What Is Medicaid

Medicaid is a joint federal – state health insurance program that assists those persons with low income and limited resources. In New York State, the State government requires county governments to administer and provide Medicaid services and to pay a portion of the cost of Medicaid.

Medicaid became law in 1965. It is often confused with Medicare. Medicare is a federal health insurance program that helps the elderly and disabled. It is possible to qualify for both programs. In that case, Medicaid typically pays the Medicare coinsurance and deductibles. Medicaid has a core of services mandated by the Federal government and optional services the states can cover or provide if they so choose. New York State covers nearly all the optional services for Medicaid.

Fee for Service (FFS) Medicaid is a payment model where healthcare providers are paid directly for each service they provide to Medicaid beneficiaries, allowing for a wide range of medical services.  Under FFS, Medicaid pays healthcare providers directly for each service rendered. This means that providers submit claims for the services they provide, and New York State reimburses them according to pre-established rates.

“Managed Care” Medicaid provides benefits through contracted arrangements with managed care organizations (MCOs), aiming to improve care coordination and control costs. Medicaid managed care is designed to deliver Medicaid health benefits and additional services through a structured system of managed care organizations (MCOs). These organizations receive a set dollar amount per member per month (called a “capitation payment”) from New York State to provide a range of health services to enrolled beneficiaries. This model allows states to manage costs and improve the quality of care provided to Medicaid recipients. 

From 2020 to the end of 2024, Medicaid costs in Erie County have increased by more than five hundred forty million dollars.  In that same period, Erie County’s portion of those costs has risen, by more than fourteen million dollars. 

The 2021 cost reduction is due to enhanced Federal Medicaid Assistance Payments (e-FMAP) coming from Congress as a result of the COVID-19 pandemic.  These payments have stopped. 

When Medicaid was first established, the Federal Government paid 51 percent of NY's Medicaid costs, New York State paid 35 percent and Counties, including Erie County, paid about 13 percent.  However, New York State has capped county Medicaid payments.  If that cap did not exist, Erie County’s portion of Medicaid costs in 2024 would have been over $388 million dollars or about $174 million dollars more than what was budgeted. 

So the reader may understand the impact of the Medicaid cap on the Erie County budget, in 2024, Property Tax revenue was about $328.7 million.  To raise an additional $174 million in property tax revenue would have caused property tax rates to rise more than 50%. 

The MIG Team can analyze prescriptions paid through Medicaid by the type of drug, prescribing medical professional, Medicaid patient, number of refills and other criteria. The MIG Team uses this data to determine the most commonly filled prescriptions.