MEDICAID: Implications of Medicaid Expansion Are Unclear

March 31, 2010

New York will get a $1.3 billion boost in federal Medicaid funding beginning in 2014, thanks to the health-care reform legislation. The money will fund a Medicaid expansion to insure more low-income peo ple, but there is uncertainty over the long-term financial impact of that expansion.

Under the legislation, the state will see annual increases in federal Medicaid funding between 2014 and 2020, with aid holding steady after that. But New York’s enrollment won’t grow as much as other states, because New York already provides broader Medicaid coverage.

The state Health Department doesn’t yet have an estimate for how many people will be covered by the expansion.

Senator Chuck Schumer said in a statement that the expansion and boost in federal funding could save New York billions. He paints a rosy picture, but growth in Medicaid spending tends to worry counties. County officials across the state say Medicaid costs are already a significant property tax driver. And the state has a habit of passing its Medicaid cost increases down to the counties.

A few years back, however, state legislators put a cap on counties’ share of Medicaid costs. So that’ll work in the counties’ favor, should the state see new costs beyond the extra federal aid.

"Our fiscal exposure is limited," says Mark Lavigne, deputy director of the New York State Association of Counties.

Monroe County may be protected beyond other counties in the state. Monroe entered into an alternate arrangement where the state takes just under half of the county’s sales tax revenues and, in turn, pays its Medicaid share.

Counties may see some extra expenses on the administrative side, however. If there are more applications and if the regulations are more complex, that means counties will need more staff, Lavigne says.

"I’m not going to pretend we know the i mplications long term," says Noah Lebowitz, a spokesman for Monroe County.