No Easy Solution: Effective Medicaid Cost Control Must Focus on the Elderly and Disabled

This Citizens Budget Commission (CBC) report conducted by The Lewin Group reveals New York State’s excessive spending for Medicaid, one of the largest items in the State budget—costing $50 billion annually—and a significant burden on local governments.

The report identifies enrollment, provider payment rates, and utilization as the three factors driving Medicaid costs, and that all three should be addressed in cost-containment proposals. The report further recommends that a multi-year plan that focuses on restructuring the system to provide better health, better outcomes, and lower costs should be developed.

The report’s major findings include the following:

• Five-year trends in long-term care services show sizeable growth in spending, yet a decline in most of the populations served. On a per-recipient basis, spending for nursing home care grew by 19%. For non-institutional care, per recipient cost for personal care grew by 40% and 76% for certified home health agencies.
• On a per capita basis, New York’s Medicaid spending is the nation’s highest at $2,283, more than twice the national average ($1,026).
• The elderly and disabled comprise fewer than one in four (24%) Medicaid enrollees, but they consume nearly three of every four (72%) dollars spent.
• Conversely, children and non-elderly adults who are not disabled represent 76% of the enrollment, but only 28% of Medicaid expenditures.
• The long-term care services that many of the elderly and disabled receive are expensive and growing rapidly. Total costs for long-term care services are $12.5 billion annually.