New York State is facing a large hole for next year’s budget driven by escalating Medicaid costs.
Gov. Andrew Cuomo’s administration released a
The Division of Budget report said that a 2020 savings plan is being developed in an attempt to avoid piercing the Medicaid Global Cap and maintain a balanced general fund. Potential savings may include across-the-board reductions in rates paid to providers and health plans as well as reductions in discretionary payments with elements of the plan to be incorporated while crafting the 2021 budget proposal.
“When this administration implemented the Medicaid Global Cap in 2012 to rein in years of unsustainable spending, we curbed costs to meet it,” Freeman Klopott, a spokesman for New York State Division of the Budget, said in a statement Monday. “With increased utilization and medical inflation nationally creating a structural imbalance, the Division of the Budget and the Department of Health are once again developing a cost-curbing plan that will be described in the executive budget to be introduced in January and continue high-quality care for more than six million New Yorkers.”
An October analysis released by the Citizens Budget Commission fiscal watchdog group criticized New York State for being slow to respond with a plan to confront a growing Medicaid cost burden. The CBC report noted that New York has deferred Medicaid payments in recent years in order to remain within budgeted spending levels and that delay of $1.7 billion bill due in 2019 into the 2020 budget cycle has contributed to the state’s current predicament. A rising cost per Medicaid enrollee between 2016 and 2018 caused total spending to increase more than 25% in the past three years despite flat program enrollment, according to the CBC.
“The state’s plan to address the Medicaid-driven budget gap is one part gimmick and one part delay,” CBC president Andrew Rein said in a statement Friday. “Delays only serve to make the solution more painful.”
The Cuomo administration is forecasting budget gaps of $7.5 billion in 2020 and $8.5 billion in 2023. When excluding imbalances in the Medicaid Global Cap, the state projects shortfalls of $4.7 billion for 2022 and $5.5 billion in 2023.
The growth in budget gaps from Medicaid expenses is largely because ofincreases in the minimum wage for healthcare providers, according to the DOB. The state said minimum wage costs are entirely offset in the 2020 budget and partly offset in subsequent years by savings in other areas.
"The New York State FY 2020 Midyear Update recognized the enormity of the Medicaid-driven budget problem,” Rein said. “However, it failed to present the actions needed to address the State’s unbudgeted Medicaid spending.”
Cuomo is slated to introduce his executive budget proposal in early January.
The Empire State has general obligation bond ratings of Aa1 from Moody’s Investors Service and AA-plus by S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.
