Hochul continues to bribe Big Health with reckless Medicaid spending

For the fourth year in a row, Gov. Kathy Hochul has used the word “unsustainable” to describe her own Medicaid budget.

Give her credit for honesty — but not sound fiscal management.

Over the four annual budgets on her watch, the state’s share of Medicaid costs has soared by 60%, or roughly five times inflation.

Her latest proposal would add another 10%.

With federal aid included, total Medicaid spending in the next fiscal year would be $28 billion higher than when Hochul took over — and that’s before the Legislature makes its inevitable additions.

So what are those billions buying for the people of New York?

It’s not more coverage: Medicaid enrollment is coming down, as it should be in the post-pandemic period.

Nor is the quality of care noticeably improving: The average federal rating for New York hospitals remains stuck in the basement at 2.5 of 5 stars, making the state 48th among the 50.

What Hochul is mostly buying is political peace: The more tax dollars she pours into Medicaid, the less election-year blowback she can expect from the deep-pocketed health-care lobby and its legion of allies in Albany.

Of course, that means cutting corners on one of her most important duties as governor, which is to manage the sprawling Medicaid program for the maximum benefit of patients and taxpayers.

Instead, she’s prioritizing the interests of the health-care industrial complex, which means higher fees, bigger subsidies and less accountability.

This year’s proposal includes $1.5 billion to cover fee boosts for hospitals and nursing homes and another $1 billion for health-care capital grants.

Hochul is claiming her spending hikes are needed to make up for cuts in federal health funding, but that argument won’t wash. 

For one thing, the changes enacted in President Donald Trump’s One Big Beautiful Bill Act merely slowed the growth of Medicaid spending, rather than cutting it in absolute terms.

Plus, some of its key provisions — including a work requirement for able-bodied recipients — don’t take effect right away.

For now, New York’s federal Medicaid funding is expected to go up, not down, in the next fiscal year, by $3 billion or 5%.

One program that will take a hit is the Essential Plan, which provides taxpayer-funded coverage to people just above the income cut-off for Medicaid.

The OBBBA drew a harder line against health subsidies for non-citizens, including legally present immigrants who make up close to half of the Essential Plan’s 1.7 million enrollees.

State officials are expecting to lose $7.6 billion of the federal funds that have, until now, paid the program’s entire cost.

Yet Hochul is not proposing to backfill that loss. Instead, she’s seeking Washington’s permission to tighten eligibility rules and dip into reserves of unspent federal aid — a strategy that would save Albany from putting up a penny of its own.

If Washington goes along, Hochul’s budget would still likely pump more than $130 billion in state and federal funds into its combined health programs, an all-time high.

Since becoming governor, she has directed more new money to Medicaid than to all other programs combined.

That will not prevent health-care lobbyists from demanding even more, and selling the Legislature on the idea that their industry is in a “crisis” due to funding “cuts” — even though it’s practically the only part of the economy that’s hiring.

As New York City Comptroller Mark Levine pointed out this week, the city would have lost 38,000 jobs last year if not for the 71,000 jobs added by the health-care and social-services sector.

Meanwhile, the Paragon Health Institute flagged New York as an “extreme outlier in the employment of home health aides” — most of which draw their wages from Medicaid.

The state has 314 aides per 10,000 residents, three times the national average.

Hochul ought to be tapping the brakes on runaway Medicaid spending, and making sure taxpayers are getting value for their massive investment.

She paid at least lip-service to that idea in 2023 when she appointed a high-powered Commission on the Future of Health Care, supposedly to guide the drafting of her Medicaid budgets. 

She gave the commission until the end of 2024 to write its first report.

It hasn’t been heard from since.

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