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March 14, 2011

 

DiNapoli: 30-Day Amendments Shed Light on Potential Medicaid Savings

Work Remains to Close Projected $10 Billion Gap


The 21-day and 30-day amendments to the Executive Budget proposal provide additional details on how the Governor plans to achieve billions of dollars in previously unspecified savings, according to a report by State Comptroller Thomas P. DiNapoli. However, risks to the Financial Plan associated with proposed savings and gap-closing actions remain.

"The Governor's Executive Budget proposal took welcome steps to remedy the state's longstanding bad habit of spending more money than it takes in," DiNapoli said. "The budget amendments provide additional detail on how savings will be achieved, but work remains to ensure the budget gap can be closed.

"As the budget process moves forward, the Legislature and the Governor must remain committed to addressing the state's structural deficit. Recurring spending must be aligned with recurring revenue, and the budget process should be transparent and completed on time."

DiNapoli's report on the SFY 2011-12 Executive Budget identified significant unspecified savings targets as risks to the Financial Plan. The Medicaid Redesign Team addressed some of this by identifying specific Medicaid reductions in its report. However, some uncertainty persists related to revenue projections, Medicaid caseloads, savings targets and the Legislature's willingness to accept some specified cuts and cede authority over others.

While the original Medicaid savings target for the Medicaid Redesign Team was $2.85 billion, the Division of Budget lowered the target to $2.3 billion based on reduced estimates of state Medicaid spending and an increase in anticipated federal matching funds.

The largest single portion of the $2.3 billion in Medicaid savings actions requires the healthcare industry to identify $640 million in as-yet-unspecified savings measures. If the industry does not meet this goal, the state, through a plan developed by the Commissioner of Health in consultation with DOB, is authorized to reduce Medicaid spending as needed.

Approximately 30 percent, or $662 million, of the $2.3 billion in Medicaid savings proposals, has been advanced in the past but not enacted by the Legislature. (Further details on the past proposals the Legislature did not enact can be found in Appendix A of DiNapoli's report).

A significant amount of the Executive Budget's non-Medicaid proposed savings remains largely undefined, including $1.4 billion in state operations savings comprising 10-percent agency reductions, $450 million in workforce savings and $100 million from unspecified facility closures.

To view DiNapoli's report on the 30-day amendments to the Executive Budget, visit:
http://www.osc.state.ny.us/press/releases/mar11/30dayamends.pdf.

To view DiNapoli's report on the SFY 2011-12 Executive Budget, visit: http://www.osc.state.ny.us/press/releases/feb11/021511.htm.



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