Gov. Andrew Cuomo, in addressing a potential budget gap, said across-the-board cuts of $550 million to Medicaid funds were needed in his budget proposal. The governor said the revision is necessary to support the state's spending plan for fiscal 2020, which starts April 1. The decision reverses his position in January: that the industry needed support to fend off federal cuts.
Because of the federal matching funds that support Medicaid, the health care industry is projecting the total impact to be $1.1 billion less than they expected after Cuomo's proposal last month.
Cuomo blamed the federal government's changes to the deductibility of state and local taxes for the state's budget gap, saying that the higher tax burden has caused some of the state's wealthy residents to relocate—or at least change their residence for tax purposes.
Cuomo released a three-prong plan to achieve the savings. The state is diverting funds it had earmarked for "health care transformation" toward housing programs, reducing "indigent care" funding, which supports hospitals that provide a large percentage of services to Medicaid and uninsured patients, and levying a 0.8% across-the-board cut to Medicaid payments.
The decision drew swift condemnation from the Greater New York Hospital Association and the state's largest health worker union, 1199SEIU, two of Cuomo's closest political allies.
"As we seek to balance this budget, it cannot be done on the backs of our most vulnerable communities, and the dedicated workers who provide exceptional care," said George Gresham, president of 1199SEIU.
"Many hospitals would curtail vital services—and some would close their doors for good," GNYHA President Kenneth Raske said in a statement. "Tens of thousands of health care workers would lose their jobs. We will take our message to the public that these cuts would spell disaster for health care in New York, and we will do so with every resource at our disposal."
The hospital group and union backed Cuomo's re-election and helped orchestrate political rallies the governor held in 2017 in support of the Affordable Care Act. The two groups, which combine their lobbying efforts through the Healthcare Education Project, cheered last year when Cuomo announced a 2% increase in Medicaid payments to hospitals and 1.5% for nursing homes that went into effect Nov. 1. That support has been eliminated as the state lowers the growth in Medicaid costs to 3%, down from 3.6% in the governor's proposal last month.
Cuomo also said he plans to reconvene the Medicaid Redesign Team, a group created in 2011 to rein in spending. It was made up of leaders from the health care industry and helped save $17.1 billion in a five-year period.
CLARIFICATION: This article has been updated to reflect that the $550 million in cuts are a downward vision from Gov. Andrew Cuomo's fiscal 2020 budget proposal presented in January 2019.