Gov. Andrew Cuomo hinted he would try to limit local Medicaid spending during his State of the State Address earlier this month, saying county governments were all too eager to spend more because the state was paying for any increases. On Tuesday, Cuomo revealed how he intends to deter overspending: a 3% Medicaid spending cap.
“The Medicaid system has to be fiscally sustainable,” Cuomo said during his 2021 budget address in Albany. “If it is not fiscally sustainable then we accomplish nothing.”
New York state is facing a $6.1 billion budget gap due in large part to rising costs of Medicaid, the health insurance program for the poor, elderly and disabled that now covers about a third of the state’s residents.
Cuomo has partly blamed counties and New York City, saying they’ve overspent on Medicaid ever since the state began holding them harmless for any Medicaid cost increases in 2013.
The state has saved local governments $20 billion on Medicaid cost increases during that time.
“That’s the blank check syndrome,” Cuomo said Tuesday. “We are signing the check and they’re filling out the amount.”
Cuomo is proposing the state continue to pay for counties’ Medicaid increases, but only if the increase is 3% or less from the previous year. The county must also stay within the state’s longstanding 2% property tax cap.
If a county goes beyond either of those limits, they’ll be the hook for their entire Medicaid cost increase.
“Local governments have to have a financial stake in the game. We have to get those increases under control,” Cuomo said.
The Medicaid spending cap would also reward counties for reducing costs. If a county keeps its spending below 3%, the state will provide them with 25% of the savings.
“So they have a financial incentive and they have a financial disincentive,” Cuomo said.
The 3% spending cap could mean big changes for local counties.
Erie County’s Medicaid spending has increased by at least 5% each year from 2014 to 2018. Its Medicaid spending went from $1.79 billion to $2.38 billion during that time, according to data provided by the county.
Erie County Executive Mark Poloncarz said in a statement Tuesday evening he and other county executives are concerned by the proposal. Poloncarz said counties can’t do much to cut Medicaid costs since the state administers much of the program. He added that nearly 80,000 more Erie County residents get health insurance through Medicaid due to the Affordable Care Act.
“As such, we will be doing a further analysis of the budget proposal's impact to Erie County,” Poloncarz said in the statement.
Cuomo is also reintroducing the state’s Medicaid Redesign Team, which originally implemented the Medicaid hold harmless provision for counties in 2013. He’s tasked them with finding $2.5 billion in Medicaid savings before the April 1 budget deadline.
However Cuomo insisted the MRT’s changes will have “zero impact” on local governments and Medicaid beneficiaries
“You say deficit, and they say, ‘Oh, you're going to have to cut,’’ Cuomo said. “No, you're going to have to reduce the rate of growth. And that's exactly what we have done in this budget.”