Gov. Kathy Hochul calls her Medicaid budget “unsustainable,” but keeps increasing it anyway.
Hammond writes that over four budgets under Hochul, the state’s share of Medicaid costs has risen by 60%, or roughly five times inflation. Her latest proposal would add another 10%.
With federal aid included, total Medicaid spending next fiscal year would be $28 billion higher than when Hochul took office, he argues. And that’s before the Legislature adds more.
Hammond questions what that spending delivers.
He says Medicaid enrollment is declining as the state exits the pandemic period. He also points to hospital quality ratings, writing that the average federal rating for New York hospitals remains at 2.5 out of 5 stars, ranking the state 48th.
Instead of better coverage or care, Hammond contends the governor is “buying” political peace by directing more tax dollars to the health-care sector.
He argues the spending benefits what he calls the “health-care industrial complex” through higher fees, larger subsidies and less accountability.
This year’s proposal includes $1.5 billion for fee increases for hospitals and nursing homes, plus $1 billion for health-care capital grants.
Hammond also challenges Hochul’s claim that the increases offset federal cuts.
He writes that changes in President Donald Trump’s One Big Beautiful Bill Act slowed the growth of Medicaid spending rather than cutting it outright. He adds that some provisions, including a work requirement for able-bodied recipients, do not take effect immediately.
For the next fiscal year, he says, federal Medicaid funding for New York is expected to rise by $3 billion, or 5%.
One area facing a reduction involves the Essential Plan, which covers people just above Medicaid’s income cutoff.
Hammond writes that the federal law restricts subsidies for non-citizens, including legally present immigrants who make up nearly half of the Essential Plan’s 1.7 million enrollees. State officials expect to lose $7.6 billion in federal funds that currently cover the program’s full cost.
He notes that Hochul does not propose replacing that money with state funds. Instead, she seeks federal permission to tighten eligibility rules and use reserves of unspent federal aid.
If approved, Hammond writes, total state and federal spending on health programs would still exceed $130 billion, a record high.
He adds that since taking office, Hochul has directed more new money to Medicaid than to all other programs combined.
Hammond points to job growth in health care as evidence the industry is not in crisis. He cites New York City Comptroller Mark Levine, who said the city would have lost 38,000 jobs last year without the 71,000 jobs added in health care and social services.
He also references the Paragon Health Institute, which labeled New York an “extreme outlier in the employment of home health aides.” The state has 314 aides per 10,000 residents, three times the national average, according to the piece.
Hammond concludes that Hochul should slow Medicaid spending and focus on ensuring taxpayers receive value.
He notes that Hochul created a Commission on the Future of Health Care in 2023 to guide Medicaid budgeting. The commission had until the end of 2024 to issue its first report, but Hammond writes that it “hasn’t been heard from since.”
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