As Families in Crisis Struggle to Reach Services, Medicaid Cuts Threaten to Make It Worse

As Albany debates Medicaid spending levels through ongoing heated budget negotiations, Health Homes is caught in the crosshairs. Facing a 40 percent surge in costs over the last three years, Governor Kathy Hochul proposed cutting more than $1 billion from some parts of New York’s health insurance program for low-income residents. The Senate and Assembly countered with multibillion-dollar increases to Medicaid and no cuts. They propose using an accounting trick — taxing and then repaying health insurers — to obtain an additional $4 billion from the federal government to fund Medicaid.

Hochul dubbed fixing New York’s mental health system “the defining challenge of our time” before releasing her state budget proposal, but her suggested cuts would take about $125 million out of Health Homes, leaving it with just under $200 million. The Department of Health says the cut would “focus care management on the most severe, acute patients.” The program has already been significantly scaled back; as recently as 2023, its budget clocked in at over $500 million.

Health Home providers across the state say that the cut would be devastating — and undermine the governor’s commitment to addressing New York’s mental health crisis. They fear that dismantling a support structure that thousands of families rely on would drive an uptick in emergency room visits and hospitalizations, and destabilize regional networks of social services.

“You can’t take apart the community-based mental health supports and say you’re supporting mental health,” said Bill Gettman, the CEO of Northern Rivers Family of Services, a mental health agency in eastern and central New York. “It’s a total disconnect.”

State Senator Gustavo Rivera, a Bronx Democrat and chair of the chamber’s health committee, said the proposed cut is “one of the many perplexing, and honestly frustrating, changes that the governor is proposing to make to the Medicaid program.”

As of Tuesday, the future of Health Homes was still uncertain.

“We’re still part of the conversation,” Rivera said. “It’s one of the things we’re insisting should be restored. And the governor’s resisting that.”

“When you’re working with a care manager, these families get an extra layer of support,” she said, adding that such managers can validate families’ frustrations and help them find needed services.

To be eligible for Health Homes, an individual must be enrolled in Medicaid and have two or more chronic conditions, like a substance use disorder and diabetes, or a single qualifying chronic condition, like HIV/AIDS or sickle cell disease. The program aims to expand enrollees’ access to preventative care and social services, thus reducing emergency room visits and extended hospital stays — and lowering overall health care costs.

“If you put a child in a hospital bed at $3,500 a day, and you’re doing care management for a few hundred dollars a month, it’s a no-brainer,” said Gettman of Northern Rivers. “It has been working. It’s keeping kids out of foster care, keeping kids out of psych centers, keeping kids out of hospitals.”

Research bears that out: The New York Health Home program has been linked to decreases in emergency department visits and hospitalizations for people with substance use disorders, as well as improved access to care among patients with diabetes. One multi-year study found a 43 percent decrease in inpatient mental health discharges among 10,000 enrollees, in addition to increased use of mental health outpatient treatment.

There have been challenges along the way, too. A 2018 Citizens Budget Commission report noted that while Health Homes “lead to better outcomes and long-run cost savings for many with complex conditions,” a sharper targeting of eligible individuals could make the program stronger and more cost-effective.

Patrick Orecki, CBC’s director of state studies, who worked on the report, said that New York’s Health Home program launched with broad eligibility standards and initially faced some difficulty in finding eligible people to enroll, but has proven effective in helping those with the most severe conditions.

“Our key finding was that the people with the most complex and complicated needs benefited the most from the arrangement,” Orecki said.

The state, for its part, is hesitant to give the impression that it would leave these people behind.

“Care management services offered by health homes serve an important role in the Medicaid program and the Department is committed to ensuring the ongoing operation of this valuable program,” Cadence Acquaviva, a Health Department spokesperson, said in a statement. “The FY25 Executive Budget prioritizes funding for health homes that serve those New Yorkers most in need, while also ensuring responsible overall levels of Medicaid spending.”

Health Home providers say they’ve been left in the dark about how the proposed cut would be implemented.

“We can’t get clarity from the governor’s office or the Budget Division or even the Health Department,” Gettman said. “So I don’t know what’s going on.”

The outcome could depend in large part on the viability of the legislature’s tax scheme. Rivera said on Friday that there had been “good progress” on that proposal, including ongoing discussions with the state and federal governments. He was hopeful that Hochul and the legislature could reach an agreement on the tax this week, enabling a final compromise.

Bill Hammond, senior health policy analyst at the Empire Center, a fiscally conservative think tank, noted that New York has the best funded Medicaid system of any state. Compared to previous administrations, Hochul’s attempts to curb the program are “very modest,” he said. And when it comes to Health Homes, he said, it could make sense to narrow the program’s scope.

“It would be prudent to carefully analyze how effective that program is and to reconfigure the program as necessary to make sure that it’s cost effective,” he said.

Rivera sees Hochul’s proposal differently: a “penny wise and pound foolish” cut that would come at a high cost to New Yorkers — and to the state.

“If you don’t provide that coordinated care, those folks are going to wind up in emergency rooms, those folks are going to wind up in nursing homes — which I’ll remind everybody, costs us more,” he said.