Senator Dale M. Volker Announces Medicaid Savings For Western New York

William T. Stachowski

August 24, 2005

(Albany, N.Y.) Senator Dale M. Volker (R-C-I, Depew) today announced substantial savings under the first two years of the State’s historic cap and takeover of the local share of the Medicaid program.

Under the new Medicaid cap -- which the State Senate and the Governor fought for in this year’s State Budget -- counties and New York City will realize a cumulative total of $6.5 billion in savings over the next five years, beginning in 2006.

The substantial Medicaid savings data, provided this week to assist counties in crafting their 2006 fiscal year budgets -- will allow dozens of counties to limit their spending growth and provide taxpayers with significant property tax relief this year.

"Considering that Erie County is currently under a control board, this is tremendous news for the County so that they may be able to submit and pass a balanced county budget," said Senator Volker. "We have always understood that Medicaid constitutes a large portion of county budgets throughout New York State. By capping the local share, the State of New York has brought immediate and lasting fiscal relief to our counties. The State Senate will continue to work with the Governor and the State Assembly to bring about reasonable long-term solutions to continue to reign in the cost of Medicaid and improve the efficient delivery of this necessary health care program."

Savings by county includes:

* Erie - - $2.94 million in 05-06, $15.28 million in 06-07

* Niagara - - $1.02 million in 05-06, $5.31 million in 06-07

This new law has not only capped Medicaid costs, saving counties $6.5 billion over five years, but also provides an additional one-time savings to counties of more than $500 million by alleviating the need for local governments to budget for accrued liabilities relating to Medicaid costs. Counties outside of New York City are estimated to receive a one-time cash infusion of more than $90 million from this accounting change.

Additionally, the New York State Department of Health has been working cooperatively with counties to develop and implement further cost savings through demonstration projects. These new projects are designed to reduce Medicaid costs and improve the delivery of health care in a cost effective manner. The county will be eligible to share in these savings.


Specifically, the new law enacted by Governor Pataki and the Legislature:

Phases in the Medicaid cap over three years based on the county’s 2005 Medicaid spending levels.

Establishes a cap of 3.5 percent beginning in State fiscal year 2005-06, 3.25 percent in 2006-07, 3 percent in 2007-08.

The final budget also provided $25 million in additional support to counties outside of New York City - - where the property tax burden has had the most negative affect - - by accelerating the State takeover of local Family Health Plus costs from January 1, 2006 to October 1, 2005.

The new Medicaid reform plan will be fully implemented in 2008 when counties will have a permanent Medicaid cap not to exceed 3 percent annually. Passage of a number of Medicaid reform proposals advanced by the Governor and enacted by the State Legislature earlier this year have allowed the State to assume a greater share of the costs.