OCTOBER 12, 2011.

N.Y. Medicaid Rolls Reach 5 Million

By JACOB GERSHMAN

For New York Gov. Andrew Cuomo and state policy makers, it's a milestone that comes with mixed blessings: five million New Yorkers on Medicaid.

If New York hasn't already eclipsed the mark this month, it's nearly certain that the Medicaid program will get its five-millionth New Yorker this year, experts said. In August, there were 4,963,000 people enrolled in the government program for the poor and disabled.

The figure could top six million by the end of Mr. Cuomo's first term, officials predict.

The surge presents a fiscal challenge for the Cuomo administration and its effort to rein in the $52.6 billion Medicaid budget, the state's single biggest spending area when federal and county funding is included.

"It's an unsustainable trend. The revenues from all levels of government just aren't there to sustain this growth," said Stephen Acquario, the head of the state's Association of Counties, which has advocated to lower Medicaid costs for counties.

Over the past decade, more than two million people were added to New York's Medicaid rolls, an increase of nearly 75%. In 2001, 15% of the population was on Medicaid. That percentage is now at 26%, about 10 points higher than the national average.

The growth in coverage is the culmination of a concerted effort to patch holes in the social safety net by expanding who can receive Medicaid and making it easier to apply.

At the same time, Mr. Cuomo aims to cap state-funded Medicaid spending growth at 4% a year, regardless of the surge of new people into the system.

Josh Vlasto, a spokesman for Mr. Cuomo, said the state had made changes to the system and was able to absorb the upward trend.

"Despite the growth in enrollment, as a result of the dramatic forms achieved by the Medicaid Redesign Team, spending is running under the cap," Mr. Vlasto said, referring to a panel Mr. Cuomo appointed this year to make recommendations on controlling state health-care costs.

Unlike some governors across the country, Mr. Cuomo's first budget avoided major changes to Medicaid benefits or eligibility rules, which are more expansive than most states.

Instead, the administration is trying to control costs by lowering rates and shifting older and costlier Medicaid patients toward managed care and away from generally more expensive fee-for-service coverage.

While the state has met its overall spending targets in the first five months of the fiscal year, health officials say enrollment growth has already led to unexpected spikes in Medicaid managed-care spending that could get bigger.

"This enrollment growth will drive additional spending which, if unabated, could place more pressure on the global cap," said a July redesign team report.

Sustainable or not, the trend is holding steady. "If every low-income New Yorker eligible for Medicaid was covered, we'd be having this conversation about hitting six million." said Michael Birnbaum, a Medicaid researcher at the nonprofit United Hospital Fund.

State officials say the enrollment trend is the result of a sluggish recovery from the recession. But, with the exception of an occasional dip, the numbers have grown in times of plenty as well. Medicaid experts say there are other factors at play.

"It's because we wanted to and we needed to," said Mr. Birnbaum. "As a state, we wanted to reduce the ranks of the uninsured, so we made more low-income adults eligible for Medicaid. And we needed to—because of two recessions and an ongoing decline in employer coverage."

New York is one of five states to provide Medicaid to childless adults. In recent years, the state eliminated resources tests, allowing most applicants to attest their family assets. It also stopped requiring face-to-face interviews, switching to mail-in applications.

Last year, the state health department posted online tips explaining how people with too much income for Medicaid can still get into the system.

The Cuomo administration's Medicaid team is seeking to remove the requirement that applicants submit original documents to enroll. It's also proposed using technology to recruit more patients and add an "Are you interested?" in Medicaid line on tax return forms.

Fueling the surging caseloads are nonelderly and nondisabled adults, who represent about 60% of enrollment growth, according to the United Hospital Fund.

But they were also relatively cheaper, accounting for only a quarter of the $22 billion growth in the Medicaid budget. The elderly and disabled population, while more stable in number, is more expensive.

Medicaid experts said that suggests enrollment is less of a fiscal burden on Mr. Cuomo's Medicaid budget than critics have warned.

"I don't think it's defeating his goals of reducing Medicaid costs," said Valerie Bogart, director of legal services at Selfhelp Community Services, a Manhattan nonprofit.

In coming years, though, demographic shifts could change the equation. The state expects a 36% increase in the 85-and-older population over the next two decades, adding more people who require expensive care to the system.

Write to Jacob Gershman at jacob.gershman@wsj.com

http://online.wsj.com/article/SB1000142 ... lenews_wsj