Hospital groups and health equity advocates are celebrating now that the upcoming state budget does not include the broad cuts to health care spending initially proposed by Governor Andrew Cuomo. Those changes would have disproportionately impacted safety-net hospitals, which serve communities that were hardest hit by COVID-19.
When Cuomo released his executive budget in January, he anticipated a $15 billion shortfall over the next two years. He sought to fill part of the gap by slashing about $600 million in health care spending. His proposals included a 1% reduction in Medicaid rates and cuts to state subsidies for already-struggling safety-net hospitals that serve low-income New Yorkers.
Some losses would have disproportionately impacted New York City health care providers. One provision sought to push public medical centers—including those in the NYC Health + Hospitals system—out of the Indigent Care Pool, a fund that reimburses them for services provided to people who can’t pay.
But legislators and health care lobbyists pushed back, and simultaneously, the state’s revenue outlook improved, thanks in part to $12.6 billion in federal relief in the latest COVID-19 stimulus bill.
“For us, it’s more than a relief,” said Anthony Feliciano, director of the Commission on the Public’s Health System, which advocates for health care access in New York City. “The concern we were having is that the very same communities relying on safety nets during this pandemic would have a much worse recovery if we had these cuts go through.”
This is one of many victories progressives have claimed in the $212 billion budget for fiscal year 2022. It was passed Wednesday, a week after the April 1st deadline.
The budget also includes a $420 million boost in spending on the Essential Plan. The plan will no longer collect monthly premiums from members who are low-income New Yorkers that either make slightly too much to qualify for Medicaid or can’t enroll because they’re undocumented. The Essential Plan has seen an 11% increase in enrollment during the pandemic, to about 885,000 beneficiaries.
“This was not the outcome we expected several months ago when state revenues were dropping, and there was little hope for federal funding for state budgets,” Kenneth Raske, president of the Greater New York Hospital Association, said in a statement. “However, through our collective advocacy and the strong support of U.S. Senate Majority Leader Charles Schumer, the federal government provided billions of dollars in relief to New York State.”
Some advocates are still lamenting that the legislature resisted calls to abolish the Medicaid Global Cap. Cuomo implemented this limit on Medicaid’s growth early in his tenure to keep the program’s costs in check. The overall Medicaid budget for fiscal year 2022 is $82.9 billion, with the state paying $27.6 billion. That’s a smaller share than usual because, during the pandemic, the federal government has enhanced the rates at which it matches state contributions to Medicaid.
Higher enrollment has contributed to the ever-rising cost of this health care program. Medicaid covered more than 6 million New York state residents before the pandemic and has since added about half a million people.
“The cap has perpetuated the notion that Medicaid growth is a problem that requires austerity, when in fact, a strong Medicaid program is a solution that allows people to have access to health care,” Lara Kassel, coalition coordinator for Medicaid Matters New York, said in a statement on the budget. “Investment in Medicaid is an investment in the one in three New Yorkers who rely on the program for their health and wellbeing.”
In recent years, the state has approved some Medicaid costs outside of the cap and made other maneuvers that gave the impression that spending grew at a slower rate than it actually did. This has raised concerns about the cap’s effectiveness among fiscal watchdogs, such as Bill Hammond at the Empire Center.
However, the state Department of Health argues that the Medicaid cap helps to limit waste, while still allowing for program enhancements. "It is undeniable the global Medicaid spending cap has contained Medicaid costs by helping identify areas of excessive spending while providing for investments that improve care for those who need it most,” a DOH spokesperson said in a statement. “Under the cap, New York achieved health insurance coverage for 95% of New Yorkers, and this extension will enable further improvements and oversight of state Medicaid expenditures."
Health care groups are still pushing for higher Medicaid rates rather than simply avoiding cuts. Health care providers are also calling for increased payments for telehealth services, which have grown in popularity during the COVID-19 lockdowns. This measure was left out of the budget.
Health equity advocates were among the coalition who pushed for higher taxes on wealthy New Yorkers to fund things like health care, education, and aid for undocumented New Yorkers who did not qualify for unemployment or other forms of COVID-19 relief. Cuomo resisted the call throughout the budget process but ultimately acceded to raising the personal income tax rate for anyone who makes more than $1 million per year.
“Now that we’ve got the taxation, we still have to fight to make sure this funding is distributed properly,” said Feliciano.