State Comptroller: Possible $1.5 Billion Jump in Medicaid Costs

This week the New York State Comptroller Thomas DiNapoli issued a report titled, “Comptroller Report Medicaid Unwinding”.

This is an in-depth analysis authored by the Office of the State Comptroller (OSC) in New York. The report focuses on the “unwinding” of Medicaid’s continuous enrollment policies that were implemented during the COVID-19 pandemic.

The report provides a detailed examination of the enrollment trends, financial implications, and potential outcomes of this process for New York State. It includes data-driven insights on how changes in Medicaid enrollment could impact state expenditures and highlights the complexities involved in managing this transition period.

What is “Unwinding”?

This is a process that reassesses the eligibility of all individuals enrolled in Medicaid, which began in April 2023 following the end of federally mandated continuous coverage requirements.

Why does this report matter to me? 

It’s important to remember history, because it has a tendency to repeat itself.  Many might recall the 2009 state budget fight, where the executive budget proposed over 100 new taxes and fees to try and cover a projected $15 billion multi-year budget gap.  The opposition was loud as many pushed back against proposed taxes that included Broadway shows, gym memberships, haircuts and even bowling shoe rentals.  The end result was the beginning of the famous millionaires tax.

Overall Medicaid is expected to cost the taxpayers around $100 billion for the state to operate in the 2023-24 FY year. This includes the federal, state, and local cost share.  Most germane to the individual and corporate taxpayer is that if Medicaid and other operating costs continue to go up, the state will seek to find ways to fill any budget gaps created by those increases.

Key Points from the Report

Enrollment Increase During Pandemic: New York’s Medicaid enrollment rose from 6.1 million in January 2020 to over 8 million in June 2023, a 31.5% increase.

Post-Unwinding Enrollment Decrease: Since the start of the unwinding process, enrollment decreased by about 190,000 individuals (2.4%) from 8 million in June 2023 to 7.8 million in August 2023.

Projected Enrollment Decline: The unwinding process is projected to reduce Medicaid enrollees to 6.9 million by April 2024 and 6.6 million thereafter.

Financial Implications: The State Financial Plan may face nearly $1.5 billion in additional State share Medicaid costs in the 2023-24 fiscal year due to higher-than-anticipated enrollment levels.

Cost Per Enrollee: The State share cost per Medicaid enrollee is approximately $4,020.

Potential Additional Costs: If enrollment declines continue at a steady pace, the enrollment would be 274,755 higher than the Division of Budget’s projections, increasing State share Medicaid spending by about $1.1 billion in the 2023-24 fiscal year.

Scenario Analysis for Cost Impact: If 5% or 10% of individuals identified as “renewals outstanding” eventually renew their Medicaid coverage, unanticipated costs could grow by an additional $186.1 million to nearly $1.5 billion.

Read the Comptroller’s Full Report Here

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