New York’s Budget Gap Swells to $6 Billon on Medicaid Costs

(Bloomberg) -- New York’s projected budget gap for the next fiscal year has swelled by almost 60% to $6.1 billion, as spending on Medicaid surges, according a mid-year state budget update.

A minimum-wage increase for health care providers, increased enrollments and costs in managed long-term care, and payments to financially distressed hospitals is putting pressure on the state budget.

The state’s division of the budget is developing a plan to close the gap by adjusting the timing of payments, cutting rates paid to providers and health plans, reducing discretionary payments and other measures, according to the budget update. Governor Andrew Cuomo will outline the savings plan in his executive budget due in January.

“The State’s plan to address the Medicaid-driven budget gap is one part gimmick and one part delay,” the Citizens Budget Commission, a business-backed budget watchdog said in a statement. “The State will make permanent a $2 billion payment deferral, which simply perpetuates papering over the structural problem. For the remainder, the State again delays presenting a savings plan. Delays only serve to make the solution more painful.”

The state should also seek budget saving by revamping school aid and ending unproductive economic development programs, the CBC said.

To contact the reporter on this story: Martin Z. Braun in New York at mbraun6@bloomberg.net

To contact the editors responsible for this story: Elizabeth Campbell at ecampbell14@bloomberg.net, Michael B. Marois

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