The State must pursue federal action on issues where New York is disproportionately burdened or constrained in its efforts to control costs.

  1. There should be no higher priority for New York political and civic leaders than to continue to seek a share of the federal contribution to Medicaid that bears a rational relationship to the State’s poverty levels and its high cost of health care….

The FMAP Formula:  Maximizing federal funding has been especially costly to New York because the rate of reimbursement it receives from the federal government—its Federal Medical Assistance Percentage, or FMAP – is relatively low…with an individual state’s FMAP based on the state’s average per capita income relative to the average per capita income of the country as a whole.  Because New York has a high average income, it gets the minimum FMAP of 50 percent.

But two states the same average per capita income can have very different Medicaid needs.  The first state may not have high-income people – but may not have many poor people, either.  The second state, with the same average income, may have some people with very high incomes but many more people in poverty, who place large burdens on the state’s Medicaid program.

New York is the second type of state, one with great Medicaid needs – as well as high health care costs.  New York’s share of the federal contribution to Medicaid does not properly reflect those needs and costs….

While any proposal to alter the calculation of the FMAP will be controversial, there is a broad consensus that the present formula is seriously flawed as a measure of Medicaid needs.  Various options have been proposed for adjusting the formula to take more accurate account of these needs.  One option would make some part of the FMAP dependent on the percentage of a state’s population with income below the federal poverty level.  Another option would weight the poverty figure by age, to take account of the increased costs of serving the elderly poor.  Still other proposals would weigh state health care costs.  But there should be no higher priority for New York’s political and civic leaders than to continue seeking a share of the federal contribution to Medicaid that bears a rational relationship to the State’s Medicaid needs.

Lieutenant  Governor’s Report on Controlling Increases in the Cost of New York Medicaid