Legislators Propose State Takeover of Medicaid

• Editor's Note: What follows is user-generated news. If you would like to post your news to Patch, for detailed instructions. The following is a press release from Assemblyman Robert Castelli's office.

Assemblyman Robert J. Castelli was joined by state and local officials from across the Hudson Valley on Monday to announce bipartisan legislation (A.8644) that will structurally reform the cost administration of New York State’s Medicaid system by incrementally transferring full responsibility for funding the $44 billion program to the State—gradually eliminating the local share traditionally paid by county governments.

An editorial and two front-page articles from the "Journal News" detailed the legislation this past weekend.

“This is one of the most historic pieces of legislation to be introduced in decades,” said Stephen Acquario, president of the New York Association of Counties. “Counties have made a tremendous sacrifice over the last 50 years.”

“Westchester’s property owners face the highest real property tax rates in the country, with tax rates going higher every year,” Castelli said. “The burden of federally mandated services is already difficult enough for counties to bear. With the active assistance of the state in mandating almost every optional service that may become available under Medicaid, it is critical to note that New York is one of only a handful of states that requires local government pay any portion of Medicaid costs. If the state wishes to provide an optional service, it is time for the state to pay for that service.”

 The legislation has garnered widespread support from local officials across the New York State. It mirrors similar legislation (A.1334) Castelli had introduced after taking office in 2010, that required the State to immediately assume responsibility for funding Medicaid.

• The proposal initially freezes local Medicaid costs, providing $180 million in immediate local savings by eliminating the automatic three percent annual spending increase currently required by statute.
• Starting in the third quarter of 2012, the local share would then be reduced by five percent, providing counties with an additional $75 million – totaling $255 million in savings for county governments.
• Between 2012 and 2019, local Medicaid costs will continue to be gradually reduced as the state assumes an increasing share of the burden.
• The end result would completely eliminate Medicaid costs from county budgets, providing municipal governments with the flexibility to substantially reduce local property taxes. 

In attendance with Castelli were State Senator Patrick M. Gallivan (R, C , I – Erie, Wyoming, Livingston, Ontario), Roy McDonald (R, C – Saratoga), and David Carlucci (D, I – Clarkstown), as well as Assemblymembers Amy Paulin (D, I, WF – Scarsdale), Dr. Steve Katz (R, I – Mohegan Lake), Ellen Jaffee (D – Suffern) and local officials.

“Without comprehensive changes to the cost structure of Medicaid, county governments are going to be faced with extremely regrettable choices.  The tax cap will only work as intended to address the property tax burden in New York State if we provide the corresponding mandate relief on local budgets,” Paulin said. “This proposal will permit local governments to control taxes, while ensuring they are able to continue providing the essential services working families rely on.”

 Under New York’s current Medicaid structure, the program is funded by state and local governments, with matching funds provided by the federal government.

Medicaid costs mandated by the state represent the largest item in nearly every county’s budget: on average, Medicaid accounts for 45 percent of an individual county’s local property tax levy. 

In Westchester County, property owners pay the highest real estate taxes in the United States.

“This is a great step towards providing the unfunded mandate relief that our Counties so desperately need,” Katz said. “I fully support Assemblymembers Castelli and Paulin in this effort, and I am proud to stand here today with my colleagues on both sides of the aisle to continue the fight to make New York more affordable.”

Local Medicaid costs are expected to increase $2.6 billion by 2025 if nothing is done to provide county governments with some form of Medicaid mandate relief.

“Freezing local costs for next fiscal year by eliminating the automatic three percent increase in Medicaid will provide immediate relief to local governments struggling to make ends meet under the constraints of the new property tax cap,” Gallivan said. “This legislation implements responsible and realistic reforms that will ensure taxpayers won’t continue to bear the brunt of county governments’ ever increasing Medicaid burden.”

Senator McDonald added, “Medicaid is the largest unfunded mandate imposed on local governments by the State. This has resulted in New Yorkers paying the highest local taxes in the nation. It is essential that we address the unsustainable local costs of Medicaid and implement responsible and realistic reforms to relieve the local mandate and tax burden.”

The issue is too important, McDonald insisted, for dialogue among state representatives to be put off until the opening of the legislative session in January 2012:  “The session begins now.” 

The new legislation takes advantage of the Medicaid spending cap provision enacted in this year’s State Budget prohibiting the State from increasing spending on Medicaid by more than the ten year rolling average of the medical component of the consumer price index.

Absent future legislation stripping the spending cap of its teeth, Medicaid will cost taxpayers $10 billion less than if the program continued to be funded jointly with local governments.

 “The constraints of a hard spending cap will force additional reforms to Medicaid’s structure, and present a perfect opportunity to implement and expand upon the recommendations put forth by the Medicaid Redesign Team assembled by the Governor Cuomo in January,” Gallivan said.

 The lawmakers were also insistent that this legislation in no way precludes the Legislature or Governor Cuomo from continuing to identify and eliminate burdensome unfunded or underfunded mandates aside from Medicaid.

By calling for an initial spending freeze coupled with a multi-year transition of the local share of Medicaid costs, the legislation intentionally allows the Governor, the Legislature and the State Department of Health a reasonable period of time to prepare and adjust the program to ensure that New York State’s Medicaid program is compliant with the new healthcare provisions and state mandates contained in the federal Affordable Care Act, enacted in 2010.