Shift Medicaid burden away from counties to Albany

Nobody does Medicaid like New York. We spend twice as much per person as other states, and we make our counties pay a much greater proportion of the costs.

Those two facts are surely related. That's why it's time to lift the Medicaid burden from Nassau, Suffolk and all the other counties in the state, shifting it to Albany where it belongs.

A recent report from the nonprofit Citizens Budget Commission makes this very point. Although Albany has taken steps in recent years both to curtail the county share and the overall growth of Medicaid, it's still a budget-buster. Medicaid administration is already being shifted to Albany; shifting the expense as well makes sense, and would increase pressure on lawmakers to devise ways to control costs.

Why should this matter to the average taxpayer? After all, New Yorkers pay one way or another, no matter which level of government writes the check. Actually, there are several reasons to care. First, at roughly $53 billion a year, Medicaid spending in New York is unaffordable -- in significant part because, per beneficiary, it spends twice the national average on the elderly and disabled. One factor driving costs skyward is that, in a typical year, Uncle Sam pays half the bill while the counties pay another 16 percent. So for every Medicaid dollar Albany doles out, it only has to come up with around 33 cents.

Spending other people's money is just too easy; shifting the county share to Albany would impose the pain on those in a position to cut or restrain Medicaid spending, which is off the charts compared with other states. Albany also needs to work for a reallocation of federal Medicaid funds, since the current formula gives New York the lowest possible reimbursement level.

Another reason for the state to take over Medicaid is that counties get most of their revenue from sales and property taxes, which fall harder on less affluent residents. Sticking Albany with the Medicaid tab would mean potentially spreading the cost over a wider tax base, including a state income tax that is more progressive than it looks. Also, property tax hikes are capped at 2 percent a year while county Medicaid increases are capped at 3 percent -- an unsustainable mismatch.

At around $7 billion in fiscal 2012, the county Medicaid burden is perhaps the mother of all unfunded mandates. But shifting it to Albany is far from a free lunch. On the contrary, New York City, with its many poor people, and rural upstate counties would probably gain most from such a change, while Long Islanders -- in particular those from Nassau County -- would send more money to the capital for Medicaid than they spend for it now. But the burden would probably be more equitably distributed, even within Nassau and Suffolk, and both governments would get desperately needed budget relief.

The CBC report suggests making the shift gradually, over several years, as is being done to shift Medicaid administration from the counties to Albany. The cost shift might be accomplished as a part of a grand bargain that lowers county taxes while some state taxes rise. That would be a good deal for all New Yorkers.