The Medicaid local share is a unique New York State policy that requires counties and New York City to fund a portion of the costs for the state-run Medicaid program. This page covers CBC’s work on the local share burden, Medicaid spending growth, the Medicaid Redesign Team, supplemental payments to hospitals, and the fiscal impact of state mandates on local taxpayers.
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..
In February 2023, the State proposed increasing the amount local governments pay for Medicaid, a move that reverses the local share freeze previously implemented.
The Medicaid local share shifts $8 billion in costs to counties and local taxpayers, which should be factored into calculations of local fiscal capacity for school aid. Adjusting the expected local contribution to account for these state mandates would better reflect a locality's actual ability to fund education.
Recommendations related to Medicaid Local Share
Calculations of local fiscal capacity should account for localities’ other spending obligations, including State mandates such as Medicaid, by adjusting the expected local contribution.
Key Data
$8 billion
— The amount of costs for the State-run Medicaid program shifted to counties and local taxpayers via the Medicaid local share.
The New York State Fiscal Year 2024 Enacted Budget includes a measure that shifts hundreds of millions of dollars in state-level Medicaid expenses onto counties and New York City. This action is characterized as a budgetary maneuver that fails to represent a genuine reduction in state spending.
The proposed state budget includes a reversal of the local share freeze for Medicaid costs, which would increase the financial burden on local governments. This policy shift is viewed as a step backward from previous fiscal improvements, necessitating a focus on restraining overall Medicaid spending growth to ensure long-term fiscal stability.
Recommendations related to Medicaid Local Share
The State must prioritize efforts to restrain Medicaid spending growth to ensure future fiscal stability.
New York should reject proposals that shift Medicaid costs to local governments, such as eliminating the State-share Medicaid Indigent Care Pool, and instead move toward assuming a larger portion of the local Medicaid share. Furthermore, the state should reverse the local sales tax intercept that was incorrectly linked to previous Medicaid budget issues.
Recommendations related to Medicaid Local Share
The State should be moving toward taking over more of the local share of Medicaid rather than pushing additional Medicaid costs onto local governments.
The Legislature should reject the elimination of the State-share Medicaid Indigent Care Pool for public hospitals, as eliminating State financing of these payments would shift these costs to local governments.
The Legislature should reverse the $500 million local government sales tax intercept that was enacted last year, as this proposal was a step backward on Medicaid financing.
Key Data
$500 million
— The total amount of the local government sales tax intercept that should be reversed.
$250 million
— The amount intercepted from county sales tax collections in January 2021.
$4.5 billion
— The amount in enhanced Medicaid funding provided by federal aid packages since March 2020.
$1.5 billion
— The amount of likely additional enhanced Medicaid funding the Executive has not yet included in the Financial Plan.
The state's proposal to shift growing Medicaid costs onto counties and New York City is an unsound financing policy that would reverse the 2015 achievement of freezing local government costs. Policymakers should omit this provision for local share growth to avoid burdening localities based on the severity of the pandemic's economic impact.
Recommendations related to Medicaid Local Share
Omit the provision for local share growth.
The Executive and Legislature should continue the course correction started by the MRT, especially as they enact a budget during these troubled times.
Lobby federal lawmakers to clarify and revise the COVID-19 response law to allow New York to implement planned cost savings.
Include transparency improvements to the Medicaid program to help prevent another budget blunder.
Continue collaborative redesign and reform of the health care system.
Key Data
$4.5 billion
— The amount of enhanced federal funding available to the State on an annualized basis.
$851 million
— The shortfall in the Medicaid Redesign Team's savings recommendations against its $2.5 billion target.
$4 billion
— The fiscal gap in the Medicaid program for fiscal year 2020.
$3 billion
— The fiscal gap in the Medicaid program for fiscal year 2021 and beyond.
$380 million
— The value of enhanced federal funding per month to the State.
$474 million
— The amount of Medicaid savings likely to be prohibited under federal law.
New York's Medicaid program requires significant fiscal management reforms, including the implementation of a truly comprehensive Global Cap that accounts for all spending rather than relying on accounting maneuvers. To ensure long-term sustainability, the state must address rapid spending growth in areas like long-term care and personal assistance programs while avoiding shortsighted cuts or tax increases that raise insurance premiums.
Recommendations related to Medicaid Local Share
The State should make the Global Cap global by including all spending to ensure all Medicaid costs are accounted for and managed.
The State should make the Global Cap a cap by following accounting principles such as modified accrual basis to prevent payment deferrals.
The State should index Medicaid spending to the rolling average of medical inflation as a sound strategy and metric for growth.
The State should adhere to and improve the law requiring Medicaid spending transparency by publishing monthly reports and enhancing their contents.
The State should target supplemental payments based on need to promote equity and reduce total costs.
The State should avoid shortsighted cuts to programs that reduce long-term costs and improve quality of care.
The State should not raise health care taxes because these costs are passed on to New Yorkers as higher health insurance premiums.
Key Data
$2.5 Billion
— The goal for identifying State-share Medicaid savings.
$1.7 Billion
— The amount of payments deferred in fiscal year 2019 to adhere to the Cap.
$500 Million
— The cost for the health homes care coordination model in its first five years.
$1,000
— The annual increase in health insurance premiums paid by the average commercially insured family in New York due to healthcare taxes.
50 percent
— The amount by which daily nursing home costs in New York exceed the national average.
New York State should avoid shifting Medicaid costs to local governments, as counties and New York City have limited control over the program's spending drivers like reimbursement rates and eligibility standards. Instead of offloading these expenses, the state should focus on managing its own responsibilities and fostering cooperation to curtail overall spending growth.
Recommendations related to Medicaid Local Share
The State should reject any increase in the local Medicaid share, as counties and New York City have limited control over the program's spending drivers.
The State should prioritize Medicaid spending control that does not shift costs to local government.
Local governments should manage their responsibilities well, work with the State to root out waste, fraud and abuse, and contribute ideas to curtail Medicaid spending growth.
Key Data
$1.9 billion
— Amount of Medicaid payments the Executive Budget proposes permanently delaying.
$2.5 billion
— Amount of Medicaid savings the Executive Budget relies on that are yet to be determined.
$18.0 billion
— Portion of the five-year budget gap attributed to previously unbudgeted Medicaid spending.
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 $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. State leaders must develop a strategy to equitably absorb these federal reductions and reform the allocation methods across all supplemental payment programs to ensure financial stability for hospitals.
Recommendations related to Medicaid Local Share
The State should create a plan for mitigating and equitably distributing scheduled federal DSH cuts in advance of their implementation.
New York should establish a more equitable distribution policy for the full set of supplemental programs.
New allocation methods and contingency plans for federal cuts should take into account the role and magnitude of all of the supplemental payments and the interactions among them.
The State should reconsider the source of the nonfederal share of payments.
Any reforms to the Indigent Care Pool should be part of a consideration of the full menu of supplemental payment programs.
Key Data
$78 billion
— Total size of New York State’s Medicaid program.
$5.3 billion
— Total amount of Medicaid supplemental payments not directly associated with the provision of medical services.
$2.9 billion
— Annual federal cut to New York State Medicaid supplemental payments phased in beginning October 1, 2019.
$3.7 billion
— Total funding distributed through the Disproportionate Share Hospital (DSH) Program.
$811 million
— Total funding distributed through the Upper Payment Limit (UPL) Program.
$758 million
— Total funding distributed through State-Initiated Supplemental Support Programs.
New York State requires local governments to pay a significant portion of Medicaid costs, a unique and regressive mandate that places the heaviest burden on the poorest districts. To address this inequity, the state should implement a full takeover of these local costs, 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 Local Share
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 enhance services.
Key Data
$7.6 billion
— The frozen annual local share of Medicaid statewide.
8.6 percent
— The average percentage of local districts' gross expenditures consumed by the Medicaid local share in 2016.
$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.
$3.3 billion
— The annual state cost reduction if the School Tax Assessment Relief (STAR) program were eliminated.
$3 billion
— The amount the current freeze saves local districts annually.
New York's unique requirement for local governments to fund a portion of Medicaid costs creates significant fiscal inequities, placing a disproportionate burden on taxpayers in lower-income counties. To address this, the state should eliminate the local funding requirement and transition to full state financing over a four-to-five-year period.
Recommendations related to Medicaid Local Share
The state should eliminate the local funding requirement for Medicaid to align decision-making responsibility with the obligation to pay.
The State should assume responsibility for the local share liability over a period of four or five years.
New York should implement full state financing as the best way to achieve continued cost control in a program fully controlled by the State.
New York should replace the current local share with new, statewide revenues in a way that relieves the disproportionate burden placed on taxpayers in low-income counties.
Key Data
$7.1 billion
— Amount New York's counties will pay for Medicaid in state fiscal year 2012.
$6.5 billion
— Amount New York's counties paid for Medicaid in fiscal year 2008.
$53 billion
— Projected total Medicaid expenditures in New York for state fiscal year 2012.
$4.6 billion
— Total local Medicaid payments made by New York City in 2007.
$555
— Local Medicaid cost per capita in New York City.
$86
— Local Medicaid cost per capita in Putnam County.
New York's requirement for counties and New York City to fund a portion of Medicaid costs creates significant regional inequities, with New York City facing a per capita burden of $597 compared to the state average of $190. Reversing the state's recent progress in assuming the growth of these local costs would exacerbate these disparities and place an undue financial burden on specific localities.
Recommendations related to Medicaid Local Share
The State should not rescind the policy of taking over the growth in local Medicaid spending, as doing so would be a mistake.
Key Data
$597
— New York City Medicaid burden per capita.
$190
— Average local share of Medicaid costs per capita throughout the rest of the State.
$10.00
— New York City local Medicaid costs per $1,000 of income.
$3.63
— Average local Medicaid costs per $1,000 of income for the rest of the State.
$96
— Putnam County local Medicaid costs per capita.
$1.70
— Putnam County local Medicaid costs per $1,000 of income.
The proposed state budget unfairly targets New York City by increasing its local share of Medicaid costs, reversing previous efforts to cap these expenses. This policy shift contradicts the state's responsibility to limit local government financial burdens, as no other state requires such high local contributions toward Medicaid.
Recommendations related to Medicaid Local Share
The State should maintain the cap on the growth of Medicaid expenses for local governments, as rolling the cap back for New York City would be a giant step in the wrong direction.
Reducing the local share of Medicaid would be an effective method to lower local government expenses and tax burdens. As the Medicaid Redesign Team's cost containment efforts succeed, the state is well-positioned to decrease this financial obligation for local governments.
Recommendations related to Medicaid Local Share
An effective method of reducing local government expenses and hence, tax burdens, would be to further reduce the local share of Medicaid.
New York should prioritize transferring a greater portion of Medicaid costs from local governments to the state while continuing to support the Medicaid Redesign Team's efforts to control spending. Additionally, the state must address federal funding reductions for the Office of People with Developmental Disabilities by avoiding reliance on one-time savings and instead pursuing permanent baseline spending reductions.
Recommendations related to Medicaid Local Share
The Legislature should approve and extend the Medicaid Redesign Team (MRT) authority to cap state-funded Medicaid spending for more than one year.
The MRT proposal to close the Medicaid eligibility loophole of 'spousal refusal' should be adopted.
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
— Annual federal government reduction in payments for services provided by the Office of People with Developmental Disabilities.
$120 million
— Proposed reduction in state spending for the Office of People with Developmental Disabilities.
$380 million
— Cuts spread among Department of Health programs to address federal funding reductions.
$600 million
— Expected alternative federal aid to offset federal reductions for the Office of People with Developmental Disabilities.
Shifting the entire burden of financing the Medicaid program to the state is necessary to provide long-term relief to local governments facing mounting fiscal pressures. Extending the Medicaid growth cap for at least five years will further help bend the cost curve and ensure the realization of savings from federal waiver applications.
Recommendations related to Medicaid Local Share
State leaders should shift the entire burden of financing the Medicaid program to the State in the long run.
The Legislature and the Governor should extend the Medicaid growth cap for at least five years to help assure realization of the waiver application’s savings projections and improve the State’s prospects of bending the Medicaid cost curve.
Key Data
$15.9 billion
— Medicaid is the second largest item in the state budget.
$10 billion
— New York applied for a federal waiver to reinvest this amount of the estimated $17 billion in federal savings expected from the work of the Medicaid Redesign Team over the next five years.
2%
— Year-to-year Medicaid spending growth was contained to this amount in the first nine months after the first MRT proposals were implemented.
4%
— The number of Medicaid beneficiaries rose by this amount during the same period.
$245 million
— Additional ideas from the Governor’s Mandate Relief Redesign Team worth this amount in annual savings were left on the table.
New York's state budget includes a positive step toward reducing the local government burden for Medicaid costs by gradually lowering the growth rate of the local share to zero by 2015. However, the budget fails to close the 'spousal refusal' loophole, which allows individuals to exploit Medicaid eligibility rules to protect assets that should otherwise be used to pay for long-term care.
Recommendations related to Medicaid Local Share
The state should pursue a gradual full State assumption of Medicaid costs to alleviate the inequitable local tax burden.
The state should close the spousal refusal loophole in Medicaid eligibility to prevent individuals from exploiting rules to protect assets that should be used for care.
Key Data
3 percent
— The annual growth limit for local Medicaid costs established by legislation passed in 2005.
2 percent
— The reduced growth rate on the local share of Medicaid costs scheduled for 2013.
1 percent
— The reduced growth rate on the local share of Medicaid costs scheduled for 2014.
0 percent
— The growth rate on the local share of Medicaid costs starting in 2015 and beyond.
New York's requirement for local governments to fund a significant portion of Medicaid costs is inequitable and inconsistent with property tax caps, placing an undue burden on counties. While the state's proposal to assume responsibility for future Medicaid cost growth provides necessary relief, further long-term action is required to fully address the financial strain on local taxpayers.
Recommendations related to Medicaid Local Share
The state's large local government share of Medicaid costs ought to be revamped to align with the new local property tax cap.
The Governor and legislative leaders should begin planning for more far reaching, longer term initiatives that will fully solve the problem of the inequitable and unusual burden of local Medicaid costs.
Key Data
$7.1 billion
— Amount counties were required to pay for Medicaid in the 2011-12 state fiscal year.
13 percent
— New York's local government share of the $54 billion in projected total Medicaid expenditures.
$370 million
— Savings to local governments in state fiscal year 2015-16 resulting from the proposed state takeover of Medicaid cost growth.
22 states
— Number of states that do not require local governments to contribute anything towards Medicaid.
2.5 percent
— California's local share of total Medicaid expenditures, which is the next largest local share after New York.
$8 billion
— Amount counties and New York City will still be paying for Medicaid costs after the 2015 cap is implemented.
New York's requirement for local governments to fund a portion of Medicaid creates an inequitable financial burden on less affluent counties and undermines incentives for cost containment. The state should eliminate this local funding requirement and assume full responsibility for Medicaid costs over a four-to-five-year period to align financial obligations with administrative control.
Recommendations related to Medicaid Local Share
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
— Amount New York's counties will pay for Medicaid in state fiscal year 2012.
$6.5 billion
— Amount New York's counties paid for Medicaid in fiscal year 2008.
$4.6 billion
— Total local Medicaid payments made by New York City in state fiscal year 2008.
$555
— Medicaid cost per capita in New York City in state fiscal year 2008.
$11.07
— Medicaid cost per $1,000 of personal income in New York City in state fiscal year 2008.
13 percent
— Percentage of total Medicaid expenditures that New York's counties will pay in state fiscal year 2012.
New York's reliance on local governments to fund a significant portion of Medicaid costs has created a substantial financial burden, with county Medicaid expenditures more than doubling between 1993 and 2003. While the state has implemented a cap on local Medicaid spending growth and assumed the costs of the Family Health Plus program, a full state takeover of Medicaid expenses is proposed to improve equity and reduce the fiscal strain on localities.
Recommendations related to Medicaid Local Share
A complete state takeover of local Medicaid expenses would ameliorate the fiscal problems caused by the current system of requiring counties to pay a significant share of Medicaid costs.
If New York reduced the rates paid to hospitals and nursing homes, tightened eligibility loopholes, reduced usage of home care, and utilized more managed care, the State would save $2 billion.
A state Medicaid takeover should also consider the disproportionate share of Medicaid expenditures (about 65 percent) in New York City to avoid shifting substantial costs from the City’s taxpayers to taxpayers in virtually every other jurisdiction in the State.
Key Data
$2.3 billion
— County Medicaid expenditures in 2003, which more than doubled from $1.1 billion in 1993.
$2.2 billion
— Medicaid mandates required from counties (excluding New York City) in fiscal year 2005.
$363 million
— Savings for New York City from the Family Health Plus state takeover in local fiscal years ending in 2008.
$343 million
— Savings for New York City from the Medicaid cap in local fiscal years ending in 2008.
$297 million
— Savings for all other counties from the Medicaid cap in local fiscal years ending in 2008.
$130 million
— Savings for all other counties from the Family Health Plus state takeover in local fiscal years ending in 2008.
New York's high Medicaid costs impose a significant financial burden on local governments, with New York City expected to pay approximately $4.5 billion in fiscal year 2006, representing about 65 percent of the statewide local share. Realignment of state and local fiscal responsibilities, specifically through the State's full assumption of Medicaid costs, is proposed as a potential solution to free up local revenues for education.
Recommendations related to Medicaid Local Share
The State should pursue a full assumption of Medicaid costs to create a better state and local finance system that would free local revenues for education.
The State should consider assuming other local costs, such as that of pensions, to further alleviate the financial burden on local governments.
Key Data
3.5%
— Growth cap on the local share of the Medicaid program enacted in January 2006.
65%
— Portion of the statewide local Medicaid share expected to be paid by New York City in fiscal year 2006.
$4.5 Billion
— Estimated cost for New York City's share of the Medicaid program in fiscal year 2006.
New York State requires its local governments to pay a significantly higher share of Medicaid costs than any other state, contributing to the highest local tax burden in the nation. To address this, reforms should focus on reducing these state-mandated costs by eliminating eligibility loopholes and curbing non-competitive provider rates.
Recommendations related to Medicaid Local Share
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
— Amount local governments in New York will pay toward Medicaid costs in the current fiscal year.
16 percent
— Portion of the total $45 billion Medicaid program cost that local governments in New York are required to pay.
$5.8 billion
— Estimated annual savings from changing policies related to Medicaid provider rates, eligibility loopholes, and utilization.
$7,912
— Average Medicaid spending per beneficiary in New York, which is 176 percent of the national average.
New York's heavy reliance on local governments to fund Medicaid and public assistance significantly increases the local tax burden, which in turn compromises the ability of localities to raise revenue for schools. This fiscal burden contributes to a combined school and Medicaid tax effort in New York City that exceeds statewide averages, highlighting the need for reform in how these services are financed.
Key Data
$15.50 per $1,000
— The combined school and Medicaid tax effort in New York City.
$13.30 per $1,000
— The statewide average combined school and Medicaid tax effort.
$5.838 billion
— The amount that could be saved annually in the Medicaid program without harming medical care for the indigent.
New York State has taken an initial step toward relieving local governments of the Medicaid burden by capping the growth of local spending over a three-year period. Full financial responsibility for the program must be shifted entirely to the State to ensure more equitable financing.
Recommendations related to Medicaid Local Share
The State must ensure that financial responsibility for Medicaid is shifted entirely to the State to achieve more equitable financing.
Key Data
three years
— The duration for which the growth in local Medicaid spending has been capped.
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 pursue cost-containment reforms, such as limiting eligibility loopholes, paying competitive rates to providers, increasing managed care participation, and limiting excessive personal care services.
Recommendations related to Medicaid Local Share
The city should limit eligibility loopholes in state laws and local administrative practices that enable middle-class and wealthier individuals to qualify for Medicaid-financed long-term care.
The city should pay only competitive costs to hospitals and nursing homes, as New York State currently pays significantly more than necessary for these services.
The city should increase managed care participation, as this arrangement can help taxpayers save money while providing better care to needy clients.
The city should limit excessive personal care services, as the current program pays for significantly more hours of home attendant services than are permitted in any other state.
Key Data
$4.8 billion
— New York City's local share of Medicaid costs in fiscal year 2005.
$5.3 billion
— Projected cost of New York City's local share of Medicaid by fiscal year 2009.
14 percent
— Portion of locally-raised revenues consumed by the local share of Medicaid in fiscal year 2005.
13 percent
— Amount more that New York State pays hospitals compared to what is necessary.
29 percent
— Amount more that New York State pays nursing homes compared to what is necessary.
$454 million
— Estimated savings for New York City in fiscal year 2009 from implementing Medicaid cost containment reforms.
New York's Medicaid program is exceptionally expensive, with costs per enrollee nearly double the national average, largely due to inefficient payment rates and generous eligibility rules that allow middle-class families to shift long-term care costs to the public. Implementing reforms to tighten eligibility, align provider payment rates with competitive benchmarks, and rationalize service utilization could save the state approximately $4.6 billion annually.
Recommendations related to Medicaid Local Share
Tighten eligibility rules for the elderly and disabled to prevent middle-class families from using Medicaid as a substitute for private long-term care insurance.
Limit Medicaid provider payments to rates based on competitive costs to save about $2.5 billion annually.
Expand managed care enrollment for elderly and disabled populations to reduce unnecessary hospitalizations and improve care efficiency.
Reduce the number of hours of personal care authorized for clients to bring usage more in line with national norms.
Reform spousal refusal policies to ensure that Medicaid is not used as a mechanism for the middle class to avoid family responsibilities.
Key Data
$4.6 billion
— The total annual savings that could be achieved by reversing the trend in Medicaid spending and lowering expenditures.
$7,646
— The annual cost per person enrolled in New York's Medicaid program.
$3,936
— The national average annual cost per person enrolled in Medicaid.
$2.5 billion
— The annual savings from limiting Medicaid provider payments to rates based on competitive costs.
$1.0 billion
— The annual savings from bringing the use of personal care services more in line with national norms.
$608 million
— The annual savings from more careful design and better enforcement of eligibility rules for the elderly and disabled.
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