Why New York Should Repeal the Medicaid Spending Cap
New York’s Medicaid spending cap has been in place since 2011. It was presented as a mechanism to limit growth in Medicaid spending and instill discipline in Medicaid budgeting. The cap was set at an arbitrary, fixed moment in time and not designed to keep pace with program growth. The 2021-22 Executive budget would extend the cap for an additional two years.
Why the cap should be repealed
- The cap is not designed to be responsive to increases in the number of people covered by the program or the cost of health care services.
- The cap was set arbitrarily and has not been adjusted to account for growth in the program. A certain amount of growth should be expected and predictable, for example, to accommodate an aging population that will turn to Medicaid to cover long-term services and supports, particularly in home- and community-based settings.
- Due to the economic downturn and job loss associated with the pandemic, over 700,000 new enrollees turned to Medicaid between March and November of 2020. This demonstrates the benefit of Medicaid being responsive and flexible, assuring that people did not lose access to health care when they lost employer-based health insurance. That is exactly how Medicaid should respond to economic downturns.
- The cap provides a platform for the Executive to frame Medicaid growth as a problem that requires austerity, when in fact, a strong Medicaid program provides a system that allows people to have access to health care when they need it.
- The statute that created the cap grants authority to the Division of the Budget to unilaterally cut the Medicaid budget mid-year to keep spending under the cap. The Legislature has no oversight over those cuts.
- Significant sums of public funds have been distributed outside the annual budget process at the Governor’s discretion and determined to be ‘cap neutral,’ without explanation, to justify the expenditures.
- State Medicaid spending draws a federal match; it is the State’s largest source of federal funding. By capping state spending, the global cap also effectively caps the amount of federal funding the state can receive for its Medicaid program, which is illogical during a health and financial crisis.
- Medicaid cuts that the Executive claims essential for remaining under the cap disproportionately impact:
- People with disabilities and seniors reliant on community-based services and supports;
- Safety-net hospitals and community-based providers, like community health centers providing primary care and community mental health centers; and
- Historically under-resourced communities of color.
- It has been argued that if the cap were repealed, an alternate fiscal mechanism would be necessary to provide structure and discipline in Medicaid budgeting. No alternative is necessary. The Medicaid budget would once again be negotiated and enacted through the annual budget process set forth by the State Constitution.
Between March and November 2020, over 700,000 new enrollees turned to Medicaid for health coverage due to the economic downturn associated with the Coronavirus pandemic. A new publication by Medicaid Matters demonstrates that Medicaid did what it was intended to do and served as the social safety net people needed when they lost employer-based coverage and/or their income.
The new publication includes the voice of Jacqueline Rodriguez of New York City who relies on Medicaid for her two children who have hemophilia.
The new publication is available here.
2021-22 Budget Issues
Subject to updates as we learn more about the budget and the budget process unfolds.
Medicaid Matters believes New York needs a Medicaid program that delivers quality health care and services to all who need them. The COVID-19 pandemic has shown us the value of a robust health care system. While not perfect and gaps remain, New York Medicaid has a long history of providing care that meets people where they are. Now more than ever we need investment in Medicaid to deliver on that promise and ensure all New Yorkers are able to be part of building a better future for our state.
This year’s proposed budget does not include cuts that would directly impact on access to services, as we have seen in previous years. However, the budget fails to invest in the Medicaid program in ways that would promote access to needed services and help the entire system reach greater equity. To do that, we need bold action to enact progressive tax reform and invest new revenue in ways that help New York build on its history of providing a Medicaid program that meets people where they are, supports community-based services, protects safety-net providers, and promotes health equity.
Repeal the Medicaid global spending cap
The budget proposal includes an extension of the global cap for an additional two years. The global cap was arbitrarily set under the guise of the need for discipline in the way we spend money on Medicaid. It was not designed to allow the program to grow and respond to the needs of New Yorkers. Governor Cuomo has played shell games in Medicaid, using the global cap as an excuse to maintain austerity. We need a budget based in reality and focused on delivering care and services people need, not arbitrary numbers that turn people into dollar signs.
Promote community-based services and supports by funding workforce
Previous enacted budgets made deep cuts to Managed Long Term Care (MLTC) in ways that will restrict access to services. This year’s budget do not propose any similar cuts. However, it makes no investment in community-based long term services and supports. In fact, it makes additional cuts to home care workforce recruitment and retention funding at a time when more home care aides and attendants are needed than ever before. The budget must promote community-based services by adequately the home care workforce to provide for people’s needs.
Protect adult home residents
Adult homes are congregate facilities for people with mental health issues, many of whom also have a variety of physical health needs. Adult home residents rely on outside advocacy, as well as funding that meets their everyday needs outside of what the facilities provide. The Governor’s budget zeroes out funding for the Adult Home Advocacy Project, which supports four independent advocacy organizations who represent adult home residents. The budget also cuts Enhancing Quality of Adult Living (EQUAL) funding, which is grant funding to improve quality of life for adult home residents. This funding must be restored.
Expand coverage for immigrants
The proposed budget does nothing to advance access to coverage for immigrants who are currently ineligible. Medicaid Matters supports the Coverage4All campaign, calling for access to affordable health coverage for all New Yorkers, regardless of immigration status. Short of that, this year’s budget should include $13 million to provide temporary Essential Plan coverage for people with incomes up to 200% of the federal poverty level who have had COVID-19 and are excluded from existing coverage programs because of their immigration status.
Protect safety-net providers
The proposed budget includes hospital cuts that would severely impact safety-net facilities. These are hospitals that serve a large number of people covered by Medicaid and people who are uninsured. To protect these hospitals, the enacted budget must:
- Reject the proposal to eliminate the state share of the Indigent Care Pool fund (which assumes the local share would kick in to cover the cost); and
- Add language to exclude hospitals that meet the statutory definition of “enhanced safety net” facilities from the 1% across-the-board reimbursement cut.
The moving of the Medicaid pharmacy benefit from managed care to fee-for-service (referred to as a managed care “carve-out” and enacted in the 2020-21 budget) eliminated the ability of safety-net providers to take advantage of the federal 340B prescription drug savings program. This is a significant loss of funding to community health centers and other safety-net providers. This year’s proposed budget provides $102 million to back-fill this funding, which is far from the total loss. The budget must include a delay in the pharmacy carve-out for providers that rely on 340B funding.
Strengthen the Essential Plan
We applaud the Governor’s proposal to eliminate premiums for people enrolled in “EP1,” Essential Plan coverage for people with income 150-200% of the federal poverty level. This will encourage enrollment for an estimated 100,000 people who are eligible, but for whom the $20 monthly premium was a barrier to enrollment.
Fully fund consumer assistance
The Community Health Advocates program (CHA) and Community Health Access to Addiction and Mental Healthcare Project (CHAMP) provide post-enrollment assistance statewide. The budget fully funds CHAMP and maintains level funding for CHA. Legislative adds would provide the total CHA funding at $3.9 million.
Restore prescriber prevails
The budget once again proposes to eliminate “prescriber prevails.” This requirement dictates that the prescriber of a medication has the final word in any disputes over the filling of a prescription. Medicaid Matters opposes this change and urges a restoration.
A PDF of our budget issues can be found here.
To reach greater equity and protect the Medicaid safety net and the people who rely on it, New York State must:
- Keep Medicaid budgeting within the process set in the State Constitution to allow for full legislative and public discourse; if stakeholder bodies are seated to make recommendations on Medicaid, it is incumbent on the state to ensure substantial representation of people who are served by the Medicaid program;
- Eliminate the Medicaid global spending cap in favor of adopting a Medicaid budget that realistically spends what is necessary to provide the program New Yorkers need;
- Avoid across-the-board cuts (should cuts become necessary) as they disproportionately decimate programs, services, and community-based providers that low-income communities and communities of color rely on;
- Streamline and simplify Medicaid eligibility and enrollment policy and procedures to ensure people entitled to coverage and current enrollees obtain and retain Medicaid coverage as easily as possible; retain simplified procedures put in place during the economic downturn caused by the COVID-19 pandemic;
- Protect and enhance the ability of people to obtain and retain home- and community-based long-term services and supports, which provide for higher satisfaction, lower cost, and abide by the right to live in the most-integrated setting;
- Enhance data collection and reporting to drill further down and capture the reality of what is happening in marginalized communities, and disaggregate data;
- Execute health equity assessments on proposed budget initiatives and policy changes to demonstrate how specific proposals would impact on communities of color;
- Ensure access to meaningful care coordination and needed services for all managed care enrollees; promote greater consumer input by enhancing existing satisfaction surveys and providing other opportunities for engagement; strengthen oversight of managed care organizations and revisit ways they should be held accountable for consumer experience, positive health outcomes, and overall well-being;
- Instill greater transparency in all Medicaid spending to increase accountability and ensure public funds are spent as they are intended and in ways that serve low-income New Yorkers;
- Enhance oversight of state contracts with large companies that do the work of administering the Medicaid program; impose restrictions on their ability to cut corners;
- Invest in and ease access to programs and services that address social determinants of health, such as food insecurity, access to child care, housing, and more.
The intent of the Medicaid program is to provide coverage and access to low-income people and people with disabilities. New York’s comprehensive and inclusive Medicaid program makes health care more affordable, enabling families and individuals to meet their health care needs and improve their quality of life. It also provides access to long-term services and supports, promoting independence and dignity for people with disabilities and older adults.
The Medicaid program has played a critical role as New Yorkers face the Coronavirus pandemic. Medicaid enrollment has grown by hundreds of thousands of people, providing vital health insurance coverage when people across the state lost their jobs and struggled to make ends meet. Medicaid has remained a lifeline to health care and other needed services as the pandemic surged to disastrous proportions in New York. Unfortunately, the austerity agenda set forth by the administration has resulted in decisions to contain cost in areas that directly impact on access to human services and various non-Medicaid services.
The pandemic has brought back to light the structural racism and oppression that perpetuates poor health for people who, by no fault of their own, are more exposed and less protected from the virus. This susceptibility is directly related to numerous factors, including living conditions, income inequality, and lack of access to quality care and services. Thanks to Medicaid, however, many New Yorkers have been able to access health care at a time when they need it most.
The COVID-19 public health crisis and associated economic downturn present us with an opportunity to do better. Investing in Medicaid is an investment in New York’s future, and a properly funded Medicaid program is how New York State will build a better future for millions of people. State leaders must reject the notion that budget austerity will help us reach the outcomes we seek. Revenue options must be enacted to reach greater budget equity, asking wealthy New Yorkers to make small sacrifices to benefit the greater good. With or without new federal relief, our state faces an unsustainable fiscal situation, and our state coffers must no longer be balanced on the backs of people who rely on Medicaid and other social service programs.
Medicaid Matters urges state policymakers to maintain New York’s unwavering commitment to the Medicaid program and thoughtfully address the budget crisis by preserving its strengths. New York must show the nation that in challenging times, we stand by our families, children, older adults and people with disabilities.
Download our 2021 priorities here.
Response to the Governor’s proposed 2021-22 budget can be downloaded here.
Medicaid Matters joined NYC Health + Hospitals, labor unions, the Commission on the Public’s Health System, the Community Service Society of NY, and many other groups and organizations to advance the following priorities to protect safety-net hospitals:
- Target Indigent Care Pool and Disproportionate Share Hospital (ICP/DSH) funding to Essential Safety Net Hospitals: This funding is supposed to support hospitals providing a disproportionate share of health care services to low-income Medicaid and uninsured patients, but in New York this funding is widely distributed to hospitals that do not need it or do not deserve it. The distorted distribution of funds harms the public and private safety net hospitals that serve low-income, immigrant, communities of color, and rural communities. ICP/DSH funding should be exclusively directed to hospitals that meet the definition of Enhanced Safety Net Hospitals under PHL Section 2807-c(34).
- No Medicaid cuts to Enhanced Safety Net Hospitals: Enacted and proposed reductions in Medicaid spending disproportionately affect low-income, medically vulnerable and communities of color. We cannot reduce Medicaid funding to Enhanced Safety Net Hospitals during a pandemic that has ravaged our most vulnerable people.
- Medicaid reimbursement rates should be increased to support safety net hospitals – Safety net providers rely heavily on Medicaid funding, which pays much less for services than private insurers, and which unfairly underpays for services that are used by vulnerable communities and not provided by private hospital systems.
The full statement may be downloaded here.