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Medicaid Madness
Empire State lawmakers keep showering money on health-care workers.
Autumn 2003

Paying for scores of services and procedures that other states wouldn’t dream of covering, New York State’s Medicaid outlays are soaring out of sight, squeezing state and local budgets. Empire State Medicaid spending, likely to increase by more than 8 percent to nearly $42 billion in the current fiscal year, is already the highest in the country—a full one-third more than runner-up California, a state with 15 million more residents. New York Medicaid costs have ballooned by $13 billion since Albany passed a health-care “reform” act four years ago, supposedly to restrain spending.

Unlike most other states, localities in New York must pay half of the state share of Medicaid, so their costs are skyrocketing, too. New York City’s contribution to Medicaid, now over $3 billion a year, has been rising at more than 7 percent annually. Upstate Erie County’s Medicaid expenditures increased by $16 million last year to $153 million, contributing to a $35 million county budget deficit. The county projects another jump of about $15 million this year.

The crippling costs on municipalities prompted Eric County Executive Joel Giambra and neighboring Chautauqua County Executive Mark Thomas to launch a petition to demand that Albany legislators grant Medicaid relief to the counties. The local politicians hope that New York State taxpayers, who, thanks mostly to the Medicaid expenditures, already pay the highest combined local and state levies in the country—a whopping $7,500 per capita annually, nearly 50 percent above the national average—will send the message that enough is enough.

Overtaxed citizens will have to yell pretty loudly to gain any attention in Albany, however, since legislators worry more about pleasing the powerful health-care lobby than restraining costs. Four years ago, state legislators gave health-care workers’ union boss Dennis Rivera several big gifts in the state’s health-care “reform” act, including a $58 million-a-year state-financed health insurance plan for private-sector home–health-care workers—most of them members of Rivera’s union. Then, this September, after Rivera complained that the program was running out of money, the Solons generously anted up tens of millions in new funds for it. The program will reportedly now cost over $163 million annually—more than $100 million above initial projections. This joins the $2.7 billion that Governor George Pataki and state pols sent Rivera’s way in January of 2003 so that hospitals could use public money to give raises to their private-sector workers.

No end seems in sight to this upward spiral. While health-care costs have risen nationwide, other states have moved to impose some restraint. New York’s deliberate expansion of its Medicaid program, by sharp contrast, is pushing the state and its localities toward financial ruin.

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