New York county leaders slam Hochul’s Medicaid expansion plan

(The Center Square) — New York’s county leaders are pushing back against Gov. Kathy Hochul‘s plans to expand Medicaid coverage, saying it would shift more costs to local governments.

Under Hochul’s proposal, which was unveiled as part of her $227 billion state budget, the state would withhold an estimated $626 million in federal Medicaid dollars that counties would otherwise get over the next year. The move would shift some of that money to other areas of the budget,

But county leaders are blasting the plans saying it would conflict with federal law and force municipal governments to raise taxes to fill anticipated gaps in funding.

“Not only does this proposal harm New York’s local taxpayers, but it also subverts Congress’ intent for this funding to be shared with the local governments that contribute to the state’s Medicaid program,” Michael E. Zurlo, president of the New York State Association of Counties, said in testimony Wednesday to a legislative panel.

Zurlo said the move would end two decades of cost sharing between the state and county governments, pulling back federal money that helps counties to offset the cost of the safety-net health care program. He said New York counties contribute more than $7.6 billion a year to Medicaid costs, “more than all other counties in the nation combined.”

The impact of Hochul’s Medicaid proposal would cost county governments collectively more than $281 million, while New York City alone would lose $345 million, he said.

Stephen J. Acquario, NYSAC’s executive director, said New York’s “long history” of shifting more costs to local governments is at the root of the state’s affordability crisis. He said Hochul’s Medicaid spending plan would make the problem even worse.

“The last thing the state should do is burden local taxpayers with more costs that will drive up the cost of homeownership and rent, increase business expenses, and make New York more unaffordable,” Acquario said.

Last week, a bipartisan group of 19 county administrators wrote to Hochul warning about the impact on local governments and taxpayers, and urging her to back away from the plan.

“As a former county official, you can appreciate new costs imposed on local governments eventually come out of all New Yorkers’ pockets in the form of increased property taxes which make our state a less affordable place to live, work, or start a business,” they wrote.

Medicaid is a safety-net health plan targeting the poor and disabled and is jointly financed by the federal, state and local governments. In fiscal year 2023, the state’s total contribution was $31.5 billion, which outstripped spending on school aid and other budget expenditures. This year, New York expects its Medicaid rolls to swell to 8 million.

Hochul is proposing to increase overall Medicaid spending about 2% in fiscal year 2024, to $94.4 billion, according to her preliminary budget. The state’s costs for the health program would increase 7.7% under her proposal. Medicaid costs would account for about 15% of the total state budget proposed for fiscal year 2024, according to the spending plan.

New York received a 6.2% increase in federal Medicaid funds during the COVID-19 pandemic. But that will drop to 1.5% by the end of the year, as federal pandemic rules end.

Hochul’s budget calls for increasing Medicaid reimbursement rates for hospitals and nursing homes by 5%, which would cost the state an estimated $379 million in fiscal year 2024.

Bill Hammond, senior fellow for health policy with the Empire Center for Public Policy, said Hochul’s plan would release the brakes on Medicaid, “allowing state spending on the safety-net health plan to increase more than twice as fast as it typically did during the Cuomo administration.”

He said the costs are rising, in part, because of Hochul’s policies, including higher reimbursement fees for hospitals and nursing homes, more subsidies for financially struggling providers and wage hikes for home health aides.

“Previous governors have generally sought to keep a lid on Medicaid spending, especially early in their tenures, recognizing that uncontrolled growth would inevitably throw the state’s finances out of balance, especially during economic downturns,” Hammond wrote in a recent blog post.