February 4, 2020
Albany, NY

ICYMI: New York State Budget Director Robert Mujica's Op-Ed in the New York Daily News on Medicaid

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Today, the New York Daily News published a version of an op-ed by New York State Budget Director Robert Mujica on the State's plan to close a $4 billion gap in the budget caused by increases in Medicaid spending. The text of the op-ed that was published by the Daily News is available here.

 

Full text of the op-ed is available below:

 

Despite political chaos in Washington, government must still function. States in particular must step up and lead the way toward progress, despite the absence of assistance from the federal government.

 

New York State is the prime example: the federal government has increased New Yorkers' burden by capping the deductibility of state and local taxes, and has reduced housing and social services funding impacting millions of New Yorkers. In response, the state has redoubled its efforts to cut taxes and pass laws that ensure social progress for all.

 

Today, while the Trump administration fights to gut health care and dismantle the Affordable Care Act, in New York a remarkable 95% of our residents have health insurance.

 

It is an historic achievement that previous generations could only have dreamed of reaching. The greatest challenge in our state budget this year is in maintaining this success for the future of all New Yorkers.

 

To do that, we must close a $4 billion gap attributable to the recent exorbitant increases in the cost of Medicaid. 

 

Our budget can sustain reasonable inflationary growth in the Medicaid program (approximately 3%), but we cannot sustain 7% annual increases that result from an inefficient delivery system.

 

The increase in the growth of the Medicaid program coincides with the state's assumption of financial responsibility from local governments. For years, localities, who administer their respective Medicaid programs, were responsible for 25% of the cost. In 2015, to assist local governments who were living within a 2% property tax cap, the state assumed all future cost increases for the Medicaid program, including local governments' share. We made a deal: The state committed to paying all Medicaid spending growth for localities, more than $4.5 billion, and localities would control their property taxes. However, by absolving localities of financial responsibility over their Medicaid programs, we inadvertently absolved them of any incentive to control spending in their Medicaid programs. Local governments' "skin in the game" was removed. As a result, the program's rate of growth has skyrocketed. Governor Cuomo refers to the "blank check syndrome," pointing to the inarguable fact that financial responsibility equates to financial accountability.

 

We must slow the Medicaid program's rate of growth and vest local governments with financial accountability while the state continues to assume financial responsibility.

The budget proposes the state continue its financial responsibility while providing new incentives and disincentives for localities to control spending and property taxes. If a locality stays within the property tax cap rate, the state continues to pay the entire increase of Medicaid costs as long as it stays under 3%.  If the costs go above 3%, localities will be responsible for increases in excess of 3%.  Meanwhile, if the locality stays below 3%, it will share in 25% of the savings. However, if a municipality does not limit property tax growth to 2% they will be responsible for increases in Medicaid growth.

 

Some local governments claim they bear no responsibility in controlling their programs' growth. There is no doubt that a "blank check" Medicaid program is easier for the local government to manage. The same, however, is not true for the taxpayer.  They also say the administration of the program does not give them the ability to control costs.  That is simply not accurate.

 

Localities perform key administrative functions that critically impact the growth and cost of the Medicaid program. They determine financial eligibility and design and manage care programs for certain services.  These determinations require diligence to ascertain the individual's true income and assets, and that those assets are disclosed.

 

Localities determine if Medicaid recipients are better served by a nursing home or home health care. They determine the level of care required for those directed to home health care and how many hours and days per week they require that care. They then monitor costs to determine effectiveness and efficiency.

 

New York City's official website even states explicitly that their 1,800 Medicaid program staff will "determine your eligibility for long-term care Medicaid coverage, evaluate your medical needs, determine the appropriate care and develop a service plan if you are medically eligible."

 

We know local governments were integral in the management of their programs because in the 50 years prior to the state taking over local growth in Medicaid spending, local governments routinely came to the state with cost-saving suggestions. Without any financial incentive, local governments lost the initiative to police the program.

Our proposal simply returns localities to their monitoring role while continuing the state's responsibility for covering spending growth up to 3%.

 

The second element in the equation to reduce Medicaid cost increases is for the industry to identify savings. The hospitals, nursing homes, health plans, home care providers and health care employees understand that the current growth of the program is unsustainable and have agreed to partner with the state in its mission. We're convening a Medicaid Redesign Team to find efficiencies and reduce abusive practices.  And we know it will work, as we have previously employed the MRT model in 2011 with great success.  After our first MRT, the average annual increase in the non-federal share of New York City's Medicaid program was 2.1% for the following eight years -- well below our projected 3% increase.

 

Government, at all levels, bristles at cost restraints.  In every budget discussion, every local government and every special interest -- and even state agencies -- argue for the same thing: "more money."  However, New York's taxpayers, to whom we are all responsible, want more money in their pockets also.  It is our obligation to provide the necessary services in the most efficient way possible.

 

We're all working together towards the same goal: getting every New Yorker the health care they need. Now, we all need to work together to ensure that goal is viable for generations to come.

 

New York has always risen to whatever issues it faces boldly, creatively, progressively and responsibly.  We face a myriad of challenges this year - from climate change and public health crises, to a rise of discrimination and hatred - and together, we will overcome them and continue to show the country what competent, truly progressive government can achieve for the people.

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