent
— The increase in local Medicaid administrative employees between 2005 and 2010.
The fiscal year 2018 executive budget maintains overall spending discipline while keeping the growth of the state's two largest expenditures, Medicaid and school aid, near their established caps. These spending limits are critical as the state prepares for potential federal budgetary changes.
Key Data
5.5 percent
— The projected growth rate for Medicaid spending in the fiscal year 2018 executive budget.
On February 22, 2017, New York State Budget Director Robert Mujica presented highlights from the New York State Executive Budget for Fiscal Year 2018 to the Citizens Budget Commission.
New York State's Medicaid spending is projected to grow by 4.6 percent in fiscal year 2018, contributing to the difficulty of maintaining the state's self-imposed 2 percent annual spending growth cap. Because Medicaid and school aid represent half of total state operating funds, the state has resorted to fiscal maneuvers to artificially lower reported spending growth.
Key Data
$22,302
— Total State Medicaid spending in fiscal year 2017.
$23,318
— Projected State Medicaid spending in fiscal year 2018.
4.6%
— Projected growth rate for Medicaid spending in fiscal year 2018.
4.7%
— Projected average annual growth rate for Medicaid spending from fiscal year 2017 through fiscal year 2021.
New York's current policy allows the state to cover medical costs for individuals who refuse to pay for their spouses' care, a practice that should be ended to prevent unnecessary public spending. This reform would ensure that Medicaid resources are not diverted to cover expenses that should be the responsibility of the spouse.
Recommendations related to Medicaid
Medicaid should not pick up the bill for New Yorkers who refuse to pay for their spouses’ medical care.
The fiscal year 2018 executive budget proposal raises questions regarding whether the plan to cap prescription drug costs will effectively maintain Medicaid spending within established limits. Additionally, the budget leaves uncertainty regarding what further cost-containment measures will be implemented to manage the program's expenses.
This presentation, from the CBC panel discussion "The Berger Commission: 10 Years On," reviews how health care services in New York City have evolved since the New York State Commission on Health Care Facilities in the 21st Century, known as "The Berger Commission" issued its recommendations in 2006.
New York State's Medicaid spending remains under a statutory cap, with the growth rate limited to 3.2% in fiscal year 2018. Total state-funded Medicaid disbursements are projected to decrease by $341 million in fiscal year 2017 and $80 million in fiscal year 2018, with expenses estimated to drop by 1.3% in fiscal year 2017.
Key Data
3.2%
— The growth rate for Medicaid spending subject to a statutory cap in fiscal year 2018.
$341 million
— The projected decrease in total state-funded Medicaid disbursements in fiscal year 2017 compared to the first quarter update.
$80 million
— The projected decrease in total state-funded Medicaid disbursements in fiscal year 2018 compared to the first quarter update.
1.3%
— The estimated decrease in state-funded Medicaid expenses in fiscal year 2017.
New York City's Access-A-Ride program could potentially offset its high costs by securing reimbursement from the federal-state Medicaid program for non-emergency medical transportation trips. Currently, the MTA lacks the necessary documentation and billing systems to capture these funds, which could generate millions of dollars in additional annual revenue.
Recommendations related to Medicaid
The MTA should establish that a share of its paratransit trips ought to be considered NEMT and eligible for Medicaid payments.
Reforming federal and state policies to allow NEMT reimbursement for relevant paratransit trips may be a welcome change for other paratransit providers in New York State as well.
The MTA should pursue payments from the joint federal-state Medicaid program that finances medical care for low-income residents to help fund paratransit trips.
Key Data
$3 million
— Potential annual revenue if 1 in 20 trips by Medicaid-eligible customers are classified as non-emergency medical transportation.
$10 million
— Lower bound of potential annual revenue if 1 in 5 trips by Medicaid-eligible customers are eligible for reimbursement.
$14 million
— Upper bound of potential annual revenue if 1 in 5 trips by Medicaid-eligible customers are eligible for reimbursement.
$276 million
— Cost of ADA paratransit trips provided by New York transit agencies other than the MTA in 2014.
$25
— Lower bound of what Medicaid pays for eligible trips in New York City depending on the level of care.
$33
— Upper bound of what Medicaid pays for eligible trips in New York City depending on the level of care.
New York State's Medicaid program involves significant enrollment and costs. An infographic provides an overview of these figures and the program's financial impact.
New York's Medicaid program, which covers nearly one-third of the state's population, has successfully contained costs and improved efficiency through the Medicaid Redesign Team's initiatives. Despite these gains, the state must aggressively pursue further reforms, including expanding managed care enrollment and improving coordinated service delivery models, to ensure the program's long-term sustainability.
Recommendations related to Medicaid
New York must make more progress toward the goal of enrolling nearly all Medicaid-eligible individuals in managed care plans to improve program efficiency.
The state requires greater use of coordinated service delivery models to better manage the care of individuals with multiple health conditions.
Policymakers should aggressively pursue further gains in Medicaid reform to overcome existing challenges and ensure the program's long-term sustainability.
The state must address the complex technical issues and difficult policy choices inherent in the design and implementation of the value-based payment strategy.
Key Data
34 percent
— Medicaid's portion of the $156 billion State budget.
6.3 million
— Number of New Yorkers provided access to medical care through Medicaid.
17 percent
— Decline in average cost per enrollee between 2010 and 2014.
$1.3 billion and $1.9 billion
— Annual savings target for state fiscal year 2020.
250,000
— Number of people intended to benefit from the Health Home initiative launched in 2012.
The City expects its local share of Medicaid costs to decline by $450 million, or 7 percent, to $5.9 billion in fiscal year 2020 due to the State freezing growth in these costs. This reduction is a notable exception to the general trend of rising expenditures within the City's financial plan.
Key Data
$450 million
— The City expects its local share of Medicaid costs to decline by $450 million in fiscal year 2020.
7 percent
— The City expects its local share of Medicaid costs to decline by 7 percent in fiscal year 2020.
$5.9 billion
— The City expects its local share of Medicaid costs to reach $5.9 billion in fiscal year 2020.
The Citywide Savings Program includes a $1.5 billion claim for reduced payments to the State for the City's share of the Medicaid program, which relies on federal funding increases from the Affordable Care Act that the State has not yet agreed to share. This proposal represents the largest single source of savings in the plan, accounting for 28 percent of the total.
Key Data
$1.5 billion
— The largest single source of savings in the Citywide Savings Program, representing 28 percent of the plan, is a claim for a reduced payment to the State for the City’s share of the Medicaid program.
New York's Medicaid program has undergone significant reforms through the Medicaid Redesign Team, which has successfully slowed expenditure growth and improved care quality by shifting toward managed care and value-based payment models. Despite these gains, the state faces ongoing challenges in fully enrolling complex populations and ensuring the long-term sustainability of new delivery systems.
Recommendations related to Medicaid
New efforts should be made to work with federal officials to develop procedures that encourage and perhaps require enrollment in managed care plans and Health Homes in the future.
Continued strong monitoring of the evolution of Performing Provider Systems and their action plans is essential.
Renewed efforts to expand enrollment in Health Homes seem warranted.
More aggressive goals exceeding 3 percent in Medicaid savings might be appropriate.
The state should revise the initial design of Health Homes to address standardization and payment rate issues.
Key Data
6.3 million
— Total Medicaid enrollment in New York in 2015, representing a one-third increase from 4.7 million in 2010.
46 percent
— The increase in total managed care enrollment in Medicaid from 2010 to the end of 2015, rising from 3.3 million to 4.8 million.
$1.3 billion to $1.9 billion
— The annual savings target for state fiscal year 2020 resulting from the continued implementation and refinement of Medicaid redesign strategies.
$30,221
— The annual cost per disabled Medicaid enrollee in New York in 2011, which was the highest among all states.
$3.2 billion
— The amount New York awarded in Disproportionate Share Hospital (DSH) payments in federal fiscal year 2011.
17 percent
— The decline in average annual cost per Medicaid enrollee from 2010 to 2014, falling from $10,432 to $8,620.
New York City's financial plan relies on $300 million in annual savings from a potential agreement with the state to share Medicaid funds, which remains unreached. This speculative revenue, combined with ongoing fiscal challenges at Health + Hospitals, poses a significant risk to the city's ability to maintain a balanced budget in future years.
Key Data
$300 million
— Annual savings in the Citywide Savings Program that depend on the city convincing the state to share Medicaid savings derived from provisions of the federal Affordable Care Act.
The New York City Executive Budget for Fiscal Year 2017 relies heavily on uncertain Medicaid revenues and federal waivers to balance its financial plan for the health system. This dependence creates significant fiscal risk, as failure to secure these approvals or increase related revenues could strain the city's budget.
State Medicaid spending is set to grow by 3.4% under the 2016-17 budget agreement, remaining within the established cap. The final budget successfully avoided a proposal to shift nearly $600 million in public university and Medicaid expenses from the state to New York City.
Key Data
3.4%
— State Medicaid spending will grow by 3.4%, a slight increase from the governor’s proposal that remains in line with the Medicaid cap.
$600 million
— The adopted budget rejected a proposal to shift almost $600 million in public university and Medicaid expenses from the state to New York City.
New York State's fiscal year 2017 budget includes a 3.4% growth in Medicaid spending, which remains the second largest item in the state budget. While the budget avoids shifting Medicaid and CUNY costs to New York City, it lacks transparency regarding the state's operating fund growth and relies on a growing capital budget for ad-hoc initiatives.
Recommendations related to Medicaid
State leaders should continue to reject imprudent proposals to shift Medicaid and CUNY costs to New York City.
Key Data
3.4%
— Growth rate of Medicaid, which is the second largest item in the fiscal year 2017 budget.
New York's policy of requiring local governments to fund a portion of Medicaid costs creates significant regional inequities, with New York City bearing a per capita burden of $597 compared to a $190 average elsewhere. The state should abandon the 2017 Executive Budget proposal to reinstitute local contributions to Medicaid growth, as continuing the state's takeover of these costs is essential for fairness.
Recommendations related to Medicaid
The State should not reinstitute New York City’s contribution toward growth in Medicaid expenses, as doing so would be a giant step backwards.
New York State should continue its policy of taking over the growth in local Medicaid spending rather than rescinding it.
Key Data
$597
— New York City's current Medicaid burden per capita.
$190
— Average local share of Medicaid costs per capita throughout the rest of the State.
$10.00
— New York City's ratio of local Medicaid costs per $1,000 of income.
$3.63
— Average ratio of local Medicaid costs per $1,000 of income for the rest of the State.
$96
— Putnam County's local Medicaid costs per capita.
$1.70
— Putnam County's local Medicaid costs per $1,000 of income.
New York's "spousal refusal" provision allows families to bypass Medicaid income and asset limits by having a spouse refuse to provide financial support, effectively shifting the cost of long-term care to the state. Repealing this loophole would align Medicaid eligibility with actual financial need and encourage the purchase of long-term care insurance, resulting in estimated annual savings of $10 Million.
Recommendations related to Medicaid
The Legislature should end the costly and unfair practice of spousal refusal.
New York State should repeal the provision of Medicaid known as “spousal refusal” to ensure eligibility is based on family income and wealth.
The state should implement the Executive Budget proposal to stop paying for services to a newly eligible spouse or child in a noncompliant family.
Key Data
$21,984
— Annual income eligibility limit for couples over 65.
$21,750
— Asset eligibility limit for couples over 65.
$35,760
— Annual income limit for couples where one spouse requires institutionalized care.
$119,220
— Asset limit for couples where one spouse requires institutionalized care.
$10 Million
— Estimated annual savings from the proposal in fiscal years 2016-2017 and 2017-2018.
New York State's proposal to rescind the takeover of payments for Medicaid growth in New York City would shift a significant financial burden onto the city, which already faces an inequitable local cost share compared to other states. This policy change, combined with other cost shifts, would transfer over $2.3 billion in expenses to the city over three years, reversing previous efforts to cap local government Medicaid costs.
Recommendations related to Medicaid
The State should maintain the cap on the growth of Medicaid expenses for local governments, as no other state requires local governments to pay as much toward Medicaid as New York.
The State should not rescind the takeover of payments for Medicaid growth in New York City, as rolling the cap back for New York City would be a giant step in the wrong direction.
Key Data
3.4 percent
— The projected increase for Medicaid spending under the Executive Budget's growth caps.
29 percent
— The growth of Medicaid expenses in New York City between 2006 and 2014.
52 percent
— The growth of Medicaid expenses outside of New York City between 2006 and 2014.
$2.3 billion
— The total expenses shifted from the State to New York City over three years, including the rescinding of the State’s takeover of payments for Medicaid growth.
The FY2017 State Executive Budget analysis evaluates spending growth, specifically highlighting the expansion of Medicaid and school aid as the primary drivers of state expenditures. These two areas represent the largest expenses within the state's financial plan.
The FY2016-2017 Executive Budget proposes increasing the local government share of Medicaid costs exclusively for New York City, despite New York already requiring higher local contributions to these expenses than any other state. Rolling back the cap on the growth of these costs for the city represents a significant policy regression that should be avoided.
Recommendations related to Medicaid
The state should maintain the cap on the growth of Medicaid expenses for local governments rather than rolling it back for New York City.
The state has successfully limited Medicaid spending growth through a global cap tied to health care inflation, which restricts growth to 3.4 percent through the upcoming fiscal year. Future budget proposals will determine whether this cap is extended or modified.
Key Data
3.4 percent
— The growth cap on state-funded Department of Health Medicaid spending, which is in effect through the next fiscal year.
The fiscal year 2016 Executive Budget maintains fiscal discipline by extending the Medicaid Redesign Team and the associated global spending cap. Additionally, the budget allocates $850 million to resolve a dispute with the federal government regarding Medicaid payments while expanding the Health Commissioner's authority to shift toward value-based provider payments.
Recommendations related to Medicaid
The Executive Budget should extend the Medicaid Redesign Team and the global cap to continue reining in costs.
The Health Commissioner should be granted expanded powers to negotiate value- rather than volume-based payments with health care providers.
Key Data
$850 million
— The amount set aside in the Executive Budget for the settlement of a dispute with the federal government over Medicaid payments.
The fiscal year 2016 executive budget proposes growing Medicaid spending by 3.6 percent to align with the global cap, while making the Commissioner of Health's authority to reduce spending permanent. Additionally, the plan allocates $850 million to settle federal liabilities and establishes a Basic Health Plan to help offset the costs of covering newly eligible immigrants.
Recommendations related to Medicaid
The allocation of $850 million to settle federal Medicaid liabilities is a sensible budgetary action.
Key Data
3.6 percent
— The rate at which the FY2016 Executive Budget grows Medicaid spending to comply with the global cap.
$850 million
— The amount set aside in the budget to settle federal Medicaid liabilities.
The fiscal year 2016 Executive Budget maintains the state's Medicaid global spending cap, which limits growth to the 10-year average of the medical component of the inflation index. Additionally, the budget allocates $850 million to address a potential federal rate dispute regarding Medicaid payments for residential facilities for the disabled.
Key Data
$850 million
— Amount set aside in the fiscal year 2016 Executive Budget for a possible settlement of a rate dispute with the federal government over Medicaid payments for residential facilities for the disabled.
The FY2016 New York State budget should prioritize fiscal discipline by ensuring that Medicaid spending remains within the 3.6% growth cap. Additionally, policymakers must determine if the costs associated with newly eligible immigrants under the program are sustainable and affordable.
Recommendations related to Medicaid
The state should ensure that Medicaid spending stays under the 3.6% cap.
The state should ensure that the cost of newly eligible immigrants for Medicaid is affordable.
New York State's projected budget surpluses are based on aspirational targets, while actual spending projections indicate significant budget gaps reaching $4 billion by fiscal year 2018. Controlling spending growth is challenged by large, hard-to-control areas like Medicaid and school aid, which are projected to grow faster than the state's 2 percent target.
Key Data
3.6%
— Projected growth rate for Medicaid spending in the next fiscal year.
50%
— Combined portion of the state budget comprised of school aid, Medicaid, debt service, and pension contributions.
The Health and Hospitals Corporation's MetroPlus plan, a major Medicaid managed care provider, has seen significant revenue and enrollment growth, reaching 467,823 members by 2014. To ensure financial sustainability, the plan must focus on increasing market share and retaining patient utilization within its own facilities while maximizing cost-coverage ratios.
Recommendations related to Medicaid
MetroPlus should seek to retain more of its members' utilization at HHC facilities, primarily by attracting patients to in-house providers because of their high quality relative to others and their proximity to member residences to improve its Medicaid managed care performance.
MetroPlus should focus on growing enrollment with an increased emphasis on greater market share to expand its Medicaid managed care reach.
MetroPlus should focus on maximizing the cost-coverage ratio while improving quality to ensure the sustainability of its Medicaid managed care plan.
Key Data
$2.2 billion
— Annual revenues of MetroPlus, a major Medicaid managed care plan operated by HHC.
467,823
— MetroPlus enrollment growth from 2005 to 2014, attributed to expanded Medicaid eligibility.
The New York City Health and Hospitals Corporation faces significant financial instability due to declining supplemental federal Medicaid funds and the high cost of caring for uninsured residents. To ensure long-term sustainability, the corporation must improve the quality of its MetroPlus managed care plan, secure more stable city funding, and advocate for a more equitable distribution of the burden of caring for the uninsured among all voluntary hospitals.
Recommendations related to Medicaid
HHC needs to address the financial burden of continuing to care for a large population of uninsured residents including undocumented immigrants in the face of declining supplemental federal Medicaid funds.
The frequently varying financial relationship with New York City should be made more rational with incentives for greater efficiencies in HHC’s services.
In order to expand future enrollment HHC will need to take steps to improve the quality of the MetroPlus plan.
HHC leaders can advocate for conditioning available tax exemptions and funding sources on greater participation by all voluntary hospitals in sharing the burden of caring for the uninsured.
Municipal leaders should develop more rational and stable guidelines for funding HHC in its efforts to meet its mandates.
Key Data
26 percent
— In calendar year 2011, Medicaid patient discharges from HHC hospitals comprised 26 percent of the citywide total.
467,823
— From 2005 to 2014, Medicaid managed care enrollment in MetroPlus grew from 230,200 to 467,823.
$742 million
— In fiscal year 2013, payments from MetroPlus to HHC totaled $742 million, representing one-third of premiums collected.
11.1 percent
— In fiscal year 2013, approximately 11.1 percent of HHC's revenue came from Medicaid DSH payments.
New York should utilize a $4 billion legal settlement windfall to fund one-time investments that provide multiyear benefits, such as information-technology systems to improve case management and cost-savings in Medicaid. These funds should be directed toward non-recurring expenditures that reduce long-term liabilities or generate recurring returns rather than short-term spending.
Recommendations related to Medicaid
The state should make one-time investments that provide multiyear benefits, such as the purchase of information-technology systems that facilitate case management and cost-savings in Medicaid.
New York State's Medicaid spending has remained under its statutory cap, which is linked to healthcare inflation and projected to grow at approximately 4 percent annually. While the state plans to utilize $8 billion in federal waiver funds over five years to potentially lower costs, officials must navigate these projections carefully to maintain the state's overall 2 percent spending cap.
Key Data
4 percent
— Expected annual growth rate for Medicaid under a cap linked to the 10-year average of healthcare inflation.
$730 million
— Amount the Department of Health absorbed for mental hygiene services in fiscal year 2014 within the spending cap.
$8 billion
— Federal funds from a Medicaid waiver that the Department of Health plans to distribute over the next five years.
$270 million
— Budget relief under the Medicaid cap projected for fiscal year 2015.
$688 million
— Budget relief under the Medicaid cap projected for fiscal year 2018.
The NY State of Health marketplace serves as a centralized platform for residents to compare and purchase private health insurance, as well as access public programs like Medicaid and Child Health Plus. Since its launch in October 2013, the system has facilitated enrollment for over 960,000 residents and provided significant customer support through its service center.
Medicaid and school aid are the two largest items in the state budget, with Medicaid projected to grow at 4% annually, complicating efforts to limit overall state spending growth to 2%. Because these programs are protected by statutory caps, achieving the state's surplus goals requires significant spending reductions in other areas of government operations.
Key Data
4%
— Annual projected growth rate for Medicaid, which is capped by statute at the medical component of the consumer price index.
$2 billion
— Amount of the total projected increase in State Operating Funds spending over the financial plan period accounted for by Medicaid growth.
$36.7 billion
— Combined total State Operating Funds spending for Medicaid and school aid.
40%
— Portion of total State Operating Funds spending comprised by Medicaid and school aid.
The state should consider assuming full financial responsibility for the Medicaid program to better manage costs and reduce the local tax burden. Shifting this funding mandate to the state level is appropriate because Medicaid serves a broad public good, unlike many other local government functions.
Recommendations related to Medicaid
The State should assume full financial responsibility for the Medicaid program to better pursue cost containment measures.
New York should expand efforts to take over more of the local funding mandate for the Medicaid program to reduce the combined tax burden.
The SAGE Commission report advocates for restructuring services for the mentally ill and developmentally disabled to move away from an antiquated system plagued by exorbitant Medicaid charges. By utilizing federal funds from the Balanced Incentive Program, the state can transition toward community-based placements that are better tailored to individual needs.
Recommendations related to Medicaid
The state should restructure services for the mentally ill and developmentally disabled to address the exorbitant Medicaid charges passed on to the federal government.
New York should utilize federal funds from the “Balanced Incentive Program” to create placements tailored to individual needs and integrated in communities.
New York should continue its Medicaid Redesign Team efforts, including extending the authority to cap state-funded spending and closing the 'spousal refusal' eligibility loophole to ensure resources reach the neediest residents. Additionally, the state should prioritize using available resources to shift a greater share of Medicaid costs from local governments to the state level.
Recommendations related to Medicaid
The Legislature should support the extension of the efforts of the Medicaid Redesign Team (MRT).
The Governor’s budget adds a year to the MRT authority to cap state-funded Medicaid spending based on national growth in healthcare prices, which should be approved and extended for more than one year.
The MRT proposal to close the Medicaid eligibility loophole of “spousal refusal” should be adopted to prevent affluent individuals from exploiting long-term care services.
High priority should be assigned to using available state resources to transfer more of the cost of Medicaid to the State.
Key Data
$1.1 billion
— The federal government's intended annual reduction in payments for services provided by the Office of People with Developmental Disabilities (OPWDD).
$120 million
— The proposed reduction in state spending for the Office of People with Developmental Disabilities (OPWDD).
$380 million
— The amount of cuts spread among Department of Health (DOH) programs.
$600 million
— The amount of expected alternative federal aid to offset federal reductions.
New York State should extend its Medicaid growth cap for at least five years to ensure long-term cost control and realize projected federal savings. Additionally, the state should work toward shifting the entire financial burden of the Medicaid program away from local counties to alleviate their fiscal pressures.
Recommendations related to Medicaid
To help assure realization of the waiver application’s savings projections, and improve the State’s prospects of bending the Medicaid cost curve over the long run, the Legislature and the Governor should extend the Medicaid growth cap for at least five years.
Although counties were relieved of a small share of the unfair burden of financing the Medicaid program last year, more should be done in the long run to shift the entire burden of financing the Medicaid program to the State.
Key Data
$15.9 billion
— Medicaid is the second largest item in the state budget, totaling $15.9 billion in the current year.
$10 billion
— New York applied for a federal waiver to reinvest $10 billion of the estimated $17 billion in federal savings expected from the work of the Medicaid Redesign Team.
$17 billion
— New York applied for a federal waiver to reinvest $10 billion of the estimated $17 billion in federal savings expected from the work of the Medicaid Redesign Team.
2%
— In the first nine months after the first Medicaid Redesign Team proposals were implemented in April 2011, year-to-year Medicaid spending growth was contained to 2%.
4%
— In the first nine months after the first Medicaid Redesign Team proposals were implemented in April 2011, the number of Medicaid beneficiaries rose 4%.
New York's Medicaid program, the second-largest item in the state budget at $15.9 billion, has seen spending growth contained to 2 percent following the implementation of the Medicaid Redesign Team's proposals. To continue bending the cost curve and provide fiscal relief to local governments, the state should extend the Medicaid growth cap for five years and work toward shifting the full financial burden of the program to the state.
Recommendations related to Medicaid
The Legislature and the governor should extend the Medicaid growth cap for at least five years.
State leaders should shift the entire burden of financing the Medicaid program to the state in the long run.
Key Data
$15.9 billion
— The amount Medicaid costs as the second-largest item in the state budget.
$10 billion
— The amount New York applied for a federal waiver to reinvest from expected federal savings.
$17 billion
— The estimated federal savings expected from the work of the Medicaid Redesign Team over five years.
2 percent
— The rate at which year-to-year Medicaid spending growth was contained in the first nine months after the first Medicaid Redesign Team proposals were implemented.
4 percent
— The rate at which the number of Medicaid beneficiaries rose during the same period spending growth was contained.
New York City's budget faces significant structural deficits driven by large expenditure items like Medicaid, which costs $6.3 billion and is mandated by the state, preventing unilateral mayoral reductions. Consequently, the city relies on temporary budget fixes and recurring programs to eliminate gaps, though these measures are likely insufficient to address long-term fiscal challenges.
Key Data
$6.3 billion
— The annual cost of Medicaid, which is a mandated expenditure that the Mayor cannot unilaterally reduce.
The New York City Health and Hospitals Corporation faces significant fiscal challenges as its reliance on large-scale supplemental Medicaid payments is jeopardized by potential federal funding cuts and its own operating deficits. To avoid a dramatic reduction in services for needy residents, the corporation must identify alternative funding sources and redouble efforts to deliver services more efficiently.
Recommendations related to Medicaid
The HHC and the City must identify sources for these funds and to replace any lost supplemental Medicaid payments.
HHC may need to implement steeper expenditure reductions and layoffs should the current plan fail to achieve savings goals.
HHC will need to redouble its efforts at delivering services more efficiently or face a dramatic reduction in the services it can provide to New York City’s needy residents.
Key Data
$1.6 billion
— Annual revenues HHC expects from special Medicaid supplementary payments that may be in jeopardy.
30%
— Share of Medicaid and uninsured patients admitted to acute care facilities that HHC hospitals care for.
78%
— Portion of emergency room visits to HHC hospitals made by Medicaid recipients or the uninsured.
35%
— Share of emergency department patients citywide who are either Medicaid recipients or uninsured that HHC cared for.
$2.0 billion
— Combined federal and City Medicaid supplemental support in fiscal year 2007.
$913 million
— City contribution to supplemental payments in 2011.
New York's current Medicaid financing policy requires counties to cover an inequitable 13 percent of total costs, a burden that is inconsistent with local property tax caps and significantly higher than in other states. While a proposed three-year state takeover of Medicaid cost growth offers some relief to local governments, the state must pursue further long-term reforms to fully address the remaining $8 billion in local financial obligations.
Recommendations related to Medicaid
The Governor and legislative leaders should begin planning for more far reaching, longer term initiatives that will fully solve the problem of the inequitable local Medicaid share.
Key Data
$7.1 billion
— Local government share for Medicaid in state fiscal year 2011-12.
13 percent
— Local government share of the $54 billion in projected total Medicaid expenditures.
$370 million
— Savings to local governments in state fiscal year 2015-16 under the proposed plan.
22
— Number of states that do not require local governments to contribute anything towards Medicaid.
$8 billion
— Amount of Medicaid costs counties and New York City will still be paying in 2015.
2.5 percent
— Local funding share of total Medicaid expenditures in California.
New York should continue to curb Medicaid spending growth through the Medicaid Redesign Team's oversight to address the state's structural cost-drivers. Furthermore, the state must phase out the inequitable local financing scheme that currently requires poorer counties to shoulder an unfairly large share of the program's costs.
Recommendations related to Medicaid
The state should continue curbing growth in Medicaid spending through the Medicaid Redesign Team’s oversight and deliberation.
New York’s inequitable local financing scheme for Medicaid should be phased out to relieve poorer counties of an unfairly large share of the program’s costs.
New York City received 62 percent of state-funded Medicaid expenditures in fiscal year 2010, a share that significantly exceeds its proportion of the state's population and residents living in poverty. If federal funds were included in the analysis, Medicaid would be the state's largest expenditure at $38.4 billion, and New York City would gain over $10 billion in additional Medicaid funding.
Key Data
$38.4 billion
— Total Medicaid expenditures in fiscal year 2010, if federal funds were included.
62 percent
— Share of state-funded Medicaid expenditures that went to New York City in fiscal year 2010.
$10 billion
— Amount New York City would 'gain' in Medicaid expenditures if all federal funds were included in the analysis.
30 percent
— Share of the state’s all-funds disbursements in fiscal 2010 represented by Medicaid.
New York State faces a projected $3.2 billion budget gap, necessitating structural reforms to control spending growth in major areas like Medicaid and school aid. To address these fiscal challenges, the state should continue the Medicaid Redesign Team's oversight and phase out the inequitable local financing scheme that places an unfair burden on poorer counties.
Recommendations related to Medicaid
The State should continue its innovative approach to curbing growth in Medicaid spending.
The Medicaid Redesign Team’s oversight and deliberation must continue to be a priority next year to ensure spending is contained.
New York’s inequitable local financing scheme for Medicaid should be phased out.
Key Data
4%
— The projected increase in Medicaid and school aid spending committed to by the Governor.
New York's requirement for local governments to fund a significant portion of Medicaid costs creates an inequitable financial burden on taxpayers in lower-income counties and misaligns incentives for cost control. To address this, the state should phase out the local funding requirement over four to five years and replace it with statewide revenue sources.
Recommendations related to Medicaid
The state should eliminate the local funding requirement for Medicaid.
The state should assume responsibility for the local share liability over a period of four or five years.
New, statewide revenues will be required to replace the current local share in a way that relieves the disproportionate burden placed on taxpayers in low income counties.
Key Data
$7.1 billion
— New York's counties will pay more than this amount for Medicaid in state fiscal year 2012.
$6.5 billion
— In fiscal year 2008, New York's counties paid this amount for Medicaid.
16 percent
— In fiscal year 2008, the local share of Medicaid costs was about this percentage of total expenditures.
13 percent
— In state fiscal year 2012, New York's counties will pay about this percentage of total Medicaid expenditures.
$555
— New York City's Medicaid burden per capita.
$11.07
— New York City's Medicaid burden per $1,000 of personal income.
New York is roughly halfway to achieving its $2.2 Billion Medicaid savings target for fiscal year 2012, though concerns remain regarding the timely implementation of utilization controls and potential enrollment spikes. While the Global Medicaid Spending Cap has successfully kept spending below thresholds thus far, future economic downturns or delays in programmatic reforms could threaten long-term fiscal goals.
Key Data
$2.2 Billion
— Budgeted savings target for the Medicaid Redesign Team in fiscal year 2012.
$1 Billion
— Value of reform proposals that have been implemented as of October 2011.
$640 Million
— Amount of savings considered 'in progress' from the Global Medicaid Spending Cap, representing 60 percent of remaining savings.
$173 Million
— Amount by which Medicaid spending was below the threshold in August, representing 2.5 percent of the budget.
New York State must successfully realize the projected savings from the Medicaid spending cap, alongside other budget measures, to prevent a significant mid-year fiscal deficit. Achieving these specific savings is essential for maintaining the state's fiscal stability and avoiding future financial shortfalls.
Recommendations related to Medicaid
The state must achieve the projected savings from the Medicaid spending cap to avoid a serious mid-year budget deficit.
The state budget includes significant cuts to Medicaid and school aid, with over $640 million in savings expected from a new Medicaid spending cap that lacks detailed implementation plans. These cuts are part of a broader effort to reduce spending, though the reliance on uncertain savings and unspecified efficiencies creates risks for future midyear deficits.
Key Data
$640 million
— The amount of savings expected to come from an overall <b>Medicaid spending cap</b>, though its implementation is not detailed.
New York's Medicaid Redesign Team has introduced a package of reforms aimed at reducing program spending through provider rate cuts, utilization controls, and eligibility limits, while also implementing a new spending cap tied to the medical Consumer Price Index. These measures seek to curb long-term cost growth and improve care quality, though long-term success will require broader payment reforms and continued efforts to manage service utilization.
Recommendations related to Medicaid
The effective savings measures should be implemented speedily, and the new cap should be tested carefully in the coming year.
Future efforts should be pursued to reverse the new assessments that push up the cost of care.
Future savings in line with the goal of the innovative cap strategy will require broad changes in the way providers are paid and even greater efforts to limit excessive utilization.
A longer term look at options for malpractice reform may ultimately be more beneficial than the current short-term cap on non-economic damages.
Key Data
$12 Billion
— Long-term care costs in 2008, representing roughly a quarter of all Medicaid spending in the state.
76%
— Increase in per recipient costs in the Certified Home Health Agencies (CHHA) program from 2003 to 2008.
30%
— Amount by which New York’s nursing home rates were above the national norm in 2007.
4%
— The amount by which state spending for the Medicaid program would fall under the new proposal.
6%
— Average annual increase in Medicaid spending between 1995 and 2010.
$28 Million
— Estimated first-year savings from the proposal to eliminate spousal refusal for Medicaid eligibility.
New York State has relied on temporary revenue measures and federal stimulus funding, including significant support for Medicaid, to manage budget gaps while state spending has continued to grow. To achieve long-term fiscal sustainability, the state must restructure its spending commitments and align growth with revenue rather than relying on one-time fixes and tax increases.
Key Data
$6.6 billion
— Federal stimulus package (ARRA) funding received by the state, which was largely in the form of enhanced federal funding for Medicaid.
$370 million
— New taxes, assessments, and charges on healthcare providers proposed by the Medicaid Redesign Team.
$475 million
— Savings from spending revisions proposed by the Medicaid Redesign Team.
$2.0 billion
— Total recurring Medicaid spending cuts assumed by the analysis, rather than the higher amount proposed in the Governor's financial plan.
$2.85 billion
— Total recurring Medicaid spending cuts proposed in the Governor’s February financial plan.
New York's Medicaid spending on nursing home care is significantly higher than the national average, yet the state's facilities often underperform in key quality metrics like patient mobility and pressure sore prevention. Reforming the outdated payment system, which is currently based on 1983 costs, offers an opportunity to achieve necessary savings while incentivizing better care through quality-based rewards.
Recommendations related to Medicaid
The Medicaid Redesign Team should strengthen the proposal to reform the state’s payment method for nursing homes to increase savings and improve care.
The Medicaid Redesign Team should consider lowering payment rates even further for nursing homes.
The Medicaid Redesign Team should include a quality care pool to reward facilities for improving care to residents.
The Medicaid Redesign Team should strengthen the payment reform proposal to achieve greater savings and to provide financial incentives for improved care.
Key Data
$203.21
— Average per diem Medicaid rate for nursing home care in 2007, which was 30 percent above the national average.
$6.7 billion
— Total spending on residential nursing home care in 2008.
$50,563
— Spending per Medicaid recipient in a nursing facility in 2008.
$100 million
— Estimated annual savings from the proposed nursing home payment system.
3.6 hours
— Average daily direct nursing care provided by nursing homes statewide in 2008, which is below the national average of 3.7 hours.
$37.5 million
— Estimated savings of State funds in the first year of the proposed payment method.
New York's Medicaid program is one of the most expensive in the nation, with 72% of expenses concentrated on the 24% of enrollees who are elderly or disabled. To achieve the state's $2.9 billion savings target, the focus should be on rationalizing care for these high-cost populations rather than cutting eligibility for healthy mothers and children.
Recommendations related to Medicaid
Rationalizing care for high-cost populations should be the primary source of Medicaid savings.
Cuts to the eligibility and benefits of healthy mothers and their children should be avoided.
Key Data
$2.9 billion
— The Medicaid Redesign Team's target for savings.
72%
— Percentage of Medicaid expenses that go toward services for the 24% of enrollees who are elderly or disabled.
24%
— Percentage of Medicaid enrollees who are elderly or disabled and account for 72% of expenses.
$50,000
— Average cost per year for individuals in nursing homes.
New York's Medicaid program faces high and rapidly growing costs, necessitating strategies like reducing non-competitive provider rates, rationalizing service utilization, and tightening eligibility rules. Implementing these reforms, including mandatory managed care for dual-eligible individuals and stricter long-term care authorization, could achieve substantial savings without denying necessary care.
Recommendations related to Medicaid
The State should adjust nursing home payments to bring them more in line with national norms, paired with a significant rate reduction.
The State should move more quickly to takeover Medicaid administration from counties and New York City.
A priority should be creating more uniform and tougher rules and practices for determining long-term care eligibility, particularly with respect to “spousal refusal” and transfer of assets.
New York can reduce the number of personal care hours provided to enrollees by reforming authorization procedures.
The New York State Department of Health should immediately begin coordinating with the federal government to create a mandatory managed care option for “dual eligibles” that would cover acute and long term care.
A Panel Discussion A recent report by the Citizens Budget Commission (CBC) found that elderly and disabled beneficiaries comprise fewer than one in four Medicaid enrollees in New York but account for nearly three of every four program dollars spent. Achieving cost savings among this population, while preserving access to…
New York's Medicaid program, which costs $50 billion annually, features per-capita spending of $2,283—more than double the national average of $1,026. To address this, the state must implement a multiyear restructuring plan that targets high costs in long-term care rather than focusing solely on fraud or limited services for healthy populations.
Recommendations related to Medicaid
Gov. Cuomo should create a multiyear plan that addresses the problem of excessive spending on Medicaid by restructuring the system to provide better health-care outcomes and lower costs.
The state should address payment rates to providers and the extent to which services are utilized as the primary levers to bring Medicaid costs under control.
The state needs to bring down the cost of care where it is exorbitant to meet its obligations to the neediest New Yorkers without slashing other public services.
Policymakers should avoid proposals that only target fraud and the already limited costs of care for healthy mothers and children, as these will not yield significant fiscal relief.
Key Data
$50 billion
— Annual cost of Medicaid in New York.
$2,283
— New York's per-capita Medicaid spending, compared to the national average of $1,026.
14 percent
— Share of all national Medicaid spending that occurs in New York.
72 percent
— Share of Medicaid spending consumed by elderly or disabled enrollees, who make up only 24 percent of the population.
$12.5 billion
— Annual cost of long-term care for the elderly and disabled.
76 percent
— Growth in per-recipient spending for certified home health agencies between 2003 and 2008.
New York's Medicaid program faces significant fiscal pressure, with spending per enrollee and per capita far exceeding national averages, particularly for the elderly and disabled populations who consume 72 percent of program funds. To achieve meaningful fiscal relief, the state must move beyond addressing minor expenses and implement a multi-year plan that restructures service provision and costs for these high-need groups.
Recommendations related to Medicaid
A multi-year plan that takes this politically powerful bull directly by the horns—restructuring the system to provide better health, better outcomes and lower costs—should be developed.
Rates and utilization—specifically in long-term care and other services for the elderly and disabled—are a major factor in New York's extraordinarily high costs and should be the primary focus for future cost control initiatives.
Any cost containment proposals should address the three factors that drive Medicaid costs—enrollment, provider payment rates, and utilization.
Key Data
$50 billion
— Annual cost of New York's Medicaid program.
72 percent
— Portion of Medicaid dollars consumed by the elderly and disabled, who comprise fewer than one in four enrollees.
$2,283
— New York's Medicaid spending on a per capita basis, which is more than twice the national average of $1,026.
$63,467
— Per recipient cost for disabled individuals receiving community rehabilitation services in calendar year 2008.
$47,909
— Average cost per recipient for long-term care in an institutional setting.
$8,450
— New York's spending per enrollee in federal fiscal year 2007, the second highest nationally.
New York's Medicaid program is the most expensive in the nation, with spending per enrollee for elderly and disabled populations nearly double the national average. Despite efforts to control costs through managed care and hospital reimbursement reforms, the program's spending continues to grow significantly, particularly in long-term care and community rehabilitation services.
Key Data
$50 billion
— Total Medicaid spending in New York State, projected to grow to $53 billion in State Fiscal Year 2010-11.
$2,283
— NYS Medicaid spending per capita in Federal Fiscal Year 2007, which was more than twice the national average.
$8,450
— Amount spent per enrollee in New York in Federal Fiscal Year 2007, the second highest nationally.
26 percent
— Percentage of New Yorkers enrolled in Medicaid in 2007, the fourth highest percentage nationally.
$289 million
— Gross savings attributable to the Preferred Drug Program in State Fiscal Year 2008-09.
$1.02 billion
— Annual reported cost savings (State share) achieved by the Office of the Medicaid Inspector General in State Fiscal Year 2009-10.
New York's fiscal plan relies on uncertain federal Medicaid assistance and a cost containment package that includes questionable fraud recovery projections. With total Medicaid costs reaching $47 Billion and growing at 10% annually, current savings measures are insufficient to address the program's long-term fiscal challenges.
Key Data
$1 Billion
— The amount of federal Medicaid assistance money the financial plan assumed would be extended.
$775 Million
— The value of the Medicaid cost containment package passed earlier in the year.
$300 Million
— The portion of the Medicaid cost containment package that relies on fraud recovery.
$47 Billion
— The total annual cost of Medicaid in New York.
10%
— The expected annual growth rate of total Medicaid costs.
$445 Million
— The amount of savings from the Medicaid cost containment package, described as a drop in the bucket.
The adopted fiscal year 2011 budget relies on $600 million in federal aid for Medicaid, a funding source that remains uncertain. If this federal support fails to materialize, the city will likely be forced to implement additional service cuts.
Key Data
$600 million
— The amount of federal aid for Medicaid included in the adopted budget that, if not received, would likely necessitate further cuts.
New York's Medicaid program faces fiscal strain due to loose eligibility policies that allow relatively well-off families to claim long-term care benefits. Consequently, the state accounts for 32 percent of all elderly-services beneficiaries nationwide despite having only 7 percent of the population in poverty, necessitating a restriction of benefits to the truly needy.
Recommendations related to Medicaid
Albany will need to make cuts to Medicaid soon; restricting access to long-term care benefits so they go only to the truly needy is the place to start.
Key Data
32 percent
— of all elderly-services beneficiaries nationwide are in New York
7 percent
— of the population in poverty in New York
New York State's 2010-11 budget proposal addresses a $6.7 billion deficit by targeting unsustainable growth in school aid and Medicaid, which together comprise 40 percent of state operating funds. The plan seeks to manage Medicaid costs, which are projected to rise by 14.5 percent or $1.6 billion without intervention, to accommodate increased enrollment.
Recommendations related to Medicaid
The Legislature should move the State's finances toward structural balance by embracing the Governor's proposal for real and recurring spending reductions, which includes necessary adjustments to Medicaid spending.
Key Data
$1.6 billion
— Projected increase in State operating funds dedicated to Medicaid next year without action.
14.5 percent
— Projected growth rate of State operating funds dedicated to Medicaid next year without action.
40 percent
— Portion of State operating funds comprised by school aid and Medicaid combined.
New York's revised deficit reduction plan replaces broad Medicaid percentage reductions with smaller, less reliable measures, including a $45 million 'spin up' of federal funds and a delay in necessary nursing home rate reform. These changes prioritize short-term budget fixes over the structural reforms required to address the state's long-term fiscal challenges.
Key Data
$45 million
— The expected state savings from the measure involving hospitals drawing down federal Medicaid dollars through the State's matching rate to reimburse them for a gross receipts tax increase.
New York's Medicaid spending is projected to increase by 36% over the next three years, with current costs per beneficiary sitting at $7,746. This expenditure level is 67% higher than the national average, yet the state's health system performance ranks only 21st in the nation.
Key Data
36%
— The expected growth rate of Medicaid spending over the next three years.
$7,746
— The annual Medicaid expense per beneficiary in New York.
67%
— The amount by which New York's Medicaid spending per beneficiary exceeds the national average.
New York's Medicaid program is currently unsustainable, as it spends 79% more per beneficiary than the national average. Consequently, spending in this area requires immediate reform to address the state's fiscal challenges.
Recommendations related to Medicaid
New York's Medicaid program needs to be reformed to address its unsustainable spending levels.
Key Data
79%
— New York's Medicaid program spends this much more per beneficiary than the national average.
The fiscal year 2009-10 budget failed to achieve necessary spending restraint, with the legislature halving the Governor's original Medicaid cost-containment proposals and rejecting significant cuts to hospital and nursing home rates. This reliance on temporary federal aid and failure to implement structural spending changes creates a risk of unsustainable future budget gaps.
Recommendations related to Medicaid
The State Legislature should have enacted the Governor's original Medicaid cost-containment proposals rather than halving them, as the failure to do so necessitates more damaging cuts in the future.
Policymakers should prioritize structural spending changes over relying on temporary federal aid, which only postpones necessary fiscal adjustments.
The State should avoid relying on one-shots and temporary measures to close budget gaps, as these do not address the underlying unsustainability of current spending levels.
Key Data
$1 billion
— Amount of the $3.2 billion in total spending reductions that came from initiatives lowering recurring Medicaid spending.
$306 million
— Amount enacted in hospital rate reductions after the Legislature rejected 56 percent of the Governor's proposed cuts.
$225 million
— Amount enacted in nursing home rate reductions after the Legislature rejected 43 percent of the Governor's proposed cuts.
$175 million
— Savings achieved through the fraud reduction initiative.
$165 million
— Savings achieved through increased utilization of managed care.
$1.047 billion
— Total enacted Medicaid savings in the fiscal year 2009-10 budget, compared to the $1.729 billion originally proposed.
New York's Medicaid program is the most expensive in the nation, with average spending per beneficiary reaching $7,912, which is 176 percent of the national average. To address the high local tax burden, policy changes such as eliminating long-term care eligibility loopholes and reducing non-competitive provider rates could save over $5.8 billion annually.
Recommendations related to Medicaid
Reduce State-mandated local government Medicaid costs more than authorized by the 3 percent cap on local growth enacted in 2005.
Lower Medicaid expenditures by eliminating long-term care eligibility loopholes that extend benefits to middle-class residents.
Key Data
$7,912
— New York's average Medicaid spending per beneficiary, which is 176 percent of the national average.
$5.8 billion
— The estimated annual savings from changing Medicaid policies, including reducing non-competitive rates and rationalizing utilization.
$45 billion
— The total cost of New York's Medicaid program in the current fiscal year.
$7 billion
— The amount local governments in New York pay toward Medicaid costs in the current fiscal year.
176 percent
— The percentage of the national average that New York's Medicaid spending per beneficiary represents.
New York's Medicaid spending per beneficiary is 69 percent higher than the national average, largely due to high long-term care costs. To address this, the state should close eligibility loopholes and control personal care utilization, which could save $1 billion annually.
Recommendations related to Medicaid
The state should close eligibility loopholes for long-term care that allow middle-class and wealthy New Yorkers to benefit from the program.
The state should tighten eligibility to individuals with homes worth less than $500,000 and apply the look-back period for asset transfers to eligibility for home care.
The state should control excessive utilization of personal care services and expand managed care to generate savings.
Key Data
69%
— Medicaid spending per beneficiary in New York is higher than the national average.
$500,000
— Eligibility for long-term care should be tightened to individuals with homes worth less than this amount.
$400 million
— Annual savings from tightening eligibility and applying the look-back period for asset transfers to home care.
$600 million
— Annual savings from controlling excessive utilization of personal care services and expanding managed care.
$1 billion
— Total annual savings from the proposed Medicaid eligibility and utilization reforms.
New York's Medicaid program for nursing homes is the most expensive in the nation, yet it fails to deliver superior care or better staffing ratios compared to national averages. The state should transition to a standardized payment system that links reimbursement to patient needs, regional labor costs, and measurable quality outcomes rather than outdated, facility-specific historic costs.
Recommendations related to Medicaid
A new payment strategy should address the problems in current rates by changing from a facility-specific to a standardized base rate system that varies primarily by differences in patient-specific characteristics and in geographic labor costs.
New York homes should be staffed at the federally recommended level of 4.1 hours of care per patient per day.
An auditing system should be developed to detail whether the level of staffing assigned to a patient meets the criteria required according to the patient’s RUG category.
New York State should develop a set of quality indicators such as those being used in other states and being tested by Medicare to assess patient outcomes.
Homes should not receive their full daily rate if they fail to meet minimum quality standards; homes exceeding quality standards should be eligible for bonus payments.
Key Data
$45 billion
— Projected cost of New York's Medicaid program in fiscal year 2008-09.
$1.2 billion
— Annual cost of avoidable hospitalizations for nursing home patients in New York.
$187
— Average daily Medicaid payment to nursing homes in New York, which is 44 percent above the national average.
4.1 hours
— Federally recommended level of total nursing care per patient per day.
$1.2 billion
— Total adjusted savings in fiscal year 2008-2009 from implementing a new nursing home payment system.
3.6 hours
— Direct care nursing hours per patient day provided by New York nursing homes in 2005.
New York's Medicaid costs per beneficiary are 69 percent higher than the national average, necessitating significant reductions in payment rates to hospitals and nursing homes. Furthermore, the program requires reform by closing eligibility loopholes for nursing homes and home care that have allowed it to expand beyond its original purpose.
Recommendations related to Medicaid
The state should reduce Medicaid payment rates to hospitals and nursing homes to achieve significant savings.
New York should reform Medicaid by closing eligibility loopholes for nursing homes and home care that have enabled the program to expand beyond serving the poor for whom it was originally intended.
Key Data
69 percent
— The amount by which New York's Medicaid costs per beneficiary exceed the national average.
New York's Medicaid program spends $7,910 per beneficiary, which is 69 percent above the national average despite offering no better quality of care. To achieve $2 billion in annual savings, the state should reduce non-competitive nursing home rates, close eligibility loopholes for individuals with significant assets, and limit coverage for personal care services.
Recommendations related to Medicaid
New York could save money by reducing non-competitive institutional rates like those paid to nursing homes, which are higher than national norms even after adjusting for differences in the cost of living and the health of patients.
The state could also close eligibility loopholes for individuals with significant personal assets, particularly those with enough money to defray the cost of their own care.
Limiting how many hours of 'personal care services' (like housekeeping services by home health attendants) the state’s Medicaid program will cover would be a huge savings.
Key Data
$2 billion
— annual savings that can be generated from the Medicaid program
$7,910
— New York's Medicaid spending per beneficiary
69 percent
— amount by which New York's Medicaid spending per beneficiary exceeds the national average
In order to promote fiscal reform, the Citizens Budget Commission (CBC) convened three separate agenda-setting conferences for key stakeholders in the state budget process in 2007. Each session focused on one aspect of fiscal reform with a goal of identifying specific changes for the coming budget cycle. The expectation is…
New York's Medicaid program is exceptionally expensive, with costs per enrollee 69 percent higher than the national average, largely due to high provider rates and broad eligibility. To address the fiscal burden on local governments, the state has implemented a cap on local Medicaid spending growth and assumed the full non-federal share of the Family Health Plus program.
Recommendations related to Medicaid
The State should pursue structural changes to the Medicaid program to reduce ineffective services.
New York should reduce the rates paid to hospitals and nursing homes, tighten eligibility loopholes, reduce usage of home care, and utilize more managed care to achieve savings.
A complete state takeover of local Medicaid expenses would ameliorate the fiscal burden on counties and improve accountability.
Key Data
$2.3 billion
— County Medicaid expenditures in 2003, which more than doubled from $1.1 billion in 1993.
$2 billion
— Potential state savings if New York reduced rates paid to hospitals and nursing homes, tightened eligibility, and utilized more managed care.
$748 million
— Savings for counties and New York City resulting from structural Medicaid reforms.
$363 million
— Savings for New York City in local fiscal years ending in 2008 from the Family Health Plus state takeover.
$343 million
— Savings for New York City in local fiscal years ending in 2008 from the Medicaid growth cap.
New York's Medicaid program is the most expensive in the nation, with spending per beneficiary nearly 69 percent above the national average, largely due to high institutional rates and lenient eligibility rules. To achieve significant savings, the state should reduce non-competitive payment rates for hospitals and nursing homes, close eligibility loopholes for the non-poor, and curb excessive utilization of personal care services.
Recommendations related to Medicaid
The state should reduce non-competitive institutional rates paid to hospitals and nursing homes, which are currently about 15 percent higher than national norms.
New York should close eligibility loopholes for the non-poor, specifically by taking over estate recovery for spousal refusal and lowering the home value exemption to federal standards.
The state should reduce excessive utilization of services, such as personal care hours and unnecessary hospital admissions, to bring costs in line with national standards.
Key Data
$7,910
— New York's annual spending per Medicaid beneficiary, which is nearly 69 percent above the national average.
$125 million
— Potential annual state savings from reducing hospital rates by 15 percent.
$735 million
— Potential annual state savings from reducing nursing home rates by 29 percent.
$45 million
— Potential annual state savings from assuming responsibility for spousal refusal recovery at the state level.
$409 million
— Potential annual state savings from requiring 1 percent of personal care recipients to contribute $250,000 toward their care.
$433 million
— Potential annual state savings from reducing average personal care hours to 17 per week.
New York's Medicaid spending per beneficiary is the highest in the nation, nearly doubling the national average, largely due to the extension of long-term-care benefits to middle- and upper-middle-class residents. To address these costs, the state should tighten eligibility requirements for long-term care and reduce hospital and nursing-home reimbursement rates to more competitive levels.
Recommendations related to Medicaid
The state should tighten the eligibility rules for long-term care and take measures to stimulate the market for private long-term-care insurance among the middle class.
The state should reduce hospital and nursing-home rates more than it did this year, to more competitive levels.
New York's Medicaid program is the most expensive in the nation, presenting an opportunity to reduce costs without impacting services for the poor. Savings can be achieved by closing eligibility loopholes for long-term care for wealthy residents and reducing excessive payments to nursing homes and hospitals.
Recommendations related to Medicaid
The state should limit support for long-term care of wealthier residents by tightening eligibility loopholes in the Medicaid program.
The state should curb generous payments to nursing homes and hospitals within the Medicaid program, as they are among the most expensive in the nation.
Rising Medicaid costs have contributed to New York City's fiscal challenges, with caseloads growing from 1,217,397 in 2000 to 2,312,678 in 2005. Total spending on residents rose from $15 billion to $22 billion during this period, indicating a need for programmatic reforms and fraud reduction to manage these expenses.
Recommendations related to Medicaid
There is ample opportunity to lower Medicaid costs through programmatic reforms and reductions in fraud.
Key Data
1,217,397
— Average monthly Medicaid caseload for New York City in 2000.
2,312,678
— Average monthly Medicaid caseload for New York City in the third quarter of 2005.
$15 billion
— Total Medicaid spending on New York City residents in 2000.
$22 billion
— Total Medicaid spending on New York City residents in 2004.
New York City faces a significant financial burden from Medicaid, paying approximately $4.5 billion which accounts for 65 percent of the statewide local share. Shifting the responsibility for these costs to the State could create a more efficient fiscal system and free up local revenue to better fund public education.
Recommendations related to Medicaid
The State should pursue a full assumption of Medicaid costs to create a better state and local finance system that would, in turn, free local revenues for education.
Key Data
$4.5 billion
— The amount New York City is expected to pay for its share of Medicaid costs in fiscal year 2006.
65 percent
— The portion of the statewide local share of Medicaid costs that New York City is expected to pay in fiscal year 2006.
3.5 percent
— The growth cap on the local share of the Medicaid program enacted in January 2006.
New York's Medicaid program is the most expensive in the nation, with average spending per beneficiary reaching $7,912, or 176 percent of the national average. To address this, policy reforms should focus on reducing state-mandated local government costs and eliminating long-term care eligibility loopholes that currently extend benefits to middle-class residents.
Recommendations related to Medicaid
Reduce State-mandated local government Medicaid costs more than authorized by the 3 percent cap on local growth enacted in 2005.
Lower Medicaid expenditures by eliminating long-term care eligibility loopholes that extend benefits to middle-class residents.
Key Data
$7 billion
— The amount local governments in New York will pay in the current fiscal year for Medicaid, representing 16 percent of the program's total cost.
$45 billion
— The total cost of the Medicaid program in New York.
$7,912
— New York's average Medicaid spending per beneficiary.
$4,487
— The national average Medicaid spending per beneficiary.
$5.8 billion
— The estimated annual savings from changing policies related to Medicaid provider rates, long-term care eligibility, and service utilization.
176 percent
— New York's average Medicaid spending per beneficiary relative to the national average.
New York State has taken an initial step toward relieving local governments of the Medicaid burden by capping spending growth, but this measure is insufficient. Full financial responsibility for the program must be shifted entirely to the State to achieve equitable financing.
Recommendations related to Medicaid
The State should ensure that financial responsibility for Medicaid is shifted entirely to the State.
New York City's local share of Medicaid costs is projected to reach $5.3 billion by fiscal year 2009, consuming a significant portion of locally-raised revenues. To address this, the city should implement reforms such as limiting eligibility loopholes, increasing managed care participation, and curbing excessive personal care service hours to align costs with national averages.
Recommendations related to Medicaid
The city should limit eligibility loopholes that allow middle-class and wealthier individuals to qualify for Medicaid-financed long-term care.
New York should pay only competitive costs to hospitals and nursing homes, as current rates are significantly higher than necessary.
The state should increase managed care participation to ensure taxpayers save money and clients receive better care.
New York should limit excessive personal care services, as the current average of 30 hours per week for home attendant services far exceeds the national average.
Key Data
$4.8 billion
— The local share of Medicaid costs in fiscal year 2005.
$5.3 billion
— The projected local Medicaid cost by fiscal year 2009.
14%
— The portion of locally-raised revenues consumed by the local share of Medicaid in fiscal year 2005.
13%
— The amount more New York State pays hospitals than is necessary.
29%
— The amount more New York State pays nursing homes than is necessary.
30 hours
— The average weekly hours of home attendant services in New York compared to 11 hours in the rest of the country.
New York State's Medicaid program is the largest item in the state budget, costing approximately $37.1 billion annually, and requires significant reforms to reduce costs and realign fiscal responsibilities between state and local governments. The state should implement measures such as reducing provider rates, rationalizing service usage, and closing eligibility loopholes to achieve necessary savings while protecting essential services.
Recommendations related to Medicaid
The Legislature should adopt the Governor’s recommended cap as a first step toward more equitable financing of the Medicaid program.
In the long run, State leaders should shift the financial responsibility for Medicaid entirely to the State.
Rates should be reduced to make New York’s payments competitive with those of other jurisdictions; state taxpayers should not underwrite inefficient managerial practices in health care institutions.
The Governor’s cost saving measures consistent with CBC’s strategies should be retained and enhanced in the adopted budget.
Closing eligibility loopholes for long-term care could save an estimated $600 million annually.
Key Data
$37.1 billion
— Estimated cost of the Medicaid program in the current fiscal year.
36.6 percent
— Medicaid's share of total State spending.
$8,031
— Amount New York State spent per Medicaid beneficiary in federal fiscal year 2001-02.
$4.6 billion
— Annual Medicaid savings identified by the CBC that would not harm the medically needy.
$600 million
— Estimated annual savings from closing eligibility loopholes for long-term care.
$222 million
— Estimated local relief for New York City from the 3.0 growth cap in fiscal year 2007-08.
New York's Medicaid program has experienced rapid spending growth that significantly outpaces total state budget growth, with per-enrollee costs nearly double the national average. To address this, the state should implement strategies to tighten eligibility loopholes, align provider payment rates with competitive benchmarks, and rationalize service utilization through managed care and reduced personal care hours.
Recommendations related to Medicaid
The state should tighten eligibility rules for the "medically needy" by limiting spousal refusal and enforcing stricter look-back periods for asset transfers.
New York should lower provider payment rates for hospitals, nursing homes, and intermediate care facilities to align with competitive benchmarks.
The state must increase managed care participation for elderly and disabled enrollees to reduce unnecessary hospitalizations and improve care management.
New York should limit excessive personal care services by reducing the average number of authorized hours to be more in line with national norms.
State leaders should negotiate "budget neutral" arrangements with federal officials to ensure New York shares in the federal savings generated by these cost-cutting initiatives.
Key Data
$4.6 billion
— Potential annual savings from reversing the trend in Medicaid spending.
$7,646
— Annual cost per person enrolled in New York's Medicaid program.
$3,936
— National average annual cost per person enrolled in Medicaid.
$2.5 billion
— Estimated annual savings from limiting Medicaid provider payments to competitive rates.
$1.0 billion
— Estimated annual savings from bringing personal care services in line with national norms.
$489 million
— Estimated annual savings from enrolling one-third of elderly and disabled eligibles in managed care.
New York's Medicaid program is the most expensive in the nation, with average per-beneficiary expenditures of $7,646, nearly double the national average. This high cost is exacerbated by state policies that require local governments to fund a significant portion of the program, costing New York City $4 billion in fiscal year 2002-03 alone.
Key Data
$4 billion
— The cost of the Medicaid match to the City of New York in fiscal year 2002-03.
$26 billion
— Total Medicaid spending by New York in federal fiscal year 1999-00, which was more than every other state.
$7,646
— New York's average Medicaid expenditure per beneficiary, which is nearly twice the national average.
25 percent
— The share of acute care service costs that local governments are required to pay for Medicaid enrollees.
10 percent
— The share of long-term care service costs that local governments are required to pay for Medicaid enrollees.
13 percent
— The portion of New York City's local tax dollars consumed by the Medicaid match in fiscal year 2002-03.
New York's Medicaid spending is significantly higher than the national average, with total expenditures per beneficiary more than double that of the rest of the country. To address fiscal challenges, the state should implement cost constraints on providers and shift more financial responsibility to the state level rather than relying on local governments.
Recommendations related to Medicaid
Medicaid cuts should be targeted to those who can best afford to pay for their care and should impose cost constraints on providers rather than deny benefits to individuals.
The State should pursue a long-run effort to both lower total Medicaid costs and finance them more from statewide sources.
The State should control Medicaid spending and spread the financial burden across its broadest tax base.
It is preferable that future structural changes clearly move greater financial responsibility to the State without imposing new risks on counties and the City.
Key Data
$1,024 Million
— Proposed Medicaid (Net of Revenues) expense reduction in the fiscal year 2003-04 budget.
$26 Billion
— Total Medicaid spending in New York during federal fiscal year 2000.
$8 Billion
— State funds portion of Medicaid spending in New York during federal fiscal year 2000.
$7.6 Billion
— Potential total Medicaid spending reduction if average costs per beneficiary were 150% of the national average.
$2.4 Billion
— State share of potential savings if Medicaid costs were reduced to 150% of the national average.
$5.1 Billion
— Annual local government burden for Medicaid.
New York City's budget includes a $4.5 billion mandate for public assistance and Medicaid, which represents a significant portion of the city's non-controllable expenses. To address this, the city should collaborate with state officials to implement cost controls on payments to healthcare providers and pursue other state-level assistance that does not require additional state funding.
Recommendations related to Medicaid
The City should work with State officials to control the rates at which hospitals, nursing homes, physicians and others are paid for their services.
The State should assist the City by pursuing Medicaid cost controls that benefit both the State and City.
Key Data
$4.5 billion
— The amount mandated by the State as the City’s contribution toward public assistance and Medicaid.
New York's fragmented administrative systems for health insurance subsidies, including Medicaid, prevent eligible residents from receiving coverage and increase costs. The state should integrate eligibility determination into a unified system, independent of public assistance, to improve efficiency and outreach.
Recommendations related to Medicaid
The Governor should take the lead in designing and implementing effective reforms for health insurance subsidy programs.
The Health Commissioner should be given primary responsibility and commensurate authority by the Governor for redesigning the health insurance subsidy system and its supporting information systems.
Eligibility determination for the major health insurance programs should be integrated in a new system created independent of the current public assistance eligibility bureaucracy.
The State should begin a longer-term process of integrating eligibility determination for all major means-tested programs, including non-health programs.
The DOH should audit the decisions of the voluntary agencies and include performance criteria and financial incentives for accuracy in their contracts.
Key Data
$21 billion
— Annual cost of the Medicaid program in New York State.
$68 million
— Cost of 'Medicaid-only' eligibility offices in New York City in fiscal year 2000.
$117
— Administrative cost per recipient for 'Medicaid-only' eligibility offices in New York City in fiscal year 2000.
10 percent
— Estimated total administrative costs borne by the State and health plans for the Child Health Plus program.
1.1 million
— Estimated number of New Yorkers without insurance that new health initiatives were intended to cover.
3.4 million
— Number of Medicaid beneficiaries in New York State in 1999.
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