New York’s Medicaid Program Is Nation’s Costliest And Is Pushing Local Budgets To The Breaking Point

Legislative column from Assembly Minority Leader Brian M. Kolb (R,I,C-Canandaigua)
October 7, 2011

Go ahead and ask any local elected official the following question: “What is the single biggest unfunded mandate that Albany imposes on municipal budgets?” Ten times out of ten, you will receive a one-word answer: Medicaid. New York’s Medicaid program has ballooned into America’s most expensive and its runaway costs are pushing many localities to the brink of fiscal insolvency. Without question, we need real solutions to reform New York’s Medicaid program, reduce costs, increase efficiency and save taxpayer dollars.


Enacted July 30, 1965, through Title XIX of the Social Security Act as part of President Lyndon Johnson’s “Great Society,” Medicaid has become America’s major public health coverage program. Medicaid finances health and long-term care services for over 55 million people, including low-income families, people with disabilities and the elderly. Medicaid should not be confused with Medicare, which is the federal health care program for persons 65 and older.

Medicaid is jointly funded through federal, state government, with the federal financing share constituting approximately 50 percent of all program spending. Here in New York, state and local governments actually share in the program’s cost. The state share of Medicaid is approximately 35 percent, while the local share amounts to roughly 15 percent. However, even though localities shoulder a significant portion of Medicaid’s hefty price tag, they have virtually no say in how the program is administered, which is a classic example of an unfunded mandate!


Since the program was launched, New York’s Medicaid costs have steadily risen to the highest in America. In fact, state Medicaid spending is now 69 percent more per beneficiary than the national average. This explosive growth is why Medicaid was cited by the New York State Association of Counties as the largest of nine State unfunded mandates that consume 90 percent of County budgets and contributes to our having America’s second highest combined state-local tax burden. New York’s Medicaid expenditures have soared due to several factors including our state’s above average share of elderly and disabled residents, higher costs for healthcare practitioners and excessive compliance costs caused by state regulations.

Another reason – a very big one – for our state’s nation-leading Medicaid expenditures is New York’s generous income eligibility levels and extensive optional services that other states do not provide. All of this contributes to the hefty Medicaid price tag Albany imposes on localities.


Just how out of control is New York’s Medicaid spending? Try this on for size: New York spends more than Texas and Florida combined, according to the Kaiser Family Foundation. The combined population of Texas and Florida is 43,948,871 (Texas has 25,145,561 residents, Florida, 18,803,310), while New York’s population is over 19 million, meaning we spend more than Texas and Florida together, even though we have nearly 24 million less residents!

Clearly, such levels of Medicaid spending are unsustainable. Albany must take immediate action to reduce this program’s crushing costs on localities and taxpayers.


The following are just a few of the legislative and administrative solutions I am supporting with an eye toward reducing Medicaid costs, reforming the program, protecting local budgets and saving taxpayer dollars. If Albany moves forward with these solutions, we have taken a large step toward making New York’s Medicaid program less costly and more effective:

  • Freeze local share of Medicaid costs: Freezing the municipal share of Medicaid costs is the first step toward reducing the program’s impact on local budgets and price tag to local taxpayers. Earlier this year, I introduced comprehensive legislation – Assembly Bill A.8447 – that would deliver extensive unfunded mandate relief for local governments beginning with freezing the local share of Medicaid costs;
  • Phased-in State takeover of Medicaid Costs: After we have successfully frozen the local share of Medicaid costs, a logical next step would be a phased-in state takeover of Medicaid expenses. Doing so would give Albany a true financial incentive to reduce costs and begin reforming the program. I recently co-sponsored legislation – Assembly Bill A.8644 – that would do exactly this;
  • Move forward with Medicaid Redesign Team proposals: The Governor’s Medicaid Redesign Team initially received thousands of cost savings proposals and moved forward with approximately 274 of them. Of the 274, 79 recommendations were formally sent to the Governor, and 73 were ultimately adopted through the State Budget process. We should go back and review the remaining recommendations that were not acted upon to determine if their enactment could lead to greater savings; and
  • Crackdown on Medicaid waste, fraud and abuse: There is an estimated $5 billion in waste, fraud and abuse occurring in Medicaid annually. We must ensure that state and local governments have the resources to prevent misuse of public monies, identify instances where waste, fraud and abuse are occurring, and recover any misspent funds.

As always, constituents wishing to discuss this topic or any other state-related matter should contact my district office at (315) 781-2030, or e-mail me at