Cuomo calls for changes in NY’s “unsustainable” Medicaid system

Gov. Andrew Cuomo sounded the alarm about New York’s growing Medicaid costs in his State of the State speech on Wednesday, forecasting a major political challenge ahead as his administration and state lawmakers seek to close a $6 billion deficit in the next three months.

And the third-term Democrat tethered county governments and their taxpayers to that difficult task by invoking the state’s cap on county Medicaid costs and how much that has saved them. He cast those frozen county shares as as a rising cost burden that the state is shouldering for them, amounting to $4 billion in all this year.

“We are paying $177 million on behalf of Erie, $175 million on behalf of Westchester, $2 billion on behalf of New York City to cover their local costs,” Cuomo said.

So did he mean he will propose lifting the county Medicaid caps in his budget proposal this month? Cuomo didn’t say that, although he did suggest that part of the problem lies in counties administering Medicaid but no longer paying cost increases. He called that situation “unsustainable” and in need of program restructuring.

“You cannot separate administration from accountability,” Cuomo said. “It is too easy to write the check when you don’t sign it.”

Stephen Acquario, executive director of the New York State Association of Counties, said the following day that he interpreted Cuomo’s remarks as an overture to county governments to help the administration reduce Medicaid spending, and not as a warning that he will propose lifting the local caps.

He said the counties are prepared to do so, in part by strengthening efforts to root out waste, fraud and abuse in the giant and costly Medicaid system.

“I think we could help insure the integrity of the program,” Acquario said.

Preserving the local spending freeze is vital for counties, which have little margin for spending increases under the state’s property-tax cap and will already be three months into their 2020 budgets when the state will adopt its own budget – with any Medicaid cuts – by April 1.

Counties have been spared the full brunt of Medicaid’s rising cost since 2005, when the state initially limited their annual increases to 3 percent. It went further in 2014 by freezing the counties’ shares altogether. According to Acquario, the cumulative savings for Orange County – which has a capped Medicaid expense of $73 million per year – has been $90 million over that 15-year span. Acquario said Ulster County spends $32 million a year and has saved $42 million since 2005 because of the cap, while Sullivan County pays $21 million and has saved $22 million.

But if Cuomo was suggesting the state take over the administration of Medicaid, Acquario noted it already has done that to a large extent under a policy adopted in 2013 and phased in over five years. He estimated the counties currently administer only about 25 percent of Medicaid cases – generally the more complex situations that can’t be handled by the state’s automated system for determining eligibility.

Acquario said county officials have every interest in working with the state to bring down Medicaid costs – and preserve the freeze on local contributions.

“We can’t afford for this to fail,” he said.

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