Medicaid Spending and Migrant Situation Might Trigger a Budget Crisis in New York

New York’s annual Medicaid budget is set to exceed $100 billion for the first time, reaching $108 billion for the fiscal year 2023-2024, writes New York Post. The increase is attributed to an expanding enrollment and higher healthcare costs. The state will also start providing medical coverage to an estimated 25,000 undocumented immigrants aged 65 and over at a cost of $171 million. While the federal government covers 59% and local governments chip in 8% of the Medicaid bill, the state’s share is growing. The looming migrant crisis could further escalate costs, and the program is already under pressure due to New York’s aging population and increased labor costs.

  • Budget Increase: The budget for the fiscal year 2023-2024 is nearly $10 billion more than the last fiscal year’s $99 billion budget.
  • Undocumented Immigrants: Starting January, New York will offer medical coverage to approximately 25,000 undocumented immigrants aged 65 and over, costing around $171 million.
  • Funding Split: Federal, state, and local governments share the cost of New York’s Medicaid program. The federal government provides 59% ($64.6 billion), New York State picks up 33% ($35.56 billion), and local governments contribute 8% ($8.5 billion).
  • Explosive Growth: New York’s share of Medicaid spending is projected to be 53% higher in 2024 compared to 2019, a drastic increase compared to the 10% growth in the five years before 2019.
  • COVID-19 Impact: The pandemic and subsequent unemployment surge have been primary factors behind the increase in Medicaid enrollment, which grew by nearly 1.6 million since March 2020.
  • Provider Fees: The bulk of the added spending will go towards higher fees for hospitals, nursing-home providers, and the State University of New York’s hospitals.
  • Aging Population: New York’s aging population is adding to Medicaid costs, as expenses for long-term care are much higher compared to a typical enrollee.
  • Fiscal Pressures: Inflation and increased labor costs add further financial strain to the program.
  • Uncertain Future: With the ending of the federal COVID-19 emergency declaration, Medicaid enrollment is expected to drop by 900,000 to 6.9 million, adding uncertainty to future Medicaid spending.
  • Government Stance: Governor Hochul’s budget office asserts that two balanced budgets have been passed that invest in healthcare and put record funding in reserves. They acknowledged the fiscal challenges but noted that estimated costs for increased enrollment have been budgeted through FY2025.

Image by Alterio Felines from Pixabay