February 25, 2004
Study: State could safely cut $4.6 billion of Medicaid costs
New York State could cut Medicaid expenses by $4.6 billion without reducing the program's effectiveness, according to a new report from the Citizens Budget Commission (CBC).
“Medicaid costs are overwhelming counties across New York State,” said Diana Fortuna, president of CBC. “The problem is not that New York provides too many benefits to the needy but that it is providing them inefficiently, and does not adequately target scarce public dollars to the needy.”
The report echoed Business Council research that found that New York's Medicaid expenses per enrollee are nearly double the national average at $7,646.
In November 2002, The Business Council's research affiliate, The Public Policy Institute of New York State, noted that New York's Medicaid spending in 2003 would be $36 billion — more than 40 other states would spend in their entire budgets that year.
The CBC report, “Confronting the Tradeoffs in Medicaid Cost Containment,” highlighted several ways New York lawmakers can reduce Medicaid spending, including:
- Reducing “medically needy” loopholes by scrutinizing
asset transfers and enforcing eligibility rules for the
elderly and disabled could save the state $608 million annually.
“Medicaid should not be a mechanism for the middle
class to avoid family responsibilities or a substitute for
private long-term care insurance,”the report said.
- The state could save $2.5 billion annually by paying hospitals
the competitive price for Medicaid services. The report
noted that the state pays hospitals and nursing homes “substantially” more than competitive standards for wages and quality of
care. “Once adjustments are made for differences in
regional costs and in case-mix, there is no justification
for paying institutions in New York more than those in the
rest of the country,” the report said.
- Encouraging managed care participation creates a “win-win” situation for the state and state taxpayers. The state would
see $489 million in savings by enrolling one-third of the
elderly into managed care programs.
- By limiting the hours spent on personal care for the elderly
and disabled living at homes, the state could save $1.0
billion. Thirty hours of home attendant services per week
are spent on tasks such as housekeeping and shopping in
New York. That number is nearly triple the national average
of 11 hours.
“These recommendations would reduce costs significantly while protecting needy New Yorkers from loss of access to medical care,” the report said.
The report also said the state should seek a waiver from the federal government to allow New York to keep much of the revenue obtained by the cost-cutting measures.
“As with many federal waiver programs, a major-cost-cutting initiative in new York should allow New Yorkers to share the benefits obtained by the federal government.”
For the full report, visit www.cbcny.org.