News Coverage on Unfunded Mandates

The Empire

Upstate legislators eye major Medicaid reform, but NYC counterparts remain doubtful

Colby Hamilton
Friday, September 30, 2011


Medicaid costs New York a lot of money. The state spends more than $53 billion a year to care for 4.7 million low-income people. That represents about 40 percent of the state’s entire budget.

For years the state has made localities bare a portion of the financial burden of the program. In most cases the Federal government and the state split the cost of the program, 50-50. In New York, counties and cities have to pony up about 16 percent of the program’s cost.

The idea, initially, was that, since New York City was where most of the people in the program lived, suburban and rural counties didn’t want to have to foot the bill. But now these same areas are nearing a financial breaking point, partly because of mounting Medicaid costs.

Re-shifting Medicaid Responsibility

A group of state legislators wants to do something about it. Last week, State Senator Patrick Gallivan, a Republican from Erie County, held a press conference with colleagues from both the Senate and the State Assembly, to announce legislation that will gradually phase out the local sharing program, shifting the total cost of Medicaid back to the state.

“Upstate counties are in trouble because of property taxes, and the upstate mandate of paying a local share of Medicaid services,” Gallivan said. “Every single county, I would say this is their single-biggest consumer of county tax dollars.”

The plan would freeze costs at the local level this year and begin an eight-year, phased-in shift of the entire cost of Medicaid back to the state. If enacted, this year would see the state picking up $258 million in Medicaid costs, according to Gallivan. “When you put that against a $132 billion that’s really pennies to assume,” he said.

Gallivan said that through a trifecta of future cost reforms—a pre-existing 2016 takeover of the administration of Medicaid entirely by the state; savings from Governor Cuomo’s Medicaid redesign team, which Gallivan said could be in the billions; and last year’s major Federal healthcare reform—the state would find the money to offset the additional cost.

“The combination of all those things will actually be reforms and changes to the way the program is administered and delivered, [and] will help to provide the monies to pay for the state takeover,” Gallivan said.

NYC's Stake

While the proposed legislation’s roots are in helping upstate and suburban communities—as were are the roots of the state/locality copay in the first place—supporters of the bill say New York City should also get on board.

Westchester Democratic Assemblywoman Amy Paulin, who supports the measure in the Assembly, said the shifting political realities mean politicians outside of New York City are reevaluating a system originally designed for their benefit.

“Ironically, because of the fact that outside of the city money is raised by a regressive property tax, as opposed to an income tax which New York uses, and the increasing burden of peoples’ need to raise that money… the pressure to lower the property tax have brought the debate up in a different way,” Paulin said.

Now, she said, New York City has an opportunity to see billions in tax dollars freed up by this new legislation. Out of the initial money saved by localities, Paulin said New York City could see roughly half that money. “If the city is destined to save approximately half of $258 million, I have to believe they’re going to think highly of that,” she said.

The assemblywoman said she had had informal discussions with “high-level people” in city government and the idea had been well received. “They think it’s great,” she said. Mayor Bloomberg’s office confirmed that supporters of the bill had reached out to the mayor, who was reviewing the legislation.

Big Savings, Big Concerns

Given the city’s recent shortfalls, there are many reasons Mayor Bloomberg might support the shift—6.3 billion of them, in fact. According to Doug Turetsky, the spokesperson for New York City’s Independent Budget Office, the city spends that much yearly on Medicaid. While his office isn’t advocating for or against such a measure, he noted that the savings could have a transformational effect on the city budget.

“Any money that the city would save from not having to pay the share required...means money potential available for other city needs," Turetsky said, noting that the city is anticipating budget shortfalls approaching $5 billion in the coming years. “At the local level, it would be a boon to the city to be relieved of this burden.”

But in conversations with New York City legislators and policy analysts, major doubts were expressed about the ability to pay for the transition through reforms alone. Likewise, with the state taking on the full burden of Medicaid, concerns were raised about potential tradeoff cuts in areas like education, which would simply shift the financial burden on the city from one obligation to another.

Manhattan Democratic Assemblyman Richard Gottfried, who sits on Governor Cuomo’s Medicaid Redesign Team, said he agreed with the concept of the bill.

“I think it makes sense in the long term. It’s a sensible policy for Medicaid to be entirely Federally and state funded without a local share," Gottfried said, who said the state had already worked to reduce the Medicaid burden on localities through the tax cap and other measures. But he was skeptical about the assumed savings that would pay for the bill.

“In coming budgets, if indeed the state burden of paying for Medicaid diminishes as a result of the Affordable Care Act, it might well be doable to pick up some of the local share," Gottfried said. “But that would be something we wouldn't really know for some time."

Other of Gottfried’s legislative colleagues in the city also sounded leery about the proposed change. On the one hand there is the continued uncertainty about the cost savings—“If the state has to pick up the share that means there'll be less aid given to localities ranging from education to roads,” said Manhattan Democratic State Senator Thomas Duane—and on the other hand the more complicated issue of care quality and coverage.

“In short, sometimes people believe shifting the burden of the cost is solving the problem,” said Brooklyn Democratic Assemblyman Karim Camara, who chairs the state’s bicameral Black, Puerto Rican, Hispanic & Asian Legislative Caucus. “Our concern is that we want to make sure that in reducing the responsibility of the mandate on localities that there is still adequate health care for the people that need it the most.”




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