100% Reimbursement of Medicaid Cost (FY25 Budget Request)

MEMORANDUM OF SUPPORT

100% Reimbursement of Medicaid Cost (FY25 Budget Request) 

New Yorkers rely on their hospitals, and hospitals rely on healthcare workers. Across the state, hospitals are the heart of their communities—as well as some of the biggest employers in their regions— but right now they are struggling to survive. Workers and patients are paying the price.

THE PROBLEM 

  • Hospitals and other healthcare employers must address staffing and working conditions in order to recruit and retain the workforce needed to keep our communities healthy. However, hospitals across New York State are struggling financially and are on the verge of being shut down or key services being eliminated. 
  • On average, 70% of patient services are paid for by Medicare and Medicaid. However, due to underpayment by public payers, hospitals lose money on the care they provide.  In fact, Medicaid only pays hospitals about 60 cents for every dollar they spend on care. Medicare only pays 84 cents on the dollar. 
  • The current system relies on subsidizing underpayment from the State through private commercial health insurance payment. However, this increases costs for all of us - without increasing quality. Private health companies spend exorbitant amounts of money on CEO salaries and creating huge amounts of paperwork and administration. 
  • Persistent underpayment from Medicare and Medicaid forces struggling hospitals to try to balance their finances by negotiating more favorable payment rates from powerful private insurers raising costs to working families - and cutting costs. The biggest cost for hospitals to cut is labor. 
  • This means hospital systems have an economic incentive to keep their healthcare worker staff as small as possible. And when their finances become tight — such as when a global pandemic forces them to cancel money making elective services — nursing and other labor costs are often targeted for cuts. That’s why US hospitals were furloughing nursing staff shortly before they became flooded by Covid-19 patients.”
  • In order to stop this trend, the State should fix the structural underfunding of hospitals by closing the Medicaid gap and ensuring 100% reimbursement of Medicaid costs. 

THE SOLUTION 

NYS must invest in sustainable, reliable and predictable funding for hospitals including funding the full reimbursement of all Medicaid cost, closing the 30% medicaid gap. 

Closing the Medicaid gap this year would require a State investment of $2.7 billion, due to federal match. We support the proposal to phase this in over four years. 

A massive infusion of funds is needed to protect our healthcare workers, keep hospitals open, and ensure that all New Yorkers receive the best care possible!