Our Medicaid fix makes sense
Despite political chaos in Washington, government must still function. States in particular must step up and make progress. For example, the federal government has increased New Yorkers’ burden by capping the deductibility of state and local taxes, and has reduced housing and social services funding. In response, the state has redoubled its efforts to cut taxes and pass laws that ensure social progress for all.
Today, while the Trump administration fights to gut health care and dismantle the Affordable Care Act, in New York 95% of residents have health insurance. It is an achievement that previous generations could only have dreamed of reaching. The greatest challenge in our state budget is in maintaining this success for the future.
Our budget can sustain reasonable, 3% Medicaid spending growth, but we cannot sustain 7% annual increases.
Recent increases in Medicaid spending coincide with the state’s assumption of financial responsibility from local governments.
For years, localities, who administer their respective Medicaid programs, were responsible for 25% of the cost. When we enacted the 2% property tax cap, we made a deal: The state committed to paying all Medicaid spending growth for localities, more than $4.5 billion, and the localities would control their property taxes.
However, by absolving localities of financial responsibility over their Medicaid programs, we inadvertently absolved them of the incentive to control spending. Gov. Cuomo refers to the “blank check syndrome,” pointing to the inarguable fact that financial responsibility equates to financial accountability.
The budget proposes the state continue its financial responsibility while providing new incentives and disincentives for localities to control spending and property taxes. If a locality stays within the property tax cap rate, the state continues to pay the entire increase of Medicaid costs as long as it stays under 3%. If the costs go above 3%, localities will be responsible for increases in excess of 3%. Meanwhile, if the locality stays below 3%, it will share in 25% of the savings.
(However, if a municipality does not limit property tax growth to 2%, they will be responsible for increases in Medicaid growth.)
Some local governments claim they bear no responsibility in controlling their programs’ growth. This is simply not accurate. Localities determine financial eligibility for Medicaid, which requires diligence to ascertain that assets have not been transferred or disclosed. They determine if Medicaid recipients are better served by a nursing home or home health care. They determine the level of care required for those directed to home health care. They then monitor costs to determine effectiveness and efficiency.
New York City’s official website even states explicitly that their 1,800 Medicaid program staff will “determine your eligibility for long-term care Medicaid coverage, evaluate your medical needs, determine the appropriate care and develop a service plan if you’re medically eligible.”
In the 50 years prior to the state taking over local Medicaid spending growth, localities routinely came to the state with cost-saving suggestions. Without any financial incentive, they no longer policed the program.
Our proposal simply returns localities to their monitoring role while continuing the state’s responsibility for covering spending growth up to 3%.
The second element in the equation to reduce Medicaid cost increases is for the industry to identify savings. We’re convening a Medicaid Redesign Team to find efficiencies and reduce abusive practices.
We know it will work. After our first MRT, the average annual increase in the non-federal share of New York City’s Medicaid program was 2.1% for the following eight years — well below our projected 3% increase.
In every budget discussion, local governments and special interests — and even state agencies — want more money. However, New York’s taxpayers, to whom we are all responsible, want more money in their pockets also. It is our obligation to provide necessary services efficiently.
We face myriad challenges this year — from climate change and public health, to a rise of discrimination and hatred — and together, we will overcome them and continue to show the country what competent, truly progressive government can achieve.
Mujica is Gov. Cuomo’s budget director.