Editorial

New York’s Medicaid Reforms

Published: September 17, 2012 - New York Times

New York State has substantially changed its Medicaid program in the past year and a half in ways likely to improve the health of its poorest residents and rein in the program’s enormous costs.

Now the state is asking the federal government to let it use $10 billion in projected federal savings from its reforms to modernize hospitals and clinics serving the poor and to expand primary and preventive care. If spent wisely, that investment could turn New York into a model on how to cut Medicaid without harming the beneficiaries.

New York’s Medicaid program, the nation’s costliest, spends more than $54 billion a year to cover some five million people, about a quarter of the state’s population. Roughly half the cost is paid by the federal government and the other half by state and local governments.

New York faces the same problem as many other states: its share of the costs of this state-federal insurance program for the poor has been rising steadily, limiting its ability to pay for other urgent needs, like education.

Last year, Gov. Andrew Cuomo, working in collaboration with health care providers and labor leaders, pushed through a budget that seems to be easing the stress. It places a cap on what the state can spend on most Medicaid programs, cuts payments to health care providers and managed care plans and sets up a mechanism to make further cuts to provider payments to stay below the cap, which, so far, has not been breached.

The cap started at $15.3 billion last year and is allowed to rise by only 4 percent a year, bringing it to $15.9 billion for the current 2012-13 budget year. The state’s total budget for Medicaid, including noncapped programs, is $20.8 billion for the current year.

The reforms do not impose higher cost-sharing on beneficiaries or make significant cuts in benefits except in a few programs, like home care visits for housekeeping services or unlimited rehabilitative services.

Most important for the long term, the budget accelerates movement from uncoordinated fee-for-service care to managed care, from high-priced specialists to primary care doctors, and from high-cost institutions to care in the community through grants, technical support and financing for health information technology. Most providers have agreed to accept lower payments in return for having a say in the reforms, rather than having them dictated by Albany. The state estimates its reforms should save the federal government $17 billion over the next five years.

The Centers for Medicare and Medicaid Services should allow New York to plow $10 billion from money the federal government will save if New York’s projections of future Medicaid savings are as plausible as they look at first glance. The agency should also look hard at New York’s plans to track and measure how well its reforms work and to obtain independent evaluations from outside experts. New York could serve as a model to other states if it can show which reforms work, which don’t, and what their combined effects are on statewide spending.