New York's Giant Medicaid Budget

Brian Lehrer: Brian Lehrer on WNYC. We'll follow up now on something from Governor Hochul's budget address last week. It's about the challenges New York State faces from the growing cost of Medicaid. It's an issue because so many New Yorkers lack private health insurance and qualify for the various parts of Medicaid, which is government health insurance for people with low enough incomes for the most part. As the population ages, that's more and more people, and healthcare costs per each person keep going up.

In Medicaid, as in the private sector, Medicaid is a big share of the total state budget. We'll get into specifics. New York also has among the highest per-person Medicaid tabs of any state. The governor says the most of any state. There are some other ways to look at those numbers, but it's near the top. We'll get two views on this. First though, here's a minute of the governor from that speech.

Governor Hochul: Our Medicaid spending exceeded our projections this year by $1.5 billion. Let me explain how it happened. First, 200,000 more people than anticipated remained on state-funded Medicaid after the federal government ended their supplemental pandemic support. Maintaining the coverage for these previously unenrolled residents now costs the state an additional $400 million annually.

On top of that, to make matters worse, the state is still awaiting repayment of a $1.5 billion one-time bridge loan made to financially distressed hospitals, which actually are about one-third of the hospitals in the state. It was all intended to keep them afloat while they were waiting for their federal disbursement. It helped them out. We've been left hanging.

Brian Lehrer: Governor Hochul last week, and with us now, Bill Hammond, senior fellow for health policy at the conservative-leaning Empire Center, and Elisabeth Benjamin, vice president of Health Initiatives at the progressive-leaning Community Service Society and co-founder of the Health Care for All New York Campaign. Bill and Elisabeth, always good to have both of you. Welcome back to WNYC.

Bill Hammond: Hi, Brian.

Elisabeth Benjamin: Thank you.

Brian Lehrer: Can we start with some basic numbers? If the overall New York State budget bill is about $230 billion, how much of that is for Medicaid?

Bill Hammond: Well, the tricky thing with Medicaid is that more than half of it comes from the federal government. I believe that $233 billion includes the federal aid. Medicaid is just south of $100 billion including federal aid.

Brian Lehrer: You're saying that around $100 billion out of a $230 billion state budget is spent on one thing?

Bill Hammond: That's correct.

Brian Lehrer: Health insurance.

Bill Hammond: Yes. Well, that doesn't include-- There are other smaller programs; the Essential Plan, Child Health Plus. That would increase it a little bit, but yes, it's in the neighborhood of $100 billion.

Elisabeth Benjamin: How much? The Essential Plan is free, essentially free for New York State. That's offset by the federal government. Right, Bill?

Bill Hammond: Right, but the numbers we're using include federal aid.

Brian Lehrer: Is it the biggest single thing in the budget?

Bill Hammond: Yes, it's one of the two biggest things.

Elisabeth Benjamin: Education.

Bill Hammond: Usually, we look at it from the point of view of just the state's share of spending. When you do that, education I think edges out Medicaid. It's gotten close in recent years, and yes, it depends how you slice it. Medicaid and healthcare are essentially even with each other, and they are heads and shoulders above everything else [crosstalk].

Brian Lehrer: Healthcare and education.

Bill Hammond: Yes.

Brian Lehrer: And heads and shoulders above everything else. Elisabeth, is this an unusual percentage of a state budget going for low-income healthcare?

Elisabeth Benjamin: I just want to get maybe the facts a little better out there. According to the governor's budget charts, it's 25% of the state budget. School, it's 27%. Other assistance and grants is 21% and executive 15% and then a lot of little dinky things.

Brian Lehrer: That's if you take the federal piece out of it, I guess, right?

Elisabeth Benjamin: Yes, I think so. Yes, I think it would be helpful to have better, clear facts. [chuckles]

Brian Lehrer: Yes. It's a little wonky. It depends if you're looking at total expenditures or total expenditures that the state raises itself.

Elisabeth Benjamin: Correct, but I would argue that that's a great investment for New York State and that Medicaid's a really important thing and that we should be proud of this investment. I don't think New York is so unusual compared to other states in comparison to California, Massachusetts, and whatnot.

Brian Lehrer: Staying with you, Elisabeth, how do benefits for New Yorkers on Medicaid compare to what people in other states get? What's important there?

Elisabeth Benjamin: The New York State Medicaid program is really important. It provides comprehensive coverage to folks. It prevents people from going into medical debt. Our private health insurance, which I guess would be the alternative, and I'm sure Bill will talk about why we should invest in that instead, is the most expensive in the nation. It's great that we offer Medicaid because it's affordable. People don't go into medical debt.

We should be proud of that fact that we have a robust program. It was there for us, for example, when we had the Coronavirus pandemic. Unemployment shot to 16%, people lost their jobs. Medicaid was there, and it acted exactly as the safety net it should have been. It was. It's doing the right thing for folks.

Brian Lehrer: Bill, on what you do advocate, she mentioned maybe you're going to advocate privatizing Medicaid to some degree, I see you were scheduled to testify at a hearing on this topic in the legislature yesterday as they're trying to figure out what they're really going to allocate. You sent us your prepared remarks. Did you actually get to speak?

Bill Hammond: Yes, for a few minutes. I'm not here to dispute that Medicaid is important. I absolutely agree it's important. It's the most important thing the state does. It's responsible for the healthcare and in some ways the entire lives of a lot of people who are severely disabled or who are indigent and can't possibly pay for their own healthcare.

What I was reacting to with my testimony is that yesterday's hearing was kind of a litany of different groups coming forward and saying, "Medicaid is underfunded. You're not spending enough on this area. You're not spending enough on that area. We're desperately short of cash, you absolutely have to increase it this year, and we're also desperately short of labor. We can't hire enough people."

My point was, if you step back and you look at the big picture, the US spends more on healthcare than any other country, and New York spends more on healthcare generally, public and private, than any other state. New York might be the best-funded healthcare system there is in the world, and yet, nobody's content with it. In fact, I don't think they should be content with it. Our hospital quality ratings are quite poor, and there is a litany of different dysfunctional situations in our healthcare system.

What I wanted the legislature to think about is, how can that be. How can it be that we have the best-funded healthcare system, we also have more employees than any other state who work in healthcare, how can that be that we're getting so little results for our investment?

Brian Lehrer: Elisabeth, I wonder your take on that as an advocate of quality healthcare for all. I'm going to read a little from Bill's prepared remarks for the legislature. He said, "If money were the answer, New York's healthcare system would already be the envy of the world." Then he goes on to say, "Yet, New York's hospitals consistently rank near the bottom of quality report cards. Its emergency room wait times are among the longest in the country. Lawsuits by the Attorney General have exposed widespread neglect and profiteering in its nursing homes," and goes on from there. What would you pick up on from that?

Elisabeth Benjamin: This is where Bill and I, I think, rabidly agree with each other. Why are we paying so much and our quality indicators, especially in hospital quality of care indicators, are so rotten? I think the original scene here happened 30 years ago. 30 years ago, we had a hospital rate-setting system where the state said, "Okay--" This is what Switzerland does with their private insurance national health program.

The New York State Department of Health set the rates for a commercial Medicaid all-payer rate system, and that was very helpful. We had a stable healthcare system. We had 75,000 beds. In the Pataki administration, there was a lot of pressure to get rid of that rate-setting system that was successful. As a result, we've lost about a third of our bed capacity. We now only have 50,000 beds, many of which are in hospitals that are highly distressed.

Then we have this handful of super overfunded, well-heeled hospitals because they're in this private market, private insurance where the insurance companies are supposed to negotiate rates, basically pay nothing to our safety net hospitals and pay the moon to our private hospitals so we have this profound disequity among our hospital system, which is just resulting in terrible quality of care.

Number one, I would say deregulation has not served us well because, on top of that, we're also paying the most for our private insurance plan, so it's not like insurance isn't even doing what it's supposed to do, which is drive down costs. In fact, our costs are out the window, as Bill just so eloquently pointed out. Insurance isn't doing what it's supposed to do. We have terrible quality. By the way, we also have terrible transparency.

We don't even know how the cost and our spending is really occurring in hospitals. We can look at their 990 tax filings two years later and try to guess. We have a really out-of-date Spark's dataset that we can look at that's 5 years old. Unlike many, many other states, smaller and bigger, we don't even have a functional all-payer claims database, so we can really do any kind of meaningful analysis at the individualized hospital level. I think New York can do better in this area, and I really love working with Bill to maybe figure out ways that we can.

Brian Lehrer: We can get a few phone calls in here in our last minute. Anybody have a story to tell? If you're on Medicaid, you want to talk about your own satisfaction with the program or anybody who wants to be a budget wonk and talk about what it is and the implications for how it's growing, 212-433-WNYC, 212-433-9692. I want to pick up on another thing from Bill, your testimony to the legislature yesterday, on one particular big expense for Medicaid. You said New York's Medicaid program spends almost as much on personal care as the other 49 states combined. What's personal care as you refer to it there?

Bill Hammond: It's a subgroup of home care, and it refers to the non-medical portion of home care. This is supports for people who are disabled, living at home, such as help with getting in and out of bed, bathing, dressing, eating, shopping, even some house cleaning. It's an area where-- Again, I would not dispute that this is an appropriate thing for New York to be spending money on.

What I highlight is that we seem to have bottomless demand for this service, which probably relates to the program design. It relates to how we decide who qualifies for it, both in terms of their medical need and also their financial need. I think we've made it too easy to qualify, and we've also allowed-- I think there's a certain amount of fraud in the program, which I don't think we're doing enough to police for, but it's extremely high.

I think a lot of the legislators who look at this, they say, "Well, we have an aging population. Of course, this expense is going up." Our over-65 population increased by 13% between, I think it was 2015 and 2020. In that same period, our home care spending increased five times faster than that. I don't think it's a question of just demographics. I think it's program design and organizations taking advantage of that design.

Elisabeth Benjamin: Can I just--

Brian Lehrer: Elisabeth, I'm curious-- Yes, go ahead now. Just go ahead.

Elisabeth Benjamin: Okay. I just want to note that on a per capita basis, we have the 10th cheapest Medicaid program. Sorry, the 10th most expensive. From the most expensive to the 10th, we rank number 10. We're not paying too much on Medicaid. We do have an older population. There's no evidence of fraud in the personal care program that I've seen. I haven't seen one report on that, but more importantly, what's the alternative?

The idea of keeping people in their homes is good. We don't want people to go into nursing homes. Only 9% of our nursing homes get the top ranking, so I guess I just have a different vision. I want a world where we keep our older residents in their homes safely. It's certainly cheaper to provide personal care than to put people into a nursing home. It's short of a 24-hour split shift care, though that actually is more expensive.

I want to live in a world where we keep our older residents and people with disabilities in the community and don't secrete them away in what are not very happy nursing homes in many occasions. [crosstalk] a good form of employment for low-wage workers, by the way, so it's also a job sector that's important to support.

Bill Hammond: This is another area where I'm puzzled by something because I've been told, since I started paying attention to healthcare, that home care was about keeping people out of nursing homes. New York's nursing home population proportionally is higher than average, so it doesn't seem like it's working that way. In fact, people in the disabled community will say there are people languishing in nursing homes because they can't get home care.

It's another case where the policy doesn't seem to be working as intended, where if we spend so much on home care compared to other states, and yet, we still have a larger than average nursing home population, who are we giving that home care to? We're not reaching the people who--

Brian Lehrer: What's the answer? It doesn't make--

Elisabeth Benjamin: We also have a larger population of people with disabilities than other states. We do have a larger population of older people. I don't know of anybody that's going to salsa classes and getting personal care. Bill, you're-- I don't know. I don't want to be-- I don't think there's any evidence that there's all these super healthy people having personal care attendants coming in and doing maid service. That isn't what's going on.

In fact, it's really hard to get personal care. You have to do an assessment with an independent agency. You have to get a health insurance company to authorize it. They're not passing it out like candy corn at Halloween here. I feel like we have all these checks and balances in our systems. In fact, my agency represents lots of people who are being denied hours and having hours of personal care, constantly having to fight to get enough to stay safely in their homes.

Brian Lehrer: All right. I don't think you're going to agree on that point.

Elisabeth Benjamin: [chuckles] [unintelligible 00:17:43].

Brian Lehrer: Let me get a couple of callers in here before we run out of time. So many people, once I put out the invitation, have called in with stories and thoughts. Charles in Manhattan, you're on WNYC. Hi, Charles.

Charles: Brian, it's been a while. Thanks for this program. When you're a certain age, you get a lot of calls when you have Medicaid, regular Medicaid. People call you all the time trying to get you to take Medicaid Plus, Medicaid this, Medicaid that. I just stick with the regular Medicaid because the doctors have told me that their co-pays can be more money. The other thing is when you are of a certain age like I am, you get called almost every day to take Medicaid this, Medicaid that.

Then also, I find that the hospitals, when they know you have Medicaid, if they're [unintelligible 00:18:29] the hospitals, will give you these bogus appointments where you get an appointment over the phone that you didn't ask for, so you have to call back and say, "I didn't ask for that." It's a great thing. You have to be aware of the things that can happen and how vulnerable you can be.

Medicaid is a great thing. I hope we keep it because even people at work want regular Medicaid these days because the insurance is much better. It's a great show. That's all I wanted to say.

Brian Lehrer: Charles, thank you very much. Michael in East Northport, you're on WNYC. Hi, Michael.

Michael: Hello. I am an orthotist. I am a provider of Medicaid, mostly for children. We accept managed care, which is Medicaid managed care. The issue that we're having is that some of the managed care company codes, what their payables for codes are, are 30% to 40% below Medicaid rates. Sometimes, we can't even provide the actual device that the patient needs because those codes are actually so low below the Medicaid fee schedule.

I'm just wondering what's being done to monitor these HMOs and how they're spending or how they're holding back the money from the providers that should actually be going to caring for the patient.

Brian Lehrer: Elisabeth, you want to take that?

Elisabeth Benjamin: I do. I think the first caller, because he kept saying he was of a certain age, might have been referring to the Medicare program, so I just want to clarify that. I really love the question from the second caller because I absolutely agree with him. When you look at the statistics, looking at our Medicaid program and what we're paying for, we pay the most for specialty care, which means hospital-based care, and we're paying much less than other states for primary care.

If I was in charge of the surveillance at the State Department of Health, I would really look closely at the Medicaid managed care. We, as a state, 30 years ago, decided to put our entire Medicaid program into Medicaid managed care plans, these HMOs. I would look really closely at how they're spending our money because we do trust them to spend that money wisely. I would submit that we aren't spending it as well as we should.

Other states like California really are spending 70% of Medicare for all of their Medicaid programs like all services, primary care, obstetric care, and other services. Whereas New York is only spending 40% of Medicare on primary care like this gentleman who's in a community-based clinic, and we really should be spending much more on primary care and really regulating how that spend is. We don't want the HMOs to be shorting community-based clinics and then paying top dollar for hospitals. I agree with him, the caller.

Brian Lehrer: One more. Sarah in Sea Cliff, you're on WNYC. Hi, Sarah.

Sarah: Hi. I'm calling from the perspective of both in terms of Medicaid and Marketplace. I was on Medicaid during the pandemic, and then recently, I no longer qualified, so I shifted back. Medicaid was the best healthcare I've ever had. It [unintelligible 00:22:01] all my doctors. I could still go to them. I didn't have to hop around and find other primary care doctors mid-year. I didn't have all the paperwork from the ACA. It was matching everything up, and then now that I'm back--

Brian Lehrer: When you say the ACA, just let me be clear to listeners, that's the Obamacare or Affordable Care Act, private Marketplace. Now you're not on New York State Medicaid program anymore. You're buying your insurance on the private market and you're finding that the insurers flip around who's in their networks and so you have to change doctors and things like that. That's what you're saying, Sarah?

Sarah: Yes. Furthermore, the rates I paid on the-- It's through New York State of Health Marketplace, but it's the qualified plan. Before the pandemic, I was paying maybe $480, $500 a month for health insurance. Now, when, I went back, it was up to almost $680 and then they just increased the rates a hundred dollars per month, January 1.

Brian Lehrer: Sarah, I'm going to leave it there because we're running out of time. It actually relates to a segment that we did recently about how the Affordable Care Act is becoming less affordable for a lot of people, and so the comparison with Medicaid, which served Sarah well, is interesting. Of course, you have to have a low enough income to qualify for Medicaid. Bill, give us your last thought on where we go from here, and then Elisabeth, you too.

Bill Hammond: One, we do have the highest commercial insurance premiums in the country, and that applies to the Obamacare plans as well. One big reason for that is that New York State taxes health insurance and pretty substantial taxes. A typical New Yorker probably pays several hundred to a thousand dollars a year in these taxes, either directly or through their employer.

Those taxes are primarily used to finance Medicaid, so we're making commercial insurance more expensive than it has to be to pay for the healthcare of other people. I don't think that's the right way to finance Medicaid. I also don't think it's the right way to handle health insurance policy. I do think the state could change policies in ways that would make commercial insurance less expensive and more accessible.

Brian Lehrer: Elisabeth?

Elisabeth Benjamin: Well, the health insurance taxes are I think around-- together between Covered Lives Assessment and the HCRA taxes, I think around 9% of a premium. Other states do similar taxes to support uncompensated care, and I do not believe the HCRA Pool actually really funds that much in Medicaid, maybe a little bit of our state share.

Going back to the caller, I just want to make sure that she definitely looked into seeing if she was eligible for financial assistance because under the Inflation Reduction Act, people pretty high up on the income ladder are eligible for financial aid and if you want help, just making sure that you're getting all the financial assistance you're eligible for on the Marketplace.

Please call, I'm doing a plug for our organization, 888-614-5400. We would be delighted to help you. Make sure you're getting all the financial assistance you are in fact eligible for. I just want to thank you so much for letting me be on the show again. It was just lovely to talk to you both.

Brian Lehrer: It's always good to have both of you. Elisabeth Benjamin, vice president of Health Initiatives at the progressive-leaning Community Service Society and co-founder of the Health Care for All New York Campaign, and Bill Hammond, senior fellow for health policy at the more conservative-leaning Empire Center think tank. Thank you both so much.

Bill Hammond: It's been a pleasure.

Elisabeth Benjamin: Thank you.

 

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