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ALBANY – New York taxpayers might get stuck with a $1.3 billion bill after the feds rejected the idea of using Medicaid money to fund bonuses for healthcare workers but not before some of the funds had been distributed.
Gov. Kathy Hochul had claimed the federal funding would cover the costs only for her administration to reveal that was “unlikely” to happen in the state financial plan released Friday.
More than 613,00 people have received $1.6 billion in bonuses so far, according to the state Department of Health.
The unexpected $1.3 billion hole over three years in state finances adds to a darkening fiscal outlook that includes a projected $9.1 billion budget gap by fiscal year 2025.
“This obviously contributes to that problem going forward,” Bill Hammond of the Empire Center for Public Policy said about the big bonus costs he spotted earlier this week.
“To make this work, they’re going to have to trim spending somewhere else.”
Expected decreases in future tax revenues play a part – but so does overspending by Albany Democrats.
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.
“Our bonus program is about more than just thanks, this is an investment in health care and with it we will retain, rebuild, and grow our health care workforce and ensure we deliver the highest quality care for New Yorkers,” Hochul said in August 2022.
The plan was to give up to $3,000 per qualifying worker in health care or mental services from Oct. 1, 2021 through March 31, 2024.
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.
Whoever ends up footing the bill, the bonuses are unlikely to have a big effect on the long-term challenge of making sure New York has enough people working in health care 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.
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