Warning From New York: ‘Exploding’ Medicaid Costs Fueling Massive Budget Deficit | Eastern North Carolina Now

Publisher's note: This post, by Brian Balfour, was originally published in Civitas's online edition.

    The New York Post reports this week that the state of New York is facing a massive budget hole of roughly $6 billion. The biggest cause?

• Exploding costs in New York's popular health-insurance program for the needy is largely fueling the state's projected $6 billion budget deficit for 2020 ... The Medicaid shortfall is projected to be as much as $4 billion

    So much for the argument that Medicaid expansion is virtually costless because the Feds pick up most of the tab. New York expanded its Medicaid program in 2014, and in the first two years expansion enrollment exploded by nearly four times initial projections.

    What has been Gov. Cuomo's response to this massive budget deficit? He followed the typical path we've seen by governments trying to rein in Medicaid costs: cutting reimbursement rates to providers.

• He invoked an emergency order last week calling for a 1 percent reduction in payments to hospitals, nursing homes, doctors and pharmacists who participate in the state's Medicaid program.

    Of course, such reductions increase the losses providers take while treating Medicaid patients. Nationally, providers lose about $23 billion in their treatment of Medicaid patients.

    Reducing reimbursements to providers for Medicaid patients has two primary impacts:

1. Decreases the number of providers accepting Medicaid patients; so while the number of Medicaid patients increases, they are chasing fewer doctors. The result is limited access to care.
2. Forces hospitals and providers to increase the prices they charge to private insurance patients to make up for the increased Medicaid losses. This helps drive up the cost of private insurance, making it unaffordable to more people and driving up the number of uninsured.

    Gov. Roy Cooper has made Medicaid expansion one of his top policy priorities. Hopefully, the latest warning coming from New York causes him to reconsider.