Gov. Hochul has only herself to blame for NY’s looming Medicaid crisis

As New York’s Medicaid costs spiral out of control, Gov. Kathy Hochul would like you to think she has nothing to do with it.

In January, she implicitly laid the blame on Washington.

“We will need to take action alongside the federal government to manage [Medicaid] growth,” she said — which, she admitted, “isn’t sustainable for New York taxpayers on its current trajectory.”

But now that Congress is actually trying to slow Medicaid spending at the federal level, Hochul is blaming Republicans in New York’s House delegation for allowing that to happen.

“They have the power to stop these reckless federal cuts,” she charged this week. “They must find the political will to stand up to this administration and fight for the people they represent.”

Hochul’s helplessness is just a pose, of course.

Although the feds pick up half or more of the cost of the safety-net health plan, each state is in charge of managing it — with broad discretion over how many people to cover, what benefits to provide and how generously to compensate providers.

That means the whole nation’s taxpayers end up footing much of the bill for New York’s Medicaid choices.

And Hochul happens to be in charge of the most extravagant state Medicaid program of all, spending $3,100 per resident compared to a national average of $1,800.

As such, she has more power to control Medicaid costs than anyone else.

Psst, governor: The Medicaid bucks stop with you.

Traditionally, governors of both parties in every state have taken it as their duty to try to keep Medicaid spending in reasonable check, or at least to make a show of it.

Hochul has mostly avoided this chore, opting instead to minimize political friction with the health-care industry, Albany’s most powerful special interest. 

She has done little to initiate cost-cutting proposals of her own, and has failed to follow through on those she inherited — like a package of reforms, including tighter eligibility restrictions for long-term home health care, passed in early 2020.

Those limits were put on hold during the federal pandemic emergency. But that ended in 2023.

Almost two years later, Hochul has made no visible sign of implementing them, even though home care remains one of Medicaid’s chief cost drivers. 

Instead, one of her few big initiatives — the consolidation of the Consumer Directed Personal Assistance Program under a single statewide contractor — will only realize minor savings, but will bring major benefits to 1199 SEIU, the powerful health-care union.

Meanwhile, Hochul has sponsored or acceded to policies that directly increase Medicaid costs.

Last year the state opened the program to illegal immigrants over age 65 — and more than 19,000 of them signed up in the first three months.

Her current budget proposal would boost fees for hospitals, long-term-care facilities and other providers by hundreds of millions of dollars, building on several previous rounds of hikes.

She’s even used Medicaid funds to reward political supporters, including bail-outs for 1199-affiliated benefit funds and grants to a Bronx medical group operated by campaign donors — spending that’s far from the mission of caring for the indigent or disabled.

Thanks to this blank-check management, the state-supported share of Medicaid costs jumped 36% over Hochul’s first three budgets — and it’s on track to grow at least 17% in fiscal 2025-26.

In just four years, she’s surpassed the combined total of increases Andrew Cuomo racked up in his 11-year term.

On Monday, almost a month into the state’s new fiscal year, Hochul announced a “general agreement” on the budget. The highlights she listed included $3 billion in “inflation refunds” to taxpayers.

But she made no mention of the rising state share of Medicaid, from $38 billion to $44 billion, an increase that accounts for 60% of new state spending in the year ahead.

Perhaps she didn’t want to emphasize that the best-funded health-care system in the country is getting more additional money than every other state program combined.

Although the economy has soured and Congress is readying a slowdown in federal Medicaid funding, Hochul acknowledged the budget deal makes no adjustment for those realities.

Instead, she warned that she and the Legislature might have to reopen the budget within months — meaning spending cuts, tax increases or both could be around the corner, with Hochul reportedly seeking unilateral authority to cut as much as $2 billion on her own in a revenue “emergency.”

If such drastic measures become necessary — as seems likely — the governor will undoubtedly try to blame Republicans in Washington, two of whom may challenge her re-election in 2026.

But voters should make no mistake: Hochul is in the driver’s seat on New York’s Medicaid spending.

And she is steering the state straight toward a cliff — and gunning the engine.

Bill Hammond is the senior fellow for health policy at the Empire Center.