Health Care Deal Might Create A $2.3 Billion Budget Problem For New York

A health care facility in Coxsackie, New York

Upstate Republicans have struck a deal on an amendment to the GOP's health care repeal bill that would allow New York counties to hand local Medicaid bills to Albany, but it's drawing complaints from state lawmakers on both sides of the aisle.

The amendment was the idea of GOP Congressmen John Faso (who represents the Hudson Valley) and Chris Collins (Western New York). Faso campaigned for Congress promising to cut property taxes. The contentious House debate over repealing and replacing Obamacare gave him an opportunity to deliver.

“It’s high time New York and Albany took control, and responsibility, for its own program," Faso said of Medicaid, "rather than shifting costs on to homeowners and small businesses.”

New York is one of 16 states that requires counties to pay some portion of Medicaid, along with the state and federal government. But New York has one of the costliest per capita Medicaid tabs in the country.

The amendment means New York counties would be off the hook for an estimated $2.3 billion each year — savings Faso expects counties will pass along by cutting property taxes. The amendment only applies to New York, and does not include New York City, which has an income tax to pay for Medicaid.

If the bill passes with the amendment, New York would have two-and-a-half years to prepare for the change.

"There’s plenty of time, in my view, for the state to reformat its own Medicaid system," Faso said.

Faso and other upstate Republicans now say they’ll vote for the health care bill, shoring up GOP support for the Trump Administration and Speaker Paul Ryan before a crucial vote on Thursday.

But the deal has made Staten Island Representative Dan Donovan’s decision even harder. Donovan is the only Republican in Congress who represents New York City, and the city is exempt from the bill, meaning it will still have to cover its share of Medicaid.

Donovan said he spent an hour on the phone with Mayor de Blasio Monday night, and the two worried that the state may force the city to help pay for the rest of the state too.

“The governor and our legislators may increase sales tax," he said, "which could hurt the people that I represent.”

Donovan and fifteen other moderate Republicans met with President Donald Trump about the healthcare bill Tuesday afternoon. Donovan said Trump didn't try to twist arms or push a hard sell on the bill. Instead, according to Donovan, the president mostly listened to their concerns.

Donovan remains undecided on the bill. He's worried people in his Staten Island and Brooklyn district will lose coverage and that hospitals will have to lay off employees. Donovan is also worried New York residents won't be able to use the new federal tax credits to purchase health insurance because New York law requires insurers to provide abortion services and the House bill bars using the credits to purchase plans which provide abortion services.

But while the deal put people like Donovan in a tight spot, Democrats were unbridled in their opposition. The amendment drew howls from Queens Democratic Rep. Joe Crowley, who said Republicans were trying to buy GOP votes. Members derisively called it the "Empire State Kickback," "The Tammany Haul" and "The Buffalo Bribe." And Governor Cuomo, local healthcare industry leaders — and even some conservatives — lambasted the state's GOP delegation for the proposed cuts.

Cuomo said absent help from Washington, Collins and Faso perhaps expected a Medicaid fairy to pay for the proposed $2.3 billion shift in costs from counties to the state. He said that would roughly double the shortfall already projected from Speaker Ryan's repeal-and-replace bill.

The cuts would affect a quarter-million Medicaid recipients in Collins’ and Faso’s districts alone, Cuomo said.

“What do you tell the people that get kicked off Medicaid? What do you tell the hospital that’s going to close because it can’t make ends meet?” he asked. “What do you tell the nursing home? What do you tell the assisted living facility?....There is no fairy that is gonna float down and hand over $2.3 billion dollars to make up the shortfall that the counties left."

Roughly a third of states require localities to pay for Medicaid alongside the state and federal government. New York has one of the costliest per capita Medicaid tabs in the country.

Describing the proposed amendment, Republican State Senate Majority Leader John Flanagan (R-Smithtown) wasn't as vitriolic as Cuomo, but he noted the counties’ share of Medicaid costs has already sharply declined in recent years — without many counties making good on their pledge to reduce property tax rates.

“I have some skepticism,” Flanagan told reporters. “I don’t want to see the state adversely affected.”

Many county leaders appear to support the proposed Collins-Faso amendment. Medicaid can be a massive expense — especially in counties with many poor people and low tax revenues.

Still, even commentator Bill Hammond, director of health policy for the Empire Center and a reliable critic of state Medicaid spending, questioned the proposed Congressional amendment.

“Look, [county Medicaid funding] is a cockamamie system, and getting rid of it makes a certain amount of sense,” Hammond said. “But doing it this way, with no help from the federal government and in very short order — this is really mischief-making, since they don't have to come up with a way to pay for it.”