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Medicaid is about to get more expensive for counties in New York

A monitor sits next to an empty hospital bed in a hospital room
DC Studio
A bed sits open in the intensive care unit of a hospital.

In the ongoing battle between New York state and county governments, unfunded mandates — programs counties have to provide, but don’t get reimbursed for — cause the most friction.

Now, the biggest unfunded mandate — Medicaid — is about to get even more expensive.

Beginning this year, the state will start to withhold hundreds of millions of federal dollars it usually passes to counties to fund Medicaid, the health insurance program for low-income people.

County leaders and North Country lawmakers in both parties say the move could mean higher local property taxes, while Gov. Kathy Hochul's Office says the funds will be used to improve Medicaid.

In New York state, counties are mandated to chip in for Medicaid costs. For years, they’ve gotten federal funding in the form of enhanced Federal Medical Assistance Percentage (eFMAP) payments that get filtered through the state to help them do that.

But that’s about to change. Over the next few years, the state is going to reduce, then zero out the federal dollars it sends down to counties for Medicaid.

State Sen. Dan Stec, a Republican from Queensbury, used a metaphor to describe what's happening.

"The federal government is Grandma and Grandpa, and they decide to give the grandchildren money — that would be the counties — and the parents step in and take that out of the grandkids’ pockets," he said. "That’s what the state is doing here."

Stec said the counties in his district — which covers Clinton, Essex, Franklin and Warren counties, and parts of St. Lawrence and Washington counties — will have to pay anywhere from $1 to $3 million more per year in Medicaid costs.

According to Spectrum News, the New York State Association of Counties (NYSAC) estimates the change could raise property taxes by 7% to 14%.

Clinton County Administrator and NYSAC President Mike Zurlo said county governments will have some big decisions to make.

"Do they reduce services? Do they raise taxes? Do they deplete reserves?" he said. "Those are all options that we’re going to be faced with going forward."

Gov. Kathy Hochul initially proposed keeping all the federal money that usually goes to counties for Medicaid starting this year. But both houses of the Legislature rejected that and negotiated a three-year phase-out in the budget. When it’s fully implemented in Fiscal Year 2026, it’s estimated the state will keep about $774 million.

In a statement, a spokesperson for the governor said the three-year off-ramp will help counties plan for future budgets. But Assemblyman Billy Jones, the North Country's lone Democrat in Albany who represents Clinton and Franklin counties and five towns in Essex County, said it’s not enough time for the counties to adjust.

"They’re not happy with it; I wasn’t happy with it," he said. "But I will say, bluntly, that the governor could have done that in policy anyway. She could have just done it with the stroke of a pen or a phone call."

The governor’s spokesperson said the state has helped counties and New York City collectively save almost $38 billion in Medicaid costs since 2015. They said shifting the federal money will allow the state to fund investments "to ensure access, promote equity and stabilize the health system serving New York’s most vulnerable."

The spokesperson said this year’s budget includes more than $6 billion in major local aid programs for counties outside New York City. Even Zurlo said highway and public health funding were among the bright spots for counties in the budget.

But he said this was not the year to go after the Medicaid funds.

"There was no urgent need to come after county governments this year," Zurlo said. "We have always been a partner. If we were ever in a crisis, I know that the Association of Counties would have worked with the administration and tried to figure out something to ameliorate the state’s issue. This was not the year. For no reason, they came after our money this year."

Zurlo said counties plan to continue to lobby for the federal Medicaid funding to be restored. But, he said, once you’re used to a revenue stream, it’s very difficult to let it go.