Third term Medicaid blues, redux

ALBANY — Another third-term governor, another Medicaid-linked budget gap.

New York State is set to begin the upcoming fiscal year with an estimated $6 billion budget deficit, according to Gov. Andrew M. Cuomo. 

Much of the problem has been attributed to Medicaid. Costs and enrollment have risen but that’s not the only factor. Cuomo, during his 2018 campaign for a third term, increased Medicaid reimbursement rates for hospitals and nursing homes.

Further, Cuomo and state legislators took action last March to delay about $1.7 billion in Medicaid payments. By pushing the payments past the April 1 start of the state’s 2019-20 fiscal year, they adhered to the cap, while shoving the problem off to the coming year.

Now, the Cuomo administration says it likely will continue to delay and roll over Medicaid payments, and is promising to unveil a “cost-curbing” plan in January to deal with the rest of the shortfall.

Back in 2002, a governor trying for a third term worked to boost health care spending. Republican George Pataki and state lawmakers approved a spending plan that significantly increased pay for members of SEIU/1199, the politically influential health care workers’ union. SEIU later endorsed Pataki, helping him win reelection.

But in 2003, facing a sluggish economy, Pataki proposed big reductions to Medicaid and other state health programs. That sparked a huge political fight; the legislature, emboldened by support from the union and hospitals, ultimately increased state spending by overriding hundreds of gubernatorial vetoes. 

CALCULATING THE GAP

The $6.1 billion deficitin the new fiscal year is a projection based on the state continuing current spending trends and promises made in the 2019-20 budget. Those include increases in debt payments and state employees' salaries and benefits, and a $1 billion hike in education spending. 

The actual number could be lower and there is precedent for it changing. In 2011, Cuomo said the state was facing a $10 billion deficit based on spending trends. He later recalculated that to make it $1 billion, based on actual year-to-year spending. 

If the state increased spending by about the 2 percent inflation rate, rather than maintaining the projected spending levels, the deficit wouldn't be $6 billion but closer to $2 billion, the Citizens Budget Commission says.

REVENUE RAISERS

Even with the massive deficit, Assembly Speaker Carl Heastie (D-Bronx) has said his house won't favor spending cuts, especially in health care.

“No one is going to want to see their health care to be cut. I think that’s one of life’s guarantees," Heastie said recently.

The Assembly's stance could boost the prospects of several revenue initiatives that died in the 2019 legislative session, observers say. Those include expanding sports gambling, taxing condominium and co-op apartments used as secondary residences in Manhattan, and legalizing recreational marijuana. 

Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers) has said even if marijuana is legalized in 2020, the state won't see any of the revenue immediately. She said her house is cool to the idea of raising taxes.