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State Medicaid proposals would be big financial hit to counties

Posted 10 March 2020 at 11:22 am

Press Release, New York State Association of Counties

A new report released by the New York State Association of Counties (NYSAC) projects state plans could squeeze local taxpayers out of between $150 million and $1.7 billion, at a time when costs are growing, and counties have limited ability to contain them.

“Instead of making local taxpayers pay for new Medicaid costs, state leaders should let the Medicaid Redesign Team II do its work and make cost containment reforms that don’t punish local taxpayers,” said NYSAC President John F. Marren. “We are asking state legislators to reject these budget proposals.”

If Part R of the Health and Mental Hygiene Article VII is passed, it will impact all New Yorkers and result in increased property taxes and cuts to services such as public health, veterans’ programs, road maintenance and repair, youth services, public libraries, Meals on Wheels and other senior services.

“We agree reforms need to be made in the Medicaid program to place it on a sustainable fiscal path, and we will remain a partner in that effort, but the current proposal charges counties with reigning in costs that we do not control. We will review the MRT proposals when they are released to gauge their impact at the local level,” said NYSAC Executive Director Stephen J. Acquario.

Counties have limited ability to contain Medicaid costs for the following reasons.

• The state directly enrolls and determines eligibility for about 60 percent of all Medicaid recipients today, and outside of New York City they enroll 2 out of every 3 recipients

• Counties do not control benefit design or eligibility income thresholds

• The state sets all reimbursement rates paid to health care providers

• The cost of prescription drugs, durable medical equipment and other major health care inputs are controlled by the state, or the marketplace

• Changing demographics are outside the control of counties including the aging, longevity and disability of the population

• Rates of illness are population and community-based and beyond the control of counties

• Minimum wage increases are set by the state

Adding to the pain, the governor’s proposal would penalize counties for any growth in Medicaid spending that exceeds the global Medicaid spending growth cap, which is currently set at 3 percent, based on the 10-year average growth in the medical care component of the consumer price index.

The proposed penalties are likely to ensnare counties in future years and drive up their Medicaid costs. Historically, Medicaid costs in New York state, the rest of the nation, and in counties around New York have grown more rapidly than the global growth cap. Projections of future Medicaid cost growth and of underlying drivers of that growth suggest that absent fundamental changes to the program itself, costs will grow more rapidly than the economy as well as the global growth cap.

(Editor’s Note: If counties have to assume the costs of Medicaid for any local increase by 1% more than the global cap, in Orleans County local taxpayers would have to pay $161,000 more in Medicaid. That’s for each percent beyond the cap. Click here to see the NYSAC report showing impact on the counties.)

The proposal contains three separate initiatives, referred to collectively as “Medicaid Local District Spending Reforms” that would impact the Medicaid local share county taxpayers pay in support of the state Medicaid program. The proposals would:

• Intercept the federal Medicaid funding to counties and transfer that funding to the state financial plan,

• Require counties to keep local Medicaid cost increases to no more than a “global Medicaid cap” now set at 3%, or the county will be penalized and required to pay the state for anything above that amount, and

• Require counties and NYC to adhere to the 2% Property Tax Cap or lose the Medicaid cap savings.

“There is a better way. Lawmakers need to remove Part R of the Health and Mental Hygiene Article VII, preserve the local Medicaid cap, and let the MRT II complete its cost containment work,” President Marren said.

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