Medicaid Spending Growth per Enrollee Is Less Than Inflation Level
New York spends only 14% of its gross domestic product (GDP) on health care, ranking it twenty-fifth among the 50 states in terms of total health expenditures. New York maintains this modest ranking despite the size of its Medicaid program, which is the biggest in the country and is characterized by a large scope of services and generous eligibility—both the result of deliberate policy choices. Moreover, New York's choice to support such a large program has benefited local taxpayers—families and businesses—by drawing billions of dollars in Federal aid, which substitute for private-sector spending. This "substitution effect" is evident in New York's ranking of 35 out of 50 states for private-sector health care spending per capita and 25 out of 50 for total health care spending as a percentage of its GDP. 

In addition, despite assertions that Medicaid spending growth in New York has spiraled out of control, that growth has, over the last few years, been driven almost entirely by the increase in the number of previously uninsured New Yorkers enrolled in the program. From 2000 through 2004—the last four years for which data are available—total program spending increased at an average annual rate of 9%; however, the components of that growth rate were 8% from increased enrollment and only 1% from increased spending per enrollee, according to a Centers for Medicare & Medicaid Services Medicaid Statistical Information System report. In other words, New York's Medicaid spending per enrollee has increased by less than the level of inflation for the past four years.

In addition, more than half of the $45 billion that is spent on Medicaid in New York State comes from the Federal government. For every dollar New Yorkers spend on Medicaid, the Federal government contributes another dollar to New York's health care system. In fact, according to the NYS Division of the Budget, Medicaid is one of the few NYS programs that leverages significant Federal dollars into the State—particularly into low-income communities where most Medicaid beneficiaries reside.