New York State faces billions of dollars in additional costs over the next two years if fewer people than expected leave its public insurance rolls once it resumes screening residents for eligibility.
(Bloomberg) — New York State faces billions of dollars in additional costs over the next two years if fewer people than expected leave its public insurance rolls once it resumes screening residents for eligibility.
State projections see enrollment in New York public health programs, including Medicaid, falling more than 10% to 8.3 million in the next fiscal year once the state starts redetermining eligibility, according to a report last week from the comptroller’s office.
If fewer come off the plans, “significant additional unbudgeted costs will occur,” the report said. If only half the forecast drop occurs, New York would incur $5.7 billion in additional costs over the next two fiscal years. With no decrease, the state could pay $11.3 billion more.
The federal government paused screening for Medicaid qualification in March 2020 as part of a package of emergency pandemic measures. But those rules expire this year after several extensions, meaning states can resume evaluating whether residents are eligible for coverage as of April 1. The Kaiser Family Foundation has predicted that anywhere from 5.3 million to 14.2 million Americans could lose insurance in the process, though some could transfer to Affordable Care Act programs or employer-sponsored plans, if available.
The state adjusted its enrollment outlook as more clarity emerged about when the federal government would end a 6.2% boost in Medicaid reimbursement rates in exchange for pausing eligibility screening, said Patrick Orecki, director of state studies at the Citizens Budget Commission. The current forecast “is a safer projection than what was on the books.”
“But still it’s hundreds of thousands of people moving off the program in a matter of months,” Orecki said in an interview. “It’s still a pretty steep drop that if it doesn’t play out, the costs are probably $10,000 to $12,000 per person. So even if a fraction of them stay on the program, it’s a big unbudgeted cost to the state.” The state’s scenario built in a mild recession, Orecki said, but a steeper one means fewer may leave the public rolls.
Governor Kathy Hochul’s budget for the fiscal year beginning April 1 anticipates the state’s share of Medicaid costs — divided between federal, state and local governments — to rise 9.1% to $34.7 billion, to account for factors including higher Medicaid payment rates and the end of extra federal payments.
Medicaid as a percentage of the 2023-2024 state fiscal year budget is about the same as last year at 20.1% but is forecast to creep up in coming years, according to state estimates.
The end of extra federal payments, which has been delayed several times, “has been top of mind for all states,” said Baye Larsen, vice president and senior credit officer at Moody’s Investors Service. “The good news is, there’s been lots of time for states to see this coming. The biggest Medicaid budget risk right now is estimating those future enrollment trends.”
New York “is well protected against that risk right now because they first of all do have a strong track record of managing their Medicaid program, and their current reserves are at historic highs,” Larsen said in an interview.
At the end of fiscal year 2023, principal reserves are projected to total $19.5 billion to cushion any economic uncertainty.
The state estimated that receiving the extra 6.2% Medicaid reimbursement saved about $3.7 billion last fiscal year, the equivalent of about 3% of the state’s proposed operating budget next year. “So in losing that savings, that’s not a de minimus amount, but it is also a manageable budget gap,” Larsen said.
–With assistance from Martin Z. Braun.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.