Hochul healthcare bonus bungle could cost NY taxpayers $1.3B
New York taxpayers face a hefty $1.3 billion bill after the federal government rejected the state’s attempt to use Medicaid funds to pay bonuses to healthcare workers. Governor Kathy Hochul had initially claimed that the federal funding would cover the costs, which would give up to $3,000 per qualifying worker in health care or mental services from October 1, 2021, through March 31, 2024. However, state officials revealed that this was “unlikely” to happen in the state’s financial plan released Friday. More than 613,000 workers have already received $1.6 billion in bonuses, according to the state Department of Health. This unexpected hole in state finances adds to the darkening fiscal outlook, which includes a projected $9.1 billion budget gap by fiscal year 2025.
Bill Hammond of the Empire Center for Public Policy stated that “this obviously contributes to that problem going forward. To make this work, they’re going to have to trim spending somewhere else.” While expected decreases in future tax revenues play a part in the state’s fiscal challenges, overspending by Albany Democrats has also contributed to its budget gap. The state budget approved last month was notably $2 billion higher than the $227 billion financial plan Hochul initially proposed.
Hochul pushed the bonus idea last year as a moral obligation to healthcare workers, considering their sacrifices during the pandemic, as well as a way to entice more of them to the Empire State amid subsequent staffing shortages. The bonuses are unlikely to have a big effect on the long-term challenge of making sure New York has enough healthcare workers and Mental Hygiene, according to Hammond. “That’s something that has to be addressed by permanent changes in pay and working conditions. Bonuses, I don’t think are gonna make a serious dent in any of that,” he said.
Administration officials are still hoping to “negotiate” with the Centers for Medicare & Medicaid Services to unlock federal money, with success hardly guaranteed, according to the financial plan. A Hochul spokesman did not provide immediate comment Tuesday afternoon.
Q: Who approved the use of Medicaid funds to pay bonuses to healthcare workers?
A: Governor Kathy Hochul approved the use of Medicaid funds to pay bonuses to healthcare workers.
Q: How much in bonuses have been distributed so far, and to how many workers?
A: More than 613,000 workers have received $1.6 billion in bonuses so far, according to the state Department of Health.
Q: Why was the use of Medicaid funds to pay these bonuses rejected by the federal government?
A: The federal government rejected the use of Medicaid funds to pay the bonuses, which created a $1.3 billion hole in state finances because it is not an authorized use of Medicaid funds.
Q: Will New York taxpayers have to pay for the bonuses themselves?
A: Although it is still uncertain who will end up paying for the bonuses, New York taxpayers may have to foot the bill.
Q: Will the bonuses have a significant effect on solving New York’s healthcare worker shortage?
A: According to Bill Hammond of the Empire Center for Public Policy, the bonuses are unlikely to have a significant effect on the long-term problem of New York’s healthcare worker shortage. Permanent changes in pay and working conditions need to be made.
The mishandling of healthcare bonuses by Hochul may result in a loss of $1.3 billion for NY taxpayers.
The US state of New York may end up with a $1.3bn bill after its request to use Medicaid funds for healthcare worker bonuses was rejected by federal officials, causing concern over the fiscal outlook. Funding was distributed in bonuses totalling $1.6bn to more than 613,000 healthcare workers, but subsequent revelations have led to the worry that the money to fund the bonus scheme is unlikely to come through. The difficulties come as New York already faces a $9.1bn budget deficit by fiscal year 2025. The bonus scheme was intended to give qualifying health care or mental services workers up to $3,000 from October 2021 to March 2024. However, experts suggest that any requirements to make up the shortfall in taxes can only be met by spending cuts elsewhere.