A real debate on Medicaid spending
Once again, New Yorkers are being treated to a public budget charade in Albany that will determine spending levels for Medicaid for the coming year. Elected officials refer to this as a health care policy discussion, which it is not. It is a money grab by a series of powerful industry players.
The crucial health policy issue which is never addressed is that only a fraction of Medicaid dollars goes directly to primary and preventive medical care where it is most needed.
The games began in January, with Gov. Hochul’s presentation of a $233 billion budget plan in which Medicaid is second only to education as the largest expense item. The governor’s modest proposal to constrain growth in Medicaid spending, was met with a multi-million-dollar advertising blitz by the hospital establishment and (most importantly and powerfully) the labor unions that represent the workforce of the state’s largest employment sector.
In March, the state Senate and Assembly released their counter budget proposals, both of which disdain any effort to rein in costs or introduce commonsense efficiencies into the Medicaid program. Instead, they propose multi-billion-dollar spending increases and suggest paying for them with a new tax that will be passed along to health care consumers and employers. Note that New York’s taxes on health insurers are already among the highest in the nation.
This debate might be worth taking seriously, as opposed to just an example of political muscle aimed at our pocketbooks, except for a few crucial facts.
First, New York State’s Medicaid program is currently $108 billion and spends more per capita than any other state. Yet our patient outcomes are no better than many states spending far less. The federal government pays 59% of this cost, with $35 billion paid by the state and $9 billion by localities. Medicaid spending will account for 27% of state operating funds in the next year, without the increases recommended by the Legislature.
Second, since 2022, state spending on Medicaid has increased 39%. Nearly 7.6 million New Yorkers, or 39% of the state population, are currently covered by Medicaid. Enrollment has increased by 1.6 million since March 2020.
Third, the pattern of expenditures is distorted with too little spent on primary and preventive care. The bulk of Medicaid dollars go to hospitals, including about $3 billion annually to keep failing institutions alive, and to home care which has become one of the state’s largest Medicaid expenses. New York’s per capita Medicaid spending on home care is more than double the national average.
Home care now accounts for about $16 billion in spending, more than half of which goes to a personal care program that allows Medicaid beneficiaries to hire friends or family as home health aides. Thanks to generous provisions of state law that allow households to place their homes and other assets in trusts for their children so they can qualify for Medicaid, New York accounts for about 44% of all personal home care spending in the entire country.
There should be a serious debate on how we spend our increasingly large Medicaid budget, but that debate has not and does not appear to be taking place. What we have instead is an extraordinarily expensive TV campaign aimed at forcing the Legislature to increase spending by 30% in the name of essential health care!
A serious debate would require a willingness of the health care network, trade associations, unions, and trial lawyers to change their focus from protecting their own interests and revenue streams and to advocate instead for the needs of customers.
It also requires building new delivery systems focused on preventive and primary care, integration of behavioral and medical care, and extending access and availability of health care into underserved areas both in poorer city districts and rural upstate communities. New models are also needed for training the workforce, and utilization of modern technology.
It would also allow us to focus on improving in-patient hospital care as opposed to politically driven efforts to preserve woefully incompetent institutions to protect jobs and the illusion of adequate service to low-income communities.
The debate in Albany is not a health care debate. It is a political exercise versus the governor’s effort at reform and improvement and trying to move the health care system to care for truly needy households as opposed to more wasteful spending by those who are gaming the system.
Berger was chairman of the state Commission on Health Care Facilities in the 21st Century, a member of the state Medicaid Redesign Task Force, and former chair of the state Department of Social Services.