Hochul’s Excessive Medicaid Spending Persuades Health Leaders at Our Expense

A significant criticism of Gov. Hochul’s Medicaid spending plan, which accounted for nearly half of the $252 billion state budget she unveiled on Tuesday, is the conspicuous absence of vocal opponents.

In the previous year, the hospital lobby invested millions in television advertisements misleadingly claiming Hochul was “cutting” the state-run health plan, which serves 7 million low-income New Yorkers.

This year, however, the advertising effort appears to have gone silent, indicating she is likely accommodating hospitals’ demands more than ever before.

This capitulation comes at a steep cost for taxpayers: The governor is aiming to increase the state-funded aspect of Medicaid by $6.4 billion, or 17%, within a single year — and this is just the beginning before the Legislature adds its adjustments.

This increase follows a combined 36% rise during Hochul’s first three years in office.

When this Medicaid budget is finalized, it will likely reflect a 60% increase from what she inherited in 2021 — a year when the Medicaid program was already the priciest in the United States on a per-capita basis.

Even Hochul conceded — in the brief eight sentences allotted to this topic in her budget presentation — that this growth “isn’t sustainable for New York taxpayers on its current trajectory.”

Of course, she is the architect of that trajectory.

Her proposed remedy is “to take action alongside the federal government to manage this growth.”

Perhaps she hasn’t kept up with recent news, but Republicans in Washington are gearing up to cut trillions in Medicaid savings. Supporting an extravagant blue-state governor isn’t high on their agenda.

Another puzzling aspect surfaced during the governor’s budget briefing.

After recognizing that spending is out of control, her budget strategy was stated as “maintaining Medicaid spending at current natural levels of growth.”

However, there is nothing “natural” about the current surge in Medicaid spending.

With the state’s economy flourishing, a low unemployment rate, and a decreasing poverty rate, one would expect less demand for what is intended to be a safety-net health plan for the impoverished and disabled.

As an explanation, Hochul and her team pointed out that Medicaid enrollment is still 900,000 above pre-pandemic levels.

They failed to mention that enrollment peaked in 2023 and has since dropped by 1.1 million. Logically, Medicaid costs should be decreasing now.

Instead, they are soaring — mainly because in Albany, Medicaid has transformed from merely aiding the needy to becoming a resource for the health-care industrial complex, often disconnected from the actual needs of the poor or disabled.

One of Hochul’s latest Medicaid-funded initiatives aims to “recruit and train thousands more health care workers,” despite New York already having the highest per capita health-care workforce in the nation.

Predictably, a portion of that funding will go to 1199 SEIU, the state’s largest and most influential health-care union.

Additionally, there are ongoing financial bailouts for “distressed” hospitals, which often struggle because patients have migrated to other providers.

In essence, the state is financing underperforming facilities to hire staff and maintain their increasingly vacant wards.

A hallmark of Hochul’s extravagant tactics is a recently implemented tax on managed care organizations, intended to secure an additional $3.8 billion in federal Medicaid funding over the next two years — after which Washington is expected to eliminate the loophole enabling this funding.

This is ultimately a short-term influx of funds, yet Hochul plans to utilize it for increasing Medicaid reimbursement rates for hospitals, nursing homes, and other care providers — creating a costly gap to bridge once the funding is depleted.

Moreover, her budget overlooks the most pressing issues within the health-care system.

What initiatives are in place to finally compel New York’s hospital sector to enhance their quality rankings, which rank among the lowest nationally? Or to reduce their average emergency room wait times, which average 3 hours and 22 minutes, ranking fifth worst in the nation?

What measures is she taking to address patient neglect and profiteering in nursing homes, as highlighted by lawsuits from Attorney General Letitia James?

On the subject of affordability — a term frequently mentioned nowadays — why isn’t Hochul striving to lower health insurance premiums, which are among the highest in the nation, largely due to state-imposed taxes and regulations?

The answer is clear: The health-care sector is the richest and most well-organized lobbying group in the state.

These entities support politicians who provide them funding and retaliate against those who challenge the lack of value in their initiatives.

Hochul’s Medicaid spending spree isn’t leading to improved care for New Yorkers. It’s merely buying her a temporary respite from the hospital lobby’s critical advertisements.

Taxpayers can only speculate on how much more this strategy will cost by 2026, when she and the entire Legislature will be up for re-election.

Bill Hammond serves as the senior fellow for health policy at the Empire Center.