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Politico: Cuomo, de Blasio have small window to find savings in Medicaid

By Dan Goldberg and Josefa Velasquez, January 21

Gov. Andrew Cuomo and Mayor Bill de Blasio have less than 10 weeks to find $180 million in Medicaid savings if they are to keep a pledge to find efficiencies in the program before the state budget is enacted. The new fiscal year begins on April 1.

The sudden sprint is the result of Cuomo’s proposal to lift the cap on New York City’s Medicaid share, a move that would cost the city nearly $2 billion over the next four years if it were to take effect.

Cuomo said his own proposal won’t be necessary because “there are no two people better equipped to work through tough issues than the mayor and myself.”

De Blasio, eager to avoid potentially devastating cuts, agreed to find the efficiencies and savings sought by Cuomo, whose original rationale for lifting the city’s cap did not mention efficiencies or administrative savings.

Cuomo’s budget book, distributed just before the governor’s State of the State message last week, and his outgoing budget director, who spoke just after the speech, both said that the city could afford to contribute to the growth of Medicaid costs because it is exempt from the property tax cap.

And on Wednesday, during a budget “webinar,” John Ulberg, chief financial officer for the state Medicaid program, said this is about the property tax cap.

“The city has not had the property tax cap applied,” he said.

A spokeswoman for the governor, however, said that Ulberg’s presentation “was not reflective of the state and city agreement last week to work together to lower costs and find efficiencies in the city’s Medicaid system.”

Neither the mayor nor the governor’s office would comment on whether they’ve begun formal meetings to find these efficiencies. And it remains unclear what will happen should the city and state fail to reach their goal.

Assembly Democrats, who also appeared to be unaware of de Blasio’s agreement with Cuomo, seemed uneasy with the budget proposal.

“I don’t want to see New York City treated differently than the rest of the state,” said Assemblywoman Cathy Nolan of Queens.

Speaker Carl Heastie said he is still reviewing the budget but is “concerned” about the effect the Medicaid provision would have on the city were it to remain intact.

“I think there is almost no likelihood that the Assembly will support that,” said Assemblyman Richard Gottfried. “I think it’s completely unjustified and wrong. There is no basis for treating New York City different than any other part of the state.”

The Republican-led state Senate, in its analysis of Cuomo’s executive budget, also assumed that lifting the Medicaid cap was related to the property tax cap.

“According to the Executive, the proposal acknowledges New York City’s exemption from the 2012 property tax cap,” the analysis said.

The $180 million in savings the city and state would negotiate during the next 10 weeks would presumably be a down payment on the much larger savings the city and state would need to agree upon in the coming years. Lifting the city’s Medicaid cap would save New York State — and cost New York City — $476 million in fiscal year 2018, $588 million in fiscal year 2019 and $705 million in fiscal year 2020, according to Ulberg’s presentation.

Medicaid provides insurance for low-income residents, and is paid for by the federal and state government.

New York is the only state that requires counties to pay a portion of the state’s share, a relic of the Rockefeller administration, which wanted to offer generous benefits when the program was first launched.

Upstate lawmakers balked at the idea at the time, correctly assuming that this would be a large subsidy for New York City, where a majority of Medicaid-eligible patients lived.

As a compromise, Albany required counties to pay a portion of Medicaid, so that New York City would shoulder a larger percentage than upstate counties.

That compromise worked reasonably well until the late 1990s, when a depressed upstate economy swelled the Medicaid rolls. Suddenly, those counties were paying more than they could afford into the Medicaid program and raising property taxes to cover the costs.

Gov. George Pataki instituted a 3 percent cap on the growth of the local share of Medicaid. That was reduced gradually until Cuomo, in 2012, capped the growth entirely. Since then New York City has paid $5.4 billion per year and the other 57 counties have paid $2.2 billion per year.

Cuomo’s cap coincided with his 2 percent property tax cap, which may be why his budget briefing book, outgoing budget director and Medicaid CFO all felt comfortable saying that lifting the Medicaid cap was justified by the city’s exemption from the property tax cap.