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Gov. Andrew Cuomo on Tuesday proposed a $178.6 billion state budget for the upcoming fiscal year that seeks to close a $6.1 billion gap by curbing the growth of Medicaid and cutting state aid to local governments.

Exactly how Medicaid — the insurance option for low-income people — will change remains to be seen. The governor plans to reconvene a nine-year-old panel to examine New York’s Medicaid program, charging the members with finding $2.5 billion in savings before the new fiscal year begins April 1.

The panel needs to find “industry efficiencies or additional industry revenue,” as well as “root out” waste, fraud and abuse in the Medicaid system, Cuomo said.

His Medicaid Redesign Team’s actions should have “zero impact” on local governments or Medicaid beneficiaries, Cuomo said during his budgetary address.

Yet Cuomo’s proposing to reduce state spending to local governments by $1.8 billion. His budget team also revised projected tax revenue upward by $2 billion.

More details were slated to be released Tuesday night.

The governor’s budget office blames sharply rising Medicaid expenses on the ballooning cost of care, increased enrollment in long-term care for those who need intensive help, and the rise of the minimum wage. While Medicaid is a federal program, states pay half the bill.

Cuomo’s plan to address the growing Medicaid tab could come as a huge hit to local governments, which he is asking to shoulder more of the financial load.

Popping the Cap

In 2012, Cuomo and the state Legislature agreed to limit the contribution county governments made to Medicaid, in exchange for a property tax cap. New York City, while not subject to the property tax limits, also saw its Medicaid contributions capped.

That’s left the state to foot the bill for spending increases. This past year alone, the state paid $2 billion for New York City’s Medicaid bill

Now Cuomo — complaining of “blank check syndrome” — is demanding city and county governments share in the pain of rising expenses, in hopes of encouraging spending discipline.

City and county governments that keep their Medicaid cost growth under 3% a year will get a 25% bonus from the amount they save, under Cuomo’s proposal. But if local governments exceed the 3%, they’ll be on the hook to pay for the increase.

He pitched his proposal as giving local governments “skin in the game” as partners in cost-cutting.

Under the status quo, Cuomo said, “It doesn’t matter what they spend, their cost does not go up. It doesn’t matter what they save, they don’t get any savings. That never works.”

Mayor Bill de Blasio delivered his preliminary budget at City Hall, on Jan. 16, 2020. Credit: Ed Reed/Mayoral Photography Office

But local governments have little control over Medicaid costs, noted Andrew Rein, president of the Citizens Budget Commission. As Mayor Bill de Blasio said last week during his preliminary budget address: “Medicaid is a state-run program.”

“The City of New York and all localities act as enrollment agents, and we have important work to do in that, but we do not control how the Medicaid program is run, the ideas behind it, the standards — that is all set by the State of New York,” de Blasio said.

Assemblymember Richard Gottfried (D-Manhattan), the longtime head of the chamber’s health committee, told THE CITY last week that he didn’t understand the governor’s push to have localities shoulder some of the responsibility. He pointed out that only a “very small segment” of the Medicaid population is enrolled through local social services.

Painful Bite for NYC

Cuomo’s growth cap proposal could mean a hit of hundreds of millions of dollars to the city’s coffers.

New York City’s Medicaid costs grew 7% in 2019. Had Cuomo’s 3% cap growth cap been in place last year, the city would have been on the hook for $646 million, according to City Hall.

De Blasio, bracing for bad news from Albany, offered his own preliminary budget last week that offered no big ticket items because of the state budget deficit.

While details on how New York City will fare under Cuomo’s proposal remain scarce, City Hall is already pushing back.

“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. We’ll review the details once we have them, but we’re ready to fight to protect New Yorkers,” said de Blasio spokesperson Freddi Goldstein.

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