What the Obamacare ruling means for New York

Uncertainties Over Medicaid Reform

Russell Sykes, senior fellow at the Empire Center for New York State Policy, wrote this editorial which appeared in the Daily News this morning. Good piece.

[Yesterday], the Supreme Court, after signaling numerous concerns with ObamaCare during oral arguments, reversed course and upheld the law basically in its entirety by a vote of 5-4, with Chief Justice John Roberts providing the swing vote. The opinion supported the controversial mandate requiring the purchase of insurance by calling it what it always was, a tax.

But on the Medicaid expansion that would add more than 16 million people to Medicaid nationwide, the court appears to agree with 26 states that challenged the provision, by not allowing the federal government to withhold current Medicaid funding for a state that does not choose to expand eligibility.

Without threat of penalty, a number of states may not expand their rolls. But, New York did not challenge the provision and is unlikely to opt out of the expansion.

So, one might think the ruling provides clear sailing for New York to get on with implementing Gov. Cuomo’s bold health reform plans. Not so fast.

The decision does make the state Health Insurance Exchange Cuomo created by executive fiat in April viable as a marketplace for individuals and small businesses to purchase health insurance. The mandate remaining intact ensures that younger healthier purchasers will offset the costs of higher-risk and less healthy purchasers.

But for his Medicaid Redesign Team’s ambitious Medicaid reform plans, it’s still far from a sure bet.

Most of his sweeping Medicaid proposals have less to do with the court decision — instead they depend greatly on a less visible, but more important, federal sign-off on a major expansion of the state’s Medicaid waiver authority.

Section 1115 of federal Medicaid law allows the Center on Medicaid and Medicare Services (CMS), which oversees Medicaid federally, to permit states to experiment with major proposed reforms that are outside of existing Medicaid law and regulations.

And New York is in the process right now of submitting the largest 1115 waiver ever to CMS in both policy scope and the amount of federal funding being requested for reinvestment. New York estimates that the waiver will save $34 billion in Medicaid costs over five years, with half of that, or $17 billion, being federal savings. And the ask of the federal government is to give $10 billion of their savings, or $2 billion annually, for five years back to New York for investing in broad Medicaid and overall health system reforms.

New York plans to submit the full waiver in the late summer or early fall and hopes to have an answer by the end of this year. Certainly it is a worthy pursuit, but even Jason Helgerson, New York’s Medicaid Director, acknowledges that approval is by no means a sure thing.

Why would the feds agree to committing to such a large sum of money to New York, based on projected savings, when their own fiscal situation is so dire, you might ask?

No matter what the merits of the proposal, and it is mostly sound, growing deficits, skyrocketing long term debt and the nearly unbridled growth of entitlement programs including Medicaid and Medicare, stand in the way of approval.

So, the court has spoken. But the decision by no means clears New York’s path to reform. When the court decision is digested further and the frenzy dies down, yet another nail-biting waiting period begins for New York.