In her State of the State address on January 9, Governor Hochul noted that “hospitals in New York are struggling financially more than in the rest of the U.S—42% of hospital facilities in New York had an operating deficit in 2021.” The Governor did not mention that the figure rose to 63% in 2022. The root cause of this crisis is that New York’s Medicaid program funds hospitals 30% less than the actual cost of delivering care.

Today’s State Budget announcement was an opportunity for the Governor to set a new course. But she did not. It’s no wonder that so many hospitals are in deep financial trouble and critical health indicators are worsening, especially in low-income communities.

The Executive Branch makes frequent mention of the 7.5% Medicaid rate increase for hospitals in last year’s budget. But that increase—after the rate remained essentially flat for 15 years—was almost completely wiped out by the budget’s hospital cuts (e.g., cuts to the Indigent Care Pool and the 340B drug program). Given these cuts, the effective rate increase was only 1.6%, about one-quarter of the cost increases that hospitals have experienced.

New York State must end the drastic underfunding of care for Medicaid recipients. 1199SEIU and GNYHA will continue to educate all those willing on the urgent need to increase New York’s Medicaid reimbursement rate for hospitals to 100% of cost over several years and strive for health care justice for all New Yorkers by reducing health care disparities and improving health outcomes for low-income, predominantly Black and Brown communities.

We will also work with stakeholders to tackle the real cost drivers of New York’s Medicaid program, such as the unsustainable growth rate of managed long-term care.

We call again on the Governor and the Legislature to join us in achieving those goals.

George Gresham, President, 1199SEIU United Healthcare Workers East
Kenneth E. Raske, President, Greater New York Hospital Association