As we begin 2011, the vast majority of states face budget shortfalls. Legislatures across the country will spend much of the new year struggling to avert fiscal catastrophe.
One major budget buster in every state is Medicaid. That’s especially true in New York. On average, states spend around 20 percent of their budgets on Medicaid; in New York, it’s 30 percent.
As New York’s legislators ask themselves how the state is going pay for one of the largest items in the budget—at a cost of 50 billion dollars—I suggest they also ask themselves why. Why does New York spend so much on Medicaid?
It might seem obvious at first. New York is a big state with major urban centers, higher cost of living, higher labor costs and a diverse population. That’s why it spends so much more than Oklahoma, maybe, but why does it spend so much more than a large, diverse state like California?
According to the latest complete numbers from the Kaiser Family Foundation, even though California has more than twice the number of people enrolled in the program (roughly 10 million compared to New York’s 5 million), its Medicaid costs are far lower. Per enrollee, New York spends $6,910; California spends just $3,686. And California’s Medicaid program generally is meeting the needs of its enrollees. It works.
Why? What does California do differently—and can New York learn from its example? These are simple questions that no one seems to be asking. But if the legislature expects to lift New York from its fiscal crisis, it may have to.