I used to write a lot about New York’s Medicaid program here (here are the Medicaid posts).
But then, just as a cap on growth of local government (New York City and counties outside NYC) Medicaid liabilities was created, I went to work for one of those counties. The county liability is now fixed by statutory formula. Thus, there wasn’t much of anything that could be done operationally at the local level. Indeed, the incentives reversed and it made more sense to shift county costs into Medicaid, which of course we did from time-to-time. So make your formula calculations, budget for it and otherwise spend time and energy elsewhere. Employee health benefit costs were growing faster anyway.
Well, a couple things have happened this year and the game has changed again.
First, the State finally decided to bring the rest of the Medicaid population into some form of capitated, case-managed care. When the State originally imposed mandatory managed care in the mid-1990′s, it exempted, the elderly, those needing long-term care, those with behavioral/mental health issues, and those with other disabilties, i.e., everyone who was sick, i.e., those who used the vast majority of services and accounted for the vast majority of expenses.
But this year, as part of the State budget process, New York decided it’s time for everyone to get into the case managed/managed care pool. They’re using lots of new names, lots of new program definitions and there are a lot of open issues, some of them pretty big, about how the transition is going to work, but clearly there’s a new direction. And the change of direction is a big one. There are many elements to these changes and I’ve had my doubts since the beginning about the aggressiveness of the schedule. (And that could become worse. The responsible Health Department offices are only partially staffed today and it’s entirely possible that they will lose more staff in layoffs.)
Second, the Legislature gave to the Commissioner of Health, what are referred to in Albany as “superpowers.” If the reforms do not lead to the targeted savings, the Commissioner, i.e., the Governor can do pretty much whatever’s necessary to reduce expenditures. In 30 years, I’ve never seen such a delegation of legislative authority to the executive, especially in health or Medicaid policymaking.
Third, for a couple reasons, the State began the planning to move the current administrative functions performed by local governments to itself. Many counties objected (ironic, huh?), but there are two sound reasons, namely that the State is increasingly the liable party, and second, because program and plan enrollment needs to be coordinated with health insurance exchanges required by the Affordable Care Act. We’ll return to that topic sometime.
Fourth, unrelated to Medicaid, the State imposed a cap on property tax growth for most local governments. Though there are technical elements and adjustments, generally the cap is about two percent per year. The cap can be exceeded but not with a simple majority vote of the county’s legislative body. Instead, additional process requirements are imposed and a 60 percent majority is required.
But in many counties two percent of the property tax levy is roughly equal to three percent of the base year Medicaid cost. Thus, the entire allowable growth allowed in property taxes will be eaten up by the State’s formula-driven Medicaid increase.
If I had to bet today, I would bet that many, perhaps a majority of counties, will submit budgets with property tax increases greater than two percent. They’ll go through the process and blame the State. But this time, their blame will be highly focused.
The county rebellion is already bubbling. Some county officials are talking about budgeting no increase in their Medicaid budgets and/or withholding payments. Some State Legislators are talking about taking over the Medicaid liability. That’s a good idea, but neither simple nor cheap ($7-8 billion). We’ve got some ideas on how to handle this, but will get to those later.
Clearly there’s more to come.
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