Medicaid in New York is a public health insurance program that provides coverage to millions of low-income residents, the elderly, and people with disabilities. This page covers CBC’s work on the Medicaid global spending cap, managed care enrollment, long-term care eligibility, value-based payment reforms, and the fiscal impact of state and federal funding trends.
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..
Develop and implement a Medicaid savings plan that targets high and growing cost services.
Use proceeds from the time-limited Managed Care Organization (MCO) tax for one-time health system improvements.
Vastly improve Medicaid transparency and planning.
Release the findings and recommendations of the CFHC immediately.
Develop and implement a Medicaid savings plan that focuses on the cost and growth areas, long term care and personal care.
Key Data
As of May 2025, the State is using a large portion of the temporary MCO tax revenue to increase base Medicaid spending, which the CBC warns will create a new fiscal cliff once the revenue disappears.
In March 2024, the CBC warned that a proposal to levy a new tax on managed care plans to leverage $4 billion of federal money risks relying on temporary revenue to seed permanent spending increases.
The state is utilizing temporary managed care organization tax revenue to fund an increase in base Medicaid spending, which threatens to create a future fiscal cliff once that revenue source expires. This approach exacerbates the existing structural imbalance in an already fiscally unsustainable program.
New York State's fiscal year 2026 budget proposals fail to implement necessary controls on the growth of Medicaid spending, which remains one of the largest portions of the state budget. To ensure long-term fiscal stability, the state should develop a savings plan targeting high-cost services and utilize Managed Care Organization tax proceeds exclusively for one-time health system improvements.
Recommendations related to Medicaid Spending Growth
Develop and implement a Medicaid savings plan that targets high and growing cost services.
Use proceeds from the time-limited Managed Care Organization (MCO) tax for one-time health system improvements.
Vastly improve Medicaid transparency and planning.
Release the findings and recommendations of the CFHC immediately.
Develop and implement a Medicaid savings plan that focuses on the cost and growth areas, long term care and personal care.
New York's executive budget fails to address the state's largest financial burden by neglecting to implement initiatives to restrain Medicaid spending growth. Furthermore, the budget improperly incorporates $3.7 billion in MCO tax revenue into the permanent Medicaid spending base, creating a future fiscal cliff instead of utilizing the funds for one-time health system transformations.
Recommendations related to Medicaid Spending Growth
The State should use the $3.7 billion from the MCO tax for a one-time investment in health system transformation rather than building it into the Medicaid spending base.
The State must implement an initiative to restrain Medicaid spending, which is currently the biggest budget buster.
The State should avoid building the MCO tax revenue into the Medicaid spending base, as this creates a future fiscal cliff.
Key Data
$3.7 billion
— The amount of revenue from the MCO tax that the budget builds into the Medicaid spending base, which should instead be used for a one-time investment in health system transformation.
New York State's structural budget gap has grown to between $16 billion and $20 billion, driven by a pattern of using temporary revenues to fund permanent spending increases. The proposed tax on Medicaid and managed care plans to leverage $4 billion in federal funds risks repeating this cycle unless the state restricts the use of these time-limited resources to one-time programs.
Recommendations related to Medicaid Spending Growth
The State should only use federal funds to finance one-time programs.
The State should only pursue the tax proposal after it has identified and publicized the planned one-time programs.
The State should not budget money it does not have, as there is a risk that the State does not get the money.
The State needs to break its bad habit of ratcheting up spending on the back of temporary receipts.
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's Medicaid program faces rapidly rising costs due to elevated enrollment and utilization, with spending projected to grow at 7.0 percent annually through fiscal year 2028. To address these fiscal challenges, the state must implement comprehensive savings, manage spending within a stronger Global Cap, and improve data transparency to inform future policy decisions.
Recommendations related to Medicaid Spending Growth
The State should identify savings that maintain quality services to those in need to avoid exceeding the Global Cap spending limit.
The State should manage Medicaid spending within a stronger Global Cap that applies to all State share costs and prevents the use of fiscal gimmickry.
The State should focus on accelerated growth areas such as long-term care and home- and community-based care to address unsustainable cost growth.
The State should require the Commission on the Future of Health Care to issue long-term cost savings recommendations this year to drive improvement and savings.
The State should improve Medicaid data reporting to inform further savings by implementing simple transparency improvements.
Key Data
7.0 percent
— Annual growth rate of the State share cost of Medicaid from fiscal year 2025 to fiscal year 2028.
$100 billion
— Total Medicaid spending, including local, State, and federal funds, for the current year.
600,000
— Number of additional Medicaid enrollees in 2024 compared to pre-pandemic levels.
1,200 percent
— Growth in CDPAP costs over the past decade.
$6 billion
— Federal funds the State recently received waiver approval to reinvest for system reforms.
New York's Medicaid program costs $101 billion annually, with long-term care services like home health care serving as a major driver of this rapid spending growth. To better manage these costs and inform necessary system transformations, the state should mandate annual reporting on home care utilization and enhance public access to detailed spending and demographic data.
Recommendations related to Medicaid Spending Growth
The Governor should sign A1926A/S1683A to require annual reporting on home care services, which is a significant and growing component of the State’s Medicaid program.
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 annual cost of New York's Medicaid program, which is the single largest program in the State’s budget.
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
The proposed New York State budget includes a concerning reversal of the local Medicaid share freeze, shifting costs to local governments. Because state Medicaid spending is growing significantly, the state must prioritize efforts to restrain this growth to ensure long-term fiscal stability.
Recommendations related to Medicaid Spending Growth
Efforts to restrain Medicaid spending growth will be essential to the State’s future fiscal stability.
New York's Medicaid program faces significant fiscal pressure due to rapidly growing costs and the upcoming expiration of pandemic-related federal aid that has historically offset state expenses. To ensure long-term sustainability, the state must address the projected departure of one million enrollees and implement cost-effective interventions to bring spending in line with available revenues.
Recommendations related to Medicaid Spending Growth
The State needs to bring the costs of Medicaid in line with available revenues to ensure fiscal sustainability.
The State should focus on ensuring that Medicaid uses cost-effective interventions and is managed well to avoid wasting precious resources.
The State should continue to leverage the Medicaid Redesign Team to find billions of dollars in savings to make the program sustainable.
Key Data
$1.7 billion
— State payment that was delayed to keep the Medicaid program on budget.
$3.5 billion
— Amount received annually in extraordinary federal aid since 2020 to offset State Medicaid costs.
$10 billion
— Minimum amount of pandemic-related federal aid received for Medicaid that will be exhausted by the end of fiscal year 2025.
one million
— Number of enrollees added to the Medicaid program since 2020 who are projected to move out of the program over a one-year period.
New York's Medicaid program requires significant reforms to its global cap and transparency measures to prevent unsustainable cost growth that could destabilize state finances. The current cap is ineffective due to exemptions and manipulation, necessitating a shift toward a comprehensive, accrual-based model that limits growth to tax receipt increases.
Recommendations related to Medicaid Spending Growth
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.
Furthermore, any growth in excess of base tax receipts should be offset by savings within the program or from other areas of the budget.
New York's Medicaid program is projected to grow significantly, necessitating efforts to ensure this spending remains affordable and sustainable. To manage this, the state should utilize the $1 billion allocated for health care transformation to drive systemic improvements without increasing long-term recurring costs.
Recommendations related to Medicaid Spending Growth
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 Medicaid costs for the State, residents, and businesses.
The $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 funds included in the budget for health care transformation, which should be used to catalyze changes in Medicaid without increasing recurring spending.
Identifying innovations that improve access and care while lowering costs is essential to address health care needs and stabilize Medicaid spending, which poses a significant risk to future fiscal stability. Expanding these initiatives is necessary to transform the state's entire health system and mitigate long-term financial risks.
Recommendations related to Medicaid Spending Growth
The State should expand the effort to identify Medicaid innovations that improve access and care and lower costs to stabilize Medicaid spending, which is a significant risk to the State’s future fiscal stability.
The State should expand the initiative to identify Medicaid innovations to help transform New York’s entire health system.
New York's Medicaid program faces ongoing fiscal challenges, exacerbated by the addition of roughly 1 million new enrollees during the pandemic. To ensure long-term sustainability, the state should transition its Medicaid Redesign Team into a Health System Transformation Team focused on improving efficiency, transparency, and care coordination for high-needs enrollees.
Recommendations related to Medicaid Spending Growth
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 for individuals, businesses and the State; quality; and equity.
A Health System Transformation Team should 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 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 and outlook by charging the Transformation Team to identify Medicaid efficiencies, program improvements, and savings.
Further improvements are still 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 is threatened by significant spending growth and reliance on non-recurring federal funds, which will create a $3.5 billion fiscal cliff by 2025. This spending is driven largely by new school aid and increased Medicaid enrollment, necessitating improved financial transparency and adherence to standard accounting principles to ensure long-term stability.
Recommendations related to Medicaid Spending Growth
The State should identify actions to reduce the existing out-year gaps, avoid the fiscal cliff, and bolster reserves needed to mitigate the inevitable next downturn.
The State should retain flexibility in how it will reduce future budget gaps, including restraining new aid growth for wealthy districts since that is preferable to other alternatives to meaningfully control spending.
The State should improve budgeting and financial reporting, including foregoing fiscal maneuvers and budgeting in accordance with Generally Accepted Accounting Principles (GAAP).
Key Data
$3.4 billion
— Federal fiscal relief offsetting costs in fiscal year 2021 included this amount for Medicaid.
$1.7 billion
— Medicaid payments deferred from the conclusion of fiscal year 2019 into fiscal year 2020.
$3.5 billion
— The projected fiscal cliff gap between available funding and planned spending in fiscal year 2025.
$116.4 billion
— Projected State Operating Funds spending in fiscal year 2022.
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…
The New York State fiscal year 2022 budget agreement extends the Medicaid Global Cap for one year, a move that addresses immediate concerns but fails to implement necessary systemic reforms. To ensure long-term fiscal sustainability and improve health outcomes, the state must establish a Health System Transformation team to address unsustainable Medicaid spending growth and focus on comprehensive system-wide reforms.
Recommendations related to Medicaid Spending Growth
The State should empanel a Health System Transformation team to reform the Global Cap, address long term Medicaid spending, and focus on health system-wide reforms to restrain cost, reduce disparities, and improve quality.
The COVID-19 pandemic has complicated New York's efforts to address a structural Medicaid budget gap, as federal legislation limits the state's ability to implement planned cost-saving measures. To ensure long-term fiscal sustainability, the state must continue to pursue Medicaid redesign and reform while seeking federal flexibility to enact necessary savings.
Recommendations related to Medicaid Spending Growth
The State should include all MRT proposals in the budget, implementing those that do not risk federal funding immediately.
New York should lobby federal lawmakers to clarify and revise the COVID-19 response law to allow the state to implement planned cost savings.
The state should include transparency improvements to the Medicaid program to help prevent future budget blunders.
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 billion
— The structural Medicaid budget gap in fiscal year 2020.
$3 billion
— The structural Medicaid budget gap in fiscal year 2021 and beyond.
$1.7 billion
— The amount of Medicaid payments the state continues to defer annually.
$851 million
— The shortfall in the Medicaid Redesign Team's savings against its $2.5 billion target.
$4.5 billion
— The estimated federal aid available to the state on an annualized basis.
$647 million
— The amount of savings related to long-term care, the largest part of the MRT package.
The Medicaid Redesign Team's proposals fall short of the $2.5 billion savings target, leaving an $851 million deficit in the state financial plan. Fundamental reforms to transparency and the Medicaid Global Cap are necessary to ensure fiscal goals are met without negatively impacting the health care system.
Recommendations related to Medicaid Spending Growth
The State should implement needed improvements to transparency and the Global Cap’s accounting and design to prevent fiscal gimmicks.
The State should publicly provide critically important data regularly, including spending data for all Medicaid agencies and unit costs of services.
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 will ensure reforms meet fiscal goals while minimizing negative impacts on the state’s health care system and patients.
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 savings target, leaving a deficit in the State financial plan.
$1.7 billion
— The value of a payment delay in March 2019 that went unreported for months due to a lack of transparency.
$1 billion
— The amount of funding provided to hospitals serving predominantly Medicaid and uninsured patients through the Indigent Care Pool.
$1.6 billion
— The total amount of savings included in the Medicaid Redesign Team's proposals.
$890 million
— The amount of recurring savings taken in fiscal year 2020 that the Executive Budget Financial Plan relied on to close the Medicaid budget shortfall.
New York's Medicaid program faces unsustainable spending growth, necessitating reforms to the Global Cap, improved accounting transparency, and targeted cost-containment strategies. Rather than raising healthcare taxes, which increases insurance premiums by $1,000 annually for the average family, the state should focus on managing high-growth areas like long-term care and health homes.
Recommendations related to Medicaid Spending Growth
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, specifically using modified accrual accounting 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 content.
The State should focus on areas with high growth rates or extraordinary spending levels, such as long-term care, health homes, and the Consumer Directed Personal Assistance Program.
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, as these are passed on to New Yorkers as higher health insurance premiums.
Key Data
$2.5 billion
— The goal for State-share Medicaid savings identified by the Medicaid Redesign Team.
10 percent
— The approximate reduction in the Medicaid budget represented by the $2.5 billion savings goal.
$1.7 billion
— The amount of payments deferred by the State in fiscal year 2019 to adhere to the Medicaid Global Cap.
$500 million
— The cost for the health homes care coordination model in its first five years.
50 percent
— The amount by which daily nursing home costs in New York are higher than the national average.
$1,000
— The annual increase in health insurance premiums paid by the average commercially insured family in New York due to healthcare taxes.
New York's Medicaid spending growth has accelerated significantly, with costs increasing 6.1 percent annually between fiscal years 2017 and 2020, contributing $12.5 billion to the state's four-year budget gap. To address this, the state should reconstitute the Medicaid Redesign Team to identify savings and enforce the Medicaid global cap to prevent future overspending.
Recommendations related to Medicaid Spending Growth
The State should reconstitute the Medicaid Redesign Team to identify savings, including policies to address high and rapidly rising long-term care costs and to reform Medicaid supplemental payments.
The Executive and 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 percent
— Average annual increase in Medicaid State spending between fiscal years 2017 and 2020.
50 percent
— 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.
32 percent
— Growth in the State share of Medicaid long-term care costs from fiscal years 2015 to 2019.
New York State's FY 2020 Midyear Update acknowledges a significant budget gap driven by unbudgeted Medicaid spending, which adds $4 billion in costs for fiscal year 2020 and up to $4 billion annually thereafter. To address this $14.5 billion four-year budget gap, the state relies on payment deferrals and delays, rather than implementing a comprehensive savings plan that considers areas beyond Medicaid like school aid and economic development.
Recommendations related to Medicaid Spending Growth
Developing and implementing a plan to solve the entire budget problem need not be done entirely within the Medicaid program.
Other portions of the budget also should be considered, including mistargeted school aid and unproductive economic development programs.
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 after fiscal year 2020.
$14.5 billion
— The increase to the four-year budget gap caused by unbudgeted Medicaid spending.
$2 billion
— The amount of a permanent payment deferral the state is using to address the Medicaid-driven budget gap.
New York State's financial plan understates Medicaid costs by over $9 billion, relying on delayed payments rather than sustainable programmatic changes to address budget gaps. To ensure fiscal accuracy, the state must account for the full cost of the program and implement concrete, multi-year strategies to control spending growth.
Recommendations related to Medicaid Spending Growth
The Mid-Year Update should identify multiyear savings targets, approaches to make programmatic changes, and programs to target.
The Fiscal Year 2021 Executive Budget should not delay payments to forestall a more serious reckoning.
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.
Fiscal year 2020 spending should not be “reduced” by delaying payment until fiscal year 2021.
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 total by which the State financial plan understates Medicaid costs over four years.
$1.7 billion
— Amount of 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 added to State Operating Funds spending in fiscal year 2020 to realign the budget with fiscal reality.
New York State has deferred billions in Medicaid payments to adhere to its spending cap, resulting in a financial plan that understates the program's true costs by over $9 billion. To address these growing budget gaps, the state must either reduce Medicaid spending or cut other areas of the budget to align with actual costs.
Recommendations related to Medicaid Spending Growth
The State should align the budget with actual costs rather than continuing to obscure the true financial obligations of the Medicaid program.
The State should reduce spending for Medicaid to align with budgeted amounts, as re-based projections exceed the State's budgeted share by more than $9 billion over four years.
The State should reduce planned spending for other services to offset the unrecognized rising costs of the Medicaid program.
The State should reinvigorate the previously successful Medicaid Redesign Team to achieve significant reductions in per-enrollee costs.
The State should slow the rapid growth in school aid by better targeting funds to needy districts to help offset rising Medicaid costs.
Key Data
$1.7 billion
— The amount of State funds deferred from fiscal year 2019 to fiscal year 2020 to adhere to the Medicaid Global Cap.
$9 billion
— The cumulative total by which the State's financial plan understates Medicaid costs.
$3.5 billion
— The projected budget gap in fiscal year 2020 after accounting for deferred payments and re-based Medicaid costs.
$6.6 billion
— The projected budget gap in fiscal year 2023 after accounting for deferred payments and re-based Medicaid costs.
$80 billion
— The approximate annual cost of New York State's Medicaid program.
1.3 percent
— The share of budgeted funds available in March 2019 for the final month of the fiscal year.
New York's dually eligible population, while only 15 percent of the Medicaid population, accounts for 36 percent of the program's costs, necessitating better care coordination to manage these expenses. Various models like Managed Long-term Care plans and Health Homes have been implemented to integrate care and improve outcomes for this high-cost group.
Recommendations related to Medicaid Spending Growth
The plans should be better marketed with more extensive consumer education, ensuring beneficiaries and their families receive information about any new integrated plans and their potential benefits.
The state should constrain competition from alternative care arrangements by not allowing integrated plan sponsors to offer MLTC plans.
The state should encourage partnerships between Medicare Advantage D-SNPs and Medicaid MLTC plans by requiring MLTC plans to offer companion D-SNPs in their service area.
The state should target enrollment in health homes among eligible fee-for-service dual enrollees, as targeted outreach and marketing to these beneficiaries may yield significant health care improvements and cost savings.
The state should support broader marketing of Medicare Advantage D-SNPs, specifically by passively enrolling Medicaid Managed Care enrollees who reach age 65 into affiliated D-SNPs.
Key Data
$70 billion
— Annual cost of New York State's Medicaid program.
36 percent
— Share of New York's Medicaid program costs consumed by dually enrolled individuals.
880,000
— Number of dually enrolled persons in New York State in 2018.
15 percent
— Share of New York's Medicaid population comprised of dually enrolled individuals.
50 percent
— Enrollment increase in Medicaid Advantage Plus plans between March 2018 and March 2019.
New York State faces significant health care challenges, including per capita costs that are 22% higher than the national average and persistent disparities in care. To address these issues, the state should pursue targeted reforms such as expanding value-based payment targets, implementing bundled payments, and refining health home models to better manage care for high-needs populations.
Recommendations related to Medicaid Spending Growth
Extend and expand NYS Value Based Payment (VBP) roadmap targets to control Medicaid costs.
Require selected bundled payments for Medicaid and state employee coverage to improve delivery system efficiency.
Allocate a hospital or multi-provider organization a fixed annual amount to care for its population through global provider or geographic budgets.
Support evidence-based interventions to coordinate care and integrate behavioral and physical health care.
Refine Health Homes to better target individuals with severe mental illness.
Key Data
22%
— NYS per capita health care cost is higher than the national average.
80%-90%
— The 2020 goal for Medicaid managed care payments that are value based.
$139 billion
— The amount of individual and firm premium and direct payments that would need to be shifted to tax revenue under a single-payer system.
$70 million to $215 million
— The estimated cost range per 25,000 people covered for expanding insurance subsidies.
Watch the original broadcast here . As Governor Cuomo's second term comes to a close, and voters decide whether to give him a third term, the Citizens Budget Commission is looking at how the state has fared over the past eight years. The group is it out with a new…
New York's Medicaid spending grew from $54 billion to $70 billion between fiscal years 2011 and 2019, a slower rate than most other states due to reforms implemented by the Medicaid Redesign Taskforce. Despite this slower growth, the program remains one of the most expensive in the nation, with per enrollee costs of $10,169 in federal fiscal year 2016 compared to the national average of $7,714.
Key Data
$54 billion to $70 billion
— Medicaid spending growth in New York between fiscal year 2011 and fiscal year 2019.
23 percent
— Increase in New York Medicaid spending between fiscal years 2011 and 2019.
28 percent
— Total increase in Medicaid enrollment between fiscal years 2011 and 2018.
13 percent
— Decrease in per enrollee Medicaid costs over the first five years of the Medicaid Redesign Taskforce's operation.
$10,169
— New York's per enrollee Medicaid costs in federal fiscal year 2016.
$7,714
— National average per enrollee Medicaid costs in federal fiscal year 2016.
New York State requires local governments to pay a significant portion of Medicaid costs, a unique and regressive mandate that places a heavy financial burden on the poorest districts. To address this, the state should implement a comprehensive takeover of these local costs, potentially financed through a combination of sales tax adjustments, expenditure efficiencies, and the elimination of the School Tax Assessment Relief (STAR) program.
Recommendations related to Medicaid Spending Growth
New York should adopt measures that will completely eliminate the required local share of Medicaid.
The State could increase the state sales tax rate by a factor equal to the cost of the local share takeover to finance the transition.
The State could intercept a set portion of the sales tax receipts that local districts currently use as revenue for their budgets to provide a reliable funding source for the state takeover.
The State should eliminate the School Tax Assessment Relief (STAR) program and couple it with a state takeover of the local Medicaid share to provide an equitable, if partial, financing option.
Key Data
$7 billion
— Annual cost burden placed on local governments by the state's Medicaid financing framework.
$7.6 billion
— Statewide frozen annual local share of Medicaid costs.
$15 billion
— 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
— Average portion of local districts' gross expenditures consumed by the Medicaid local share in 2016.
Medicaid spending growth, along with education aid, has exceeded the state's self-imposed 2 percent spending growth cap, contributing to the need for budgetary shifts and reclassifications to maintain the appearance of fiscal restraint. For example, the state used $435 million in Master Settlement Agreement revenues to move Medicaid expenses off-budget, allowing it to claim compliance with the cap despite underlying spending pressures.
New York's Health Home initiative, designed to coordinate care for Medicaid enrollees with complex needs, has grown significantly in cost and enrollment since its 2012 launch, reaching $558 million in annual spending by 2017. To improve the program's cost-effectiveness and impact, the state should refine its targeting of priority populations, strengthen ties between health homes and managed care organizations, and improve data interoperability.
Recommendations related to Medicaid Spending Growth
The state should implement better targeting of priority subpopulations to ensure the program reaches those who will receive the greatest benefits and cost savings.
New York should foster greater reliance on specialized Health Home entities by utilizing staff from existing specialized providers like community health centers and mental health centers.
The state should develop stronger ties between Health Homes and Managed Care Organizations to improve information flow and mutual accountability.
Policymakers should consider alternative payment rates for Health Homes, including options with reduced payments for adults who have reached a duration of enrollment where greater self-management is practical.
The state should pursue centralized development of marketing and training materials to overcome the decentralized nature of the current network and improve understanding of services.
New York should launch new initiatives to encourage and speed interoperability of Health Home, Managed Care Organization, and provider electronic health records to facilitate better information sharing.
Key Data
$72 billion
— The annual cost of New York State's Medicaid program.
$558 million
— The annual spending on Health Homes in 2017.
$87 million
— The annual spending on Health Homes in 2012.
$157 million
— The amount spent on outreach in 2017.
$543 million
— The cumulative spending on outreach from 2012 to 2017.
175,000
— The number of people currently enrolled in Health Homes.
New York's Medicaid spending remains controlled under a 3.2 percent global growth cap, with ongoing efforts to improve efficiency through value-based payments and the Delivery System Reform Incentive Payment program. To further manage these costs, the state should adopt proposed measures such as the repeal of spousal refusal.
Recommendations related to Medicaid Spending Growth
The Legislature should accept the Governor's Medicaid proposals, including the repeal of spousal refusal, to help contain Medicaid costs.
Key Data
3.2%
— The State's share of Medicaid spending continues to remain under this Global Growth Cap.
$125 million
— Amount dedicated for health care capital grants that may prove worthwhile if utilized to effectuate systematic reforms.
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.
New York provides $5 billion annually in supplemental Medicaid payments to hospitals, but these funds face significant reductions due to federal policy changes. The state must revise its distribution strategy to ensure that future cuts are shared equitably rather than disproportionately impacting municipal hospitals.
Recommendations related to Medicaid Spending Growth
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.
The State can revise the distribution of reduced federal funding for supplemental payments to make the impact of future federal cuts more equitable.
Key Data
$5 billion
— Total annual supplemental Medicaid payments provided to hospitals in New York.
$370 million
— Net annual cuts in 2018 that New York City municipal hospitals are slated to bear.
$659 million
— Projected impact on New York from the scheduled $2 billion nationwide decrease in federal DSH payments.
$697 million
— Total projected reduction in supplemental payments based on steady funding, a 5 percent reduction in UPL payments, and a $659 million DSH cut.
$3.6 billion
— Portion of the $5 billion in total supplemental payments comprised by DSH payments.
$811 million
— Estimated annual UPL payments for 2016.
New York's requirement for local governments to fund a significant portion of Medicaid costs creates an inequitable financial burden on taxpayers in less affluent counties and reduces incentives for cost containment. The state should eliminate this local funding requirement and assume full financial responsibility for the program to align decision-making with fiscal accountability.
Recommendations related to Medicaid Spending Growth
The State should assume responsibility for the local share liability over a period of four or five years.
Eliminating the local share policy would significantly improve the way New York State finances its Medicaid program.
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
— The amount New York's counties will pay for Medicaid in state fiscal year 2012.
$6.5 billion
— The amount New York's counties paid for Medicaid in fiscal year 2008.
13 percent
— The portion of total Medicaid expenditures that New York's counties will pay in state fiscal year 2012.
16 percent
— The portion of total Medicaid expenditures that New York's counties paid in fiscal year 2008.
$53 billion
— The projected total Medicaid expenditures for New York in state fiscal year 2012.
25 percent
— The portion of the cost of acute care services that localities are required to pay.
New York State's Medicaid spending remains controlled under a statutory cap, with the growth rate limited to 3.2 percent for 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 compared to previous estimates.
Key Data
3.2 percent
— The growth rate for Medicaid spending subject to a statutory cap remains capped at 3.2 percent in fiscal year 2018.
$341 million
— Total state-funded Medicaid disbursements are projected to be down $341 million in fiscal year 2017 compared to the first quarter update.
$80 million
— Total state-funded Medicaid disbursements are projected to be down $80 million in fiscal year 2018 compared to the first quarter update.
1.3 percent
— State-funded Medicaid expenses are now estimated to decrease 1.3 percent in fiscal year 2017.
New York State's budget update includes a global Medicaid growth cap of 3.4 percent, which was recently lowered to 3.2 percent for 2018 based on medical inflation. The state faces the ongoing challenge of slowing Medicaid spending growth while managing increasing enrollment numbers.
Key Data
3.4%
— The adopted budget included a global Medicaid growth cap of 3.4 percent.
3.2%
— The most recent financial plan update lowered the 2018 global cap forecast to 3.2 percent, based on medical inflation.
This infographic provides an overview of enrollment figures and costs associated with New York State's Medicaid program. It serves as a factual reference for understanding the scale of the state's Medicaid system.
New York's Medicaid program has successfully contained costs through redesign initiatives, with the average cost per enrollee declining 17 percent between 2010 and 2014. To achieve further savings and sustainability, the state must aggressively pursue the full implementation of managed care, coordinated service delivery models, and value-based payment strategies.
Recommendations related to Medicaid Spending Growth
The state must make more progress toward the goal of enrolling nearly all Medicaid-eligible individuals in managed care plans.
Greater use of coordinated service delivery models is needed to improve care for those with multiple conditions.
The state should aggressively pursue further gains in current Medicaid reform policies to overcome implementation challenges.
Policymakers must address the complex technical issues and difficult policy choices involved in the design and implementation of the value-based payment strategy.
Key Data
34%
— Portion of the $156 billion State budget comprised by Medicaid.
6.3 million
— Number of New Yorkers provided access to medical care through Medicaid.
17%
— 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.
New York's Medicaid program, historically the most expensive in the nation, has successfully slowed spending growth and improved quality metrics through the Medicaid Redesign Team's implementation of managed care and new delivery models. However, achieving further savings and full implementation faces significant challenges, including federal limitations on mandatory enrollment and complex technical issues in value-based payment design.
Recommendations related to Medicaid Spending Growth
New efforts should be made to work with federal officials to develop procedures that encourage and perhaps require such enrollment in the future.
Continued strong monitoring of the evolution of these organizations and their action plans is essential, and their ability to achieve measureable improvements is still to be tested.
More aggressive goals exceeding 3 percent might be appropriate.
Dealing with these multiple issues requires revision to the initial design and takes considerable time to implement.
The State is in the process of redesigning the initiative to achieve better results.
Key Data
$60 billion
— Annual taxpayer money spent on Medicaid in New York.
6.3 million
— Number of New York residents enrolled in Medicaid.
$10,432 to $8,620
— Decline in average annual cost per enrollee between 2010 and 2014.
$8.0 billion
— Federal funds provided for Performing Provider Systems (PPSs) over five years.
$1.3 billion to $1.9 billion
— Annual savings target for state fiscal year 2020.
$30,221
— Annual cost per disabled enrollee in New York.
New York's 'spousal refusal' provision allows families to bypass Medicaid income and asset limits, creating an unfair and costly loophole that discourages long-term care insurance planning. Eliminating this practice would generate estimated annual savings of $10 million in the initial years while ensuring Medicaid resources are reserved for those who truly meet eligibility requirements.
Recommendations related to Medicaid Spending Growth
The Legislature should end the costly and unfair practice of spousal refusal to ensure Medicaid eligibility rules are enforced.
New York State should implement the Executive Budget proposal to stop paying for services for newly eligible spouses or children in noncompliant families, while allowing those already receiving services to continue.
Key Data
$21,984
— Annual income limit for Medicaid eligibility for couples over 65.
$21,750
— Asset limit for Medicaid eligibility 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 Medicaid savings from ending spousal refusal in fiscal years 2016-2017 and 2017-2018.
20%
— Personal income tax credit offered by New York State for long-term care insurance premiums.
The state's fiscal strategy includes extending the Medicaid Redesign Team and its global spending cap, alongside expanding the Health Commissioner's authority to shift toward value-based provider payments. Additionally, $850 million has been set aside to resolve a long-standing dispute with the federal government regarding Medicaid payments.
Recommendations related to Medicaid Spending Growth
The state should continue the Medicaid Redesign Team and the global cap on Medicaid spending growth to maintain fiscal discipline.
The state should expand the powers of the Health Commissioner to negotiate value- rather than volume-based payments with health care providers to control costs.
The state should utilize surplus resources to settle the dispute with the federal government over Medicaid payments by setting aside $850 million.
Key Data
$850 million
— Amount set aside in the Executive Budget for the settlement of a dispute with the federal government over Medicaid payments.
The FY2016 New York State budget faces scrutiny regarding its ability to maintain the 3.6% cap on Medicaid spending growth. Additionally, the fiscal sustainability of covering newly eligible immigrants under the Medicaid program remains a key concern.
Key Data
3.6%
— The cap on Medicaid spending growth that the budget is expected to stay under.
New York State's budget projections rely on unrealistic assumptions, as the state faces significant budget gaps rather than the anticipated surpluses. Controlling state spending growth to 2 percent remains difficult due to rising costs in major areas like school aid and Medicaid, which are projected to grow faster than the target.
Key Data
3.6 percent
— Projected growth rate for Medicaid spending in the next fiscal year.
New York State faces significant fiscal pressure as it attempts to maintain a 2 percent spending cap while major budget components like Medicaid and school aid grow at higher rates. To achieve long-term fiscal stability, the state must move away from using accounting maneuvers to mask budget gaps and instead adopt a transparent financial plan that reflects actual spending realities.
Recommendations related to Medicaid Spending Growth
If the federal aid is spent on reforms that reduce costs, Medicaid spending projections could be lower.
A more sensible approach to presenting the fiscal challenges that lie ahead is to return to a straightforward and transparent financial plan, one that shows the baseline budget gaps that result from the actions taken in this year’s budget.
Until realistic plans are made to adhere to the 2 percent spending cap, there should be no illusions about spending a 'surplus.'
Key Data
$730 million
— Amount the Department of Health absorbed through the creation of a “stabilization fund” for mental hygiene services in fiscal year 2014.
$8 billion
— Amount the Department of Health is planning to distribute over the next five years in federal funds from a waiver to the State’s Medicaid Plan.
4 percent
— Expected annual growth rate for Medicaid under a cap linked to the 10-year average of healthcare inflation.
42 percent
— Portion of the state operating fund budget comprised of Medicaid and school aid.
$270 million
— Projected budget relief under the Medicaid cap in fiscal year 2015.
$688 million
— Projected budget relief under the Medicaid cap in fiscal year 2018.
New York State has successfully contained Medicaid spending growth to 2 percent despite a 4 percent increase in beneficiaries by implementing a global cap on expenditures. To ensure long-term fiscal stability and continue bending the cost curve, the state should extend this Medicaid growth cap for at least five years and work toward shifting the entire financial burden of the program from counties to the state.
Recommendations related to Medicaid Spending Growth
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 over the long run.
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.
$17 billion
— Estimated federal savings expected from the work of the Medicaid Redesign Team over five years.
2 percent
— Year-to-year Medicaid spending growth was contained to 2 percent in the first nine months after MRT proposals were implemented.
4 percent
— Increase in the number of Medicaid beneficiaries during the same period spending growth was contained to 2 percent.
New York's current policy requires local governments to cover a disproportionate 13 percent of Medicaid costs, creating an inequitable financial burden that conflicts with local property tax caps. While a proposed three-year state takeover of Medicaid cost growth offers necessary relief, further long-term reforms are required to fully address the state's uniquely high reliance on local funding for the program.
Recommendations related to Medicaid Spending Growth
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.
New York should continue to move toward ending an inequitable distribution of substantial Medicaid costs among local taxpayers.
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 expenditures.
3 percent
— Annual cap on the growth in localities’ Medicaid expenses since 2005.
5 percent
— Average growth in total Medicaid costs since 2005.
$370 million
— Savings to local governments in state fiscal year 2015-16 from the proposal.
$1 billion
— Local funding in California, the state with the next largest local share.
New York is halfway toward its $2.2 billion Medicaid savings goal for fiscal year 2012, though concerns remain regarding the timely implementation of utilization controls and the potential impact of economic downturns on enrollment. While the Global Medicaid Spending Cap has successfully kept spending below thresholds so far, rising enrollment in programs like Family Health Plus poses a risk to long-term fiscal targets.
Key Data
$2.2 billion
— Budgeted savings target for the Medicaid Redesign Team in fiscal year 2012.
$640 million
— Amount of savings considered to be '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.
8 percent
— Increase in Family Health Plus enrollment as of September compared to the previous year.
6.2 percent
— Increase in managed care enrollment as of September compared to the previous year.
4 percent
— The approximate ten-year average of the medical component of the consumer price index used to limit annual Medicaid expenditure growth.
New York's Medicaid Redesign Team has introduced a package of reforms, including a program-wide spending cap and targeted provider rate cuts, to achieve a rare year-over-year reduction in program spending. While these measures address immediate budget gaps, long-term sustainability will require broader payment reforms and continued efforts to manage utilization.
Recommendations related to Medicaid Spending Growth
The effective savings measures should be implemented speedily.
The new cap should be tested carefully in the coming year.
Future savings in line with the goal of the innovative cap strategy will require broad changes in the way providers are paid.
Future efforts should be pursued to reverse the new assessments.
A longer term look at options for malpractice reform may ultimately be more beneficial.
Key Data
4 percent
— The projected year-over-year reduction in state Medicaid spending.
6 percent
— The average annual increase in Medicaid spending between 1995 and 2010.
$440 million
— Combined savings in the next fiscal year from base rate cuts for institutional providers.
$12 billion
— Total long-term care costs in 2008, representing roughly a quarter of all state Medicaid spending.
$2.85 billion
— The total savings target for the Medicaid Redesign Team's package.
$209 million
— The savings generated in the first year from medical malpractice reform.
New York's Medicaid nursing home payment rates are significantly higher than national averages, yet the state's quality of care remains mediocre. Reforming the current outdated payment system to a statewide base rate could generate savings, though further reductions and quality-based incentives are necessary to improve efficiency and patient outcomes.
Recommendations related to Medicaid Spending Growth
The Medicaid Redesign Team should consider lowering payment rates even further and including 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
$2.85 billion
— Annual Medicaid savings goal for the Medicaid Redesign Team.
$203.21
— Average per diem Medicaid nursing home rate in 2007, which was 30 percent above the national average.
$6.7 billion
— Total amount spent on residential nursing home care in 2008.
$50,563
— Per Medicaid recipient spending in a nursing facility in 2008.
$100 million
— Annual savings from the proposed nursing home payment system.
$314 million
— Annual revenue reduction for facilities classified as 'losers' under the new payment system.
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 $2.9 billion savings target, the state should focus on rationalizing care for these high-cost populations while avoiding cuts to eligibility and benefits for healthy mothers and children.
Recommendations related to Medicaid Spending Growth
Rationalizing care for high-cost populations should be the primary source of Medicaid savings.
Cuts to eligibility and benefits for healthy mothers and their children should be avoided.
Key Data
$2.9 billion
— The Medicaid Redesign Team's target for savings.
72%
— The portion of Medicaid expenses that go toward services for the elderly or disabled.
24%
— The portion of Medicaid enrollees who are elderly or disabled.
$50,000
— The average cost per year for those in nursing homes.
New York's Medicaid program faces high and rapidly growing costs, with nearly three-quarters of spending driven by long-term care services for the elderly and disabled. To achieve savings, the state should implement strategies such as adjusting nursing home payment rates, tightening eligibility rules, and transitioning dual-eligible individuals into mandatory managed care.
Recommendations related to Medicaid Spending Growth
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.
The State should create more uniform and tougher rules and practices for determining long-term care eligibility, particularly with respect to “spousal refusal” and transfer of assets.
The State should reform authorization procedures to reduce the number of personal care hours provided to enrollees.
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 spending is the highest in the nation, costing $50 billion annually and exceeding the national per-capita average by more than double. To address this, the state must implement a multiyear plan to restructure the system, focusing on payment rates and service utilization to lower costs while maintaining care for the neediest residents.
Recommendations related to Medicaid Spending Growth
Gov.-elect Andrew Cuomo should move quickly to rein in the state's out-of-control Medicaid spending.
The state should address the number of people enrolled, payment rates to providers, and the extent to which services are utilized to contain Medicaid costs.
Gov. Cuomo should create a multiyear plan that restructures the system to provide better health-care outcomes and lower costs.
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.
Taxpayers should let their legislators know how they feel about paying for the most costly Medicaid system in the nation.
Key Data
$50 billion
— Annual cost of Medicaid in New York.
$2,283 vs. $1,026
— New York's per-capita Medicaid spending compared to the national average.
14 percent
— Portion of all national Medicaid spending that occurs in New York.
$12.5 billion
— Annual cost for long-term care services for the elderly and disabled.
76 percent
— Growth in per-recipient spending for certified home health agencies between 2003 and 2008.
72 percent
— Share of Medicaid dollars consumed by elderly or disabled enrollees.
New York's Medicaid program costs $50 billion annually, with the elderly and disabled accounting for 24 percent of enrollees but 72 percent of total spending. To achieve significant fiscal relief, the state must move beyond addressing fringe expenses like fraud and instead implement a multi-year plan to restructure long-term care and services for the elderly and disabled.
Recommendations related to Medicaid Spending Growth
Three factors drive Medicaid costs—enrollment, provider payment rates, and utilization—and these factors should be addressed in any cost containment proposals.
Rates and utilization—specifically in long-term care and other services for the elderly and disabled—should be the primary focus for future cost control initiatives.
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.
Policymakers should avoid proposals that address only the fringes of program expenses, such as fraud or the limited costs of healthy mothers and children, as they will not yield significant serious fiscal relief.
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.
$22,159
— New York's annual spending per elderly enrollee, compared to a national average of $12,499.
$28,223
— New York's annual spending per disabled enrollee, compared to a national average of $14,481.
$12.5 billion
— Total annual costs for long-term care services.
$63,467
— Per recipient cost for community rehabilitation services in calendar year 2008.
New York State's Medicaid program is the most expensive in the nation, with total spending reaching approximately $50 billion and projected to grow to $53 billion in fiscal year 2010-11. While the state has implemented cost-containment initiatives like the Preferred Drug Program and the Office of the Medicaid Inspector General, spending per enrollee remains significantly higher than the national average, particularly for elderly and disabled populations.
Key Data
$50 billion
— Current total Medicaid spending in New York State.
$53 billion
— Projected Medicaid spending in New York State for State Fiscal Year 2010-11.
$2,283
— New York State Medicaid spending per capita in Federal Fiscal Year 2007, which was more than twice the national average.
$8,450
— Amount New York spent per Medicaid enrollee in Federal Fiscal Year 2007, the second highest nationally.
$1.02 billion
— Annual reported cost savings (State share) achieved by the Office of the Medicaid Inspector General in State Fiscal Year 2009-10.
$468 million
— Total cost savings (State share) reported by the Office of the Medicaid Inspector General for the first quarter of calendar year 2010.
New York's Medicaid spending on the elderly and disabled, including nursing homes and in-home care, accounts for 72% of total program expenses and is nearly double the national average per enrollee. To address the state's multi-billion dollar budget gaps, greater fiscal discipline is required to curb these high costs and address the state's status as a spending outlier.
Recommendations related to Medicaid Spending Growth
The governor must take on entrenched interests to reduce spending in the three areas that absorb two-thirds of state revenue, including Medicaid.
New York must exercise greater fiscal discipline regarding Medicaid spending.
New York must stop being an off-the-charts spending outlier in the area of Medicaid.
Key Data
72%
— Spending on the elderly and disabled in New York, including the cost of nursing homes and in-home care, accounts for 72% of total Medicaid expenses.
New York's Medicaid program faces sustainability challenges due to loose eligibility policies for long-term care that allow well-off families to claim benefits. To address this, the state should restrict access to these benefits to ensure they are reserved for the truly needy.
Recommendations related to Medicaid Spending Growth
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
— Percentage of all elderly-services beneficiaries nationwide that are in New York.
7 percent
— New York's share of the national population in poverty.
The Governor'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. Without intervention, state spending on Medicaid was projected to increase by $1.6 billion, or 14.5 percent, necessitating structural spending reductions to achieve fiscal balance.
Recommendations related to Medicaid Spending Growth
The Legislature should seize the opportunity to move the State's finances toward structural balance by embracing the Governor's proposal for real and recurring spending reductions.
Key Data
$1.6 billion
— Projected increase in state operating funds dedicated to Medicaid without action.
14.5 percent
— Projected growth rate of state operating funds dedicated to Medicaid without action.
40 percent
— Share of State operating funds comprised by school aid and Medicaid combined.
New York's Medicaid spending per beneficiary is significantly higher than the national average, necessitating reforms to long-term care eligibility and utilization. Closing loopholes for asset transfers and controlling personal care services could generate substantial annual savings to align the program with national norms.
Recommendations related to Medicaid Spending Growth
Eligibility loopholes for long-term care that allow middle-class and wealthy New Yorkers to benefit from the program should be closed to ensure the program serves the neediest New Yorkers.
Tightening eligibility to individuals with homes worth less than $500,000 and applying the look-back period for asset transfers to eligibility for home care would save $400 million annually in Medicaid spending.
Controlling excessive utilization of personal care services and expanding managed care would save $600 million annually in Medicaid spending.
Key Data
69 percent
— Amount by which Medicaid spending per beneficiary in New York exceeds the national average.
$400 million
— Annual savings from tightening eligibility for home care and applying the look-back period for asset transfers.
$600 million
— Annual savings from controlling excessive utilization of personal care services and expanding managed care.
$1 billion
— Total annual savings from combined Medicaid reform efforts over the next few years.
New York's Medicaid nursing home payment system is outdated and inefficient, resulting in high costs that do not correlate with better quality of care. The state should transition to a standardized, performance-based payment system that links rates to national standards, adequate staffing levels, and measurable quality outcomes to achieve significant savings.
Recommendations related to Medicaid Spending Growth
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.
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.
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
$1.2 billion
— Estimated annual savings by changing the way the Medicaid program pays nursing homes.
$45 billion
— Projected cost of New York's Medicaid program in fiscal year 2008-09.
$7,910
— Annual spending per beneficiary in New York, which is the highest in the nation.
$187
— Average daily Medicaid payment to nursing homes in New York.
$130
— Average daily Medicaid payment to nursing homes for the rest of the nation.
4.1 hours
— Federally recommended minimum staffing requirement per patient day to ensure nursing home patient safety.
New York's Medicaid program is the most expensive in the nation, with per-enrollee costs 69 percent higher than the national average due to high provider rates and broad eligibility. To mitigate the fiscal strain 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 Spending Growth
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 significant savings.
The state should pursue structural changes to the Medicaid program to reduce ineffective services and lower the fiscal burden on local governments.
Key Data
$2.3 billion
— County Medicaid expenditures in 2003, which more than doubled from $1.1 billion in 1993.
69 percent
— The amount by which New York State's average Medicaid cost per person enrolled exceeds the national average.
$2 billion
— Potential state savings if New York reduced rates paid to hospitals and nursing homes, tightened eligibility, reduced home care usage, and utilized more managed care.
72 percent
— The growth in county Medicaid costs over the decade preceding 2005.
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 this, policy reforms such as eliminating long-term care eligibility loopholes and reducing non-competitive provider rates could generate over $5.8 billion in annual savings.
Recommendations related to Medicaid Spending Growth
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.
$4,487
— The national average Medicaid spending per beneficiary.
$5.8 billion
— Estimated annual savings from changing Medicaid policies.
$1.1 billion
— Savings to local governments from the 2005 Medicaid cap legislation.
$45 billion
— Total cost of New York's Medicaid program in the current fiscal year.
New York City's local share of Medicaid costs is projected to grow to $5.3 billion by fiscal year 2009, driven by state-mandated eligibility rules and inefficient service delivery. Implementing cost containment measures, such as limiting eligibility loopholes and increasing managed care participation, could save the city $454 million annually by 2009.
Recommendations related to Medicaid Spending Growth
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 advocate to pay only competitive costs to hospitals and nursing homes, as New York State currently pays significantly more than necessary.
The City should increase managed care participation, as it is a cost-effective arrangement that can provide better care for 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
— The local share of Medicaid costs for New York City in fiscal year 2005.
$5.3 billion
— The projected local share of Medicaid costs for New York City by fiscal year 2009.
13%
— The amount more than necessary that New York State pays to hospitals.
29%
— The amount more than necessary that New York State pays to nursing homes.
30 hours
— The average number of hours per week for home attendant services in New York State.
11 hours
— The average number of hours per week for home attendant services in the rest of the country.
New York's Medicaid program, which cost $36 billion in fiscal year 2003, has grown at an annual rate of over 9 percent, significantly outpacing total state spending growth. By tightening eligibility loopholes, aligning provider payment rates with competitive costs, and rationalizing service utilization, the state could reduce annual Medicaid expenditures by approximately $4.6 billion.
Recommendations related to Medicaid Spending Growth
State laws and county administrative practices have created large loopholes in Medicaid eligibility standards that enable many middle-class and wealthier individuals to qualify for Medicaid-financed long-term care; these eligibility rules should be tightened.
Limiting Medicaid provider payments to rates based on competitive costs would save about $2.5 billion annually; New York State should pay hospitals and nursing homes only for competitive costs.
Efforts should be made to build the capacity among managed care organizations to manage care for these groups effectively; New York should enroll about one-third of the elderly and disabled eligibles in a managed care plan.
Bringing use of personal care services more in line with national norms would save about $1.0 billion annually; New York should reduce the average number of hours of personal care authorized for clients.
The policy objective to which hospital leaders should adjust is a smaller role for New York hospitals in graduate medical education, rather than continued extra financial support in order to play the bigger educational role; New York should reduce its financial support for graduate medical education.
Key Data
$36 billion
— Total spending for Medicaid in New York in fiscal year 2003.
$7,646
— New York's annual cost per person enrolled in the Medicaid program.
$3,936
— The national average annual cost per person enrolled in Medicaid.
$4.6 billion
— The amount by which annual Medicaid expenditures could be lowered.
$608 million
— The annual savings from tightening eligibility rules for the elderly and disabled.
$2.5 billion
— The annual savings from limiting Medicaid provider payments to rates based on competitive costs.
New York State's health insurance subsidy programs, including Medicaid, suffer from fragmented administrative structures that increase costs and prevent eligible individuals from receiving coverage. To improve efficiency and reach, the state should implement an integrated eligibility system that consolidates application processes and utilizes a statewide master eligibility file.
Recommendations related to Medicaid Spending Growth
The Governor and Health Commissioner should pursue a two-stage strategy, starting with integrating eligibility determination for major health insurance programs into a new system independent of the current public assistance bureaucracy.
The State should define common information requirements across all health insurance programs to facilitate easier movement between programs when eligibility changes.
The State should standardize procedures relating to documentation requirements and recertification to reduce administrative burdens and inconsistencies.
The State should maintain a statewide master eligibility file for all programs to allow for seamless transitions between health insurance subsidies.
The State should establish multiple, common access points for eligibility and recertification with staff following uniform procedures across the state.
The State should integrate Food Stamp eligibility determination with health insurance program eligibility determination to improve administrative efficiency.
The State should test using school lunch program administrators as facilitated enrollers for health insurance programs to reach more eligible children.
The State should coordinate Earned Income Tax Credit benefit determination with health insurance subsidy eligibility determination to identify and expedite applications for likely eligible individuals.
Key Data
$21.2 billion
— Total annual Medicaid expenditures 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 administrative costs borne by the State and health plans for the Child Health Plus program.
573,000
— Number of public assistance recipients in New York City in 2000.
585,500
— Number of Medicaid-only recipients in New York City in 2000.
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