A Band-Aid on Medicaid costs
Little more than a year ago, before COVID blew holes in the state budget, New York already had a $6 billion deficit to close. The biggest culprit last year, before the virus killed jobs and tax revenues, was larger than anticipated spending on Medicaid, which provides health insurance for low-income and disabled people. New York’s Medicaid spending has grown 26% since 2011, and will reach $80 billion next year, comprising one out of every three dollars in the budget. Since Gov. Cuomo took office, Medicaid enrollment has grown by 2 million to now include 6.9 million people, 35% of the state’s entire population.
It’s not that so many more people have gotten poorer, but that health care costs keep rising and Medicaid has become the default option for long term health care for chronic conditions, especially among older folks, leading families to “spend down” or transfer their assets to qualify. And so the more the population ages and needs services, the more who will sign up for Medicaid.
Neither private insurance nor Medicare, which the federal government pays for, cover the vast majority of long-term care services. Private long-term care plans exist but are exorbitantly expensive and rarely used. Only Medicaid, which states pay half of through income and property taxes, currently guarantees longterm care coverage, including nursing homes.
This year, after COVID attacked state budgets, President Biden’s American Rescue Plan sent out billions to 50 statehouses to fill gaps, and pledged to temporarily reimburse the lion’s share of the state-federal split costs of Medicaid. In New York, that will help paper over a problem, but only for a little while. In a few years, the $1.9 trillion rescue plan will run out, and New York and other states’ Medicaid bills for giving long term care to the growing elderly population will still be growing, putting ever more strain on income and property taxes that fund states’ budget coffers.
What we need is a federal fix, and a fair, well-considered way to pay for it.
Any suggestions?