The Governor’s state budget fails to address New York’s Medicaid funding crisis, jeopardizing care for the more than seven million New Yorkers who rely on Medicaid for healthcare coverage
Albany, New York – Ahead of Tuesday’s budget healthcare hearing, the New York Alliance for Healthcare Justice (NYAHJ)—a Healthcare Education Project initiative being led by 1199SEIU United Healthcare Workers East and Greater New York Hospital Association — announced that a majority of Democratic state legislators have joined the effort to call on Governor Hochul to raise the Medicaid reimbursement rate for hospitals alongside dozens of elected officials and 1199 healthcare workers. These elected officials are part of a broader coalition of nearly 70 leaders statewide that have signed on to a letter urging the Governor to fully fund Medicaid.
Over seven million New Yorkers rely on Medicaid for their healthcare, the majority of whom come from Black and Latino communities. Even though Medicaid provides vital coverage to these New Yorkers, New York’s Medicaid program pays hospitals 30% less than the actual cost of care hospitals provide. This system endangers healthcare providers and the low-income patients, including seniors, children, mothers, and people with disabilities, who rely on them.
“New Yorkers deserve far better than a budget which cuts healthcare funding for our state’s most vulnerable people. At a time of glaring healthcare inequities, Medicaid is a lifeline for millions of children, seniors, and people with disabilities. To prioritize an arbitrary 15% budget reserve over the immediate health needs of our communities is entirely out of step with the will of New Yorkers, who overwhelmingly support investments to protect healthcare services and keep hospital doors open. Medicaid equity in New York cannot be delayed and must be ensured in the final FY2025 budget,” said George Gresham, President, 1199SEIU United Workers East.
“Our hospitals and their workers give every patient 100%, but New York pays hospitals 30% less than the cost of care they provide for Medicaid patients. These longstanding underpayments have created healthcare workforce shortages, longer wait times in emergency rooms, the scaling back of critical services, and entrenched health disparities in low-income communities. It doesn’t have to be this way. State budgets are about priorities and choices, and it’s an inconvenient truth that last year’s budget didn’t come close to fixing the problem. Governor Hochul has the opportunity and resources right now to increase Medicaid reimbursement to hospitals until, after several years, it fully covers the cost of care. Only then can our hospitals and their workers truly tackle the daunting challenges they face and best serve their patients and communities,” said Kenneth E. Raske, President of Greater New York Hospital Association (GNYHA).
“The pandemic showed us how important it is that everyone can access the care they need. We must fix the Medicaid crisis now, to prevent a public health crisis later. New York’s neediest and most vulnerable patients are depending on us to act,” said New York State Senator Zellnor Myrie
Hospitals in New York continue to struggle financially more than in the rest of the U.S.— 63% had an operating deficit in 2021—largely as a result of the severe underfunding of the State’s Medicaid program. Last year’s rate Medicaid increase of 7.5% was counteracted by other cuts to hospitals in the state budget, such as the indigent care pool and 340B drug program. With these cuts, all set against a rate that had remained essentially flat for 15%, the effective rate increase was only 1.6%, about one-quarter of the cost increases that hospitals have experienced.
Without sufficient funding, many hospitals cannot invest in programs or infrastructure that benefit the patients and communities they serve, and instead are left to reduce services, cut services or even close their doors:
- In 2023 Kingsbrook Jewish Medical Center (Brooklyn) and Beth Israel Medical Center (Manhattan) both announced that they are closing services. Eastern Niagara Hospital (Western New York) shuttered in June.
- Over the past 15 years, nearly 30 maternity units have closed or reduced services.
- The New York State Office of Mental Health has also reported the closure of 850 inpatient psychiatric beds across the State. Chronic underfunding of psychiatric services makes operating and staffing these services extremely difficult.
Chronic underfunding has also contributed to health disparities in largely Black and Latino communities, particularly affecting low-income seniors, expectant mothers, young children from low-income families, and people with disabilities.
For example, while Medicaid covers 50% of births in New York, women covered by Medicaid accounted for 61% of pregnancy-associated deaths in 2018, with Black women experiencing significantly higher mortality rates than other races. Infant mortality rates for Blacks and Latinos are also higher than for whites.
In another example, residents of the Bronx also experience higher rates of emergency department visits for asthma for adults and kids, and higher rates of hospitalizations for diabetes. These are just a few examples of the ongoing health disparities, worsened by the longtime underfunding of Medicaid.
By raising Medicaid rates to cover the cost of hospital services over the next four years, New York can eliminate the Medicaid funding gap and reduce the resulting care gaps and health disparities for the 40% of New Yorkers covered by the Medicaid program. This will not only stabilize hospitals across the state but also allow them to invest and grow critical services needed to treat the most vulnerable New Yorkers.
About the Healthcare Education Project
The New York Alliance for Healthcare Justice (NYAHJ) is dedicated to ensuring that Medicaid reimbursements cover the full cost of care, so that all New Yorkers have access to quality health care.
NYAHJ is an initiative through the Healthcare Education Project (HEP), a community-based advocacy organization working to protect and expand access to quality, affordable healthcare for all Americans through education, advocacy, and coalition building. HEP is a joint effort of 1199SEIU United Healthcare Workers East and the Greater New York Hospital Association, founded in 1999.
For additional information, click HERE.
###
