New York City worries that state Medicaid spending curb amounts to cut

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While New York City officials are sifting through the nuances of Gov. Andrew Cuomo's plan to curb Medicaid costs, City Hall insists that Cuomo's spending-control emphasis is a de facto cut.

The governor, in his budget message on Tuesday, said local governments must stay within the 2% property tax cap and limit Medicaid increases to 3%. "We can manage 3% growth," he said of the health insurance program for poor and disabled people.

Mayor Bill de Blasio's administration warned at his own budget briefing last week that cuts could jeopardize the city's public hospital operations.


"We'll review the details once we have them, but we're ready to fight to protect New Yorkers," de Blasio press secretary Freddi Goldstein said Tuesday. "Whether it's moms turning to our public hospitals for life-saving breast cancer screenings or first graders learning to read in our public schools, New Yorkers should not be held responsible for the state's Medicaid gap."

Cuomo released his $178 billion fiscal 2021 budget proposal as the state faces a $6.1 billion shortfall tied largely to a $4 billion increase in Medicaid costs. The city receives about $2 billion from the state annually in Medicaid reimbursement.

In a carrot-and-stick move, the governor said a locality that exceeds cost limits will be liable for its Medicaid cost hike. By contrast, the state would reimburse one-fourth of containment below 3%.

“Local governments have to have a financial stake in the game. We have to get those increases under control,” Cuomo said.

The Medicaid spending cap would also reward counties for reducing costs. If a county keeps its spending below 3%, the state will provide it with 25% of the savings.

"It is real," said Andrew Rein, president of the watchdog Citizens Budget Commission. "Anyone who thinks we're going to skate over this is living in an illusionary land."

City Hall maintains that capping growth at 3% and shifting anything more to localities amounts to imposing a cut. Growth in the state's Medicaid costs in the city in 2019 was 7%. Had the 3% growth cap had been in place last year, the city would have been on the hook for $646 million.

De Blasio officials cited data that say while total enrollment is essentially flat, a shift in growth the past five years is skewed toward other parts of the state.

The situation in Albany is getting tougher for the city, the mayor said last week. He also cited uncertainty about federal aid. "Those are the kinds of things that are coming together to create an unusual level of uncertainty that we're doing our best to address in this preliminary budget."

Cuomo also said a state task force could help save at least $2.5 billion in annual Medicaid spending by identifying waste and fraud. Northwell Health chief executive Michael Dowling and former healthcare labor leader Dennis Rivera will lead the co-called Medicaid Redesign Team II. Cuomo said it would build on an earlier initiative that has helped save taxpayers $19 billion statewide.

According to the governor, the city and upstate counties have overspent since the state began absorbing Medicaid cost hikes in 2013.

"That's the blank-check syndrome," Cuomo said.

The state must approve its budget by April 1.

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