New York's Health-Care Industry Awaits Cuomo's Budget-Deficit Fix
January 20 2020 - 9:29AM
Dow Jones News
By Jimmy Vielkind
ALBANY, N.Y. -- Officials representing New York's hospitals,
nursing homes, counties and insurance plans are bracing for
reductions to Medicaid funding as Gov. Andrew Cuomo proposes a new
state budget this week.
The Democratic governor will have to bridge a projected $6.1
billion deficit in a roughly $175 billion spending plan. About $4
billion of the shortfall comes from cost overruns in the state's
Medicaid program, which provides health-care services for more than
six million people. The current state budget expires March 31.
Different kinds of providers last week warned against cuts in
certain areas and offered ideas that they said would avoid service
disruptions and pain. The New York Health Plan Association, which
represents insurers, suggested the state re-examine several pools
of money that indirectly fund hospital operations.
Local 1199 of the Service Employees International Union -- which
represents workers in hospitals, nursing homes, and home health
care -- favors raising more revenue to offset potential cuts
through taxes or surcharges.
LeadingAge New York, which represents owners of nursing homes
and other senior care facilities, said the state should earmark a
share of new housing funding to build affordable units for
seniors.
"The strategy on long-term care has been cut, cut, cut, and not
strategic investments that will bend the overall cost curve," said
Ami Schnauber, LeadingAge's vice president for public policy and
advocacy.
A spokesman for the governor said details of his Medicaid plans
would be released Tuesday, and declined to elaborate. Melissa
DeRosa, a top aide to the governor, said this month that the state
would convene health-care stakeholders to help develop its Medicaid
plan.
During his State of the State address Jan. 8, Mr. Cuomo also
suggested he might require localities to bear more of the
burden.
The federal government pays for about half the cost of New
York's roughly $80 billion Medicaid program, the state splits the
remaining share with New York City and the other 57 counties.
Localities paid $7.6 billion in 2019, including $5.4 billion from
New York City, according to the New York State Association of
Counties.
The state capped the size of the local contributions, starting
in 2013. This is projected to add $1.3 billion in costs for the
state during the fiscal year that starts April 1. Mr. Cuomo said
the situation was "unsustainable" during his speech and later told
reporters that localities were "writing a check that we sign."
New York City Mayor Bill de Blasio and other county leaders said
they were concerned by the comments. Erie County Executive Mark
Poloncarz, a Democrat, said county budgets for 2020 were "locked
in," and changes could result in property tax increases.
Health insurance executives said they were concerned Mr. Cuomo
could increase taxes and fees levied on insurance plans, which are
often passed on to employers and individuals. In 2019, those
surcharges totaled more than $5 billion.
The Medicaid imbalance has been growing for more than a year. In
April 2019, Mr. Cuomo delayed a $1.7 billion required payment
across fiscal years. The maneuver allowed the last state fiscal
year to conclude in balance, but created a hole in the current
fiscal year.
To address this shortfall, the state Department of Health
ordered a 1% across-the-board reduction in Medicaid reimbursements
for providers that took effect Jan. 1. Bill Hammond, director of
health policy for the Empire Center, a fiscally conservative think
tank, said this would only yield about $248 million in annual
savings.
Mr. Hammond said Mr. Cuomo should focus on the long-term care
sector, which has seen explosive enrollment growth in recent years.
He said the state should deal with the imbalance by controlling
costs, not raising revenue.
"We're talking about slowing growth," Mr. Hammond said. "That is
absolutely reasonable, given the high rate of growth we've seen in
the last several years."
Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com
(END) Dow Jones Newswires
January 20, 2020 09:14 ET (14:14 GMT)
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