News Release


For More Information:

William R. Steinhaus
Dutchess County Executive
(845) 486-2000

May 24, 2002

Medicaid Deficit Warned

Poughkeepsie. . . .Dutchess County Executive William R. Steinhaus, Legislature Chairman Bradford Kendall and members of the Dutchess County Legislature have been advised of a potential deficit of $1.5 to $2.0 million in available funds to cover rising state mandated Medicaid costs.

Please see attached memorandum from Dutchess County Budget Director Kevin D. Fish.


To:                  William R. Steinhaus, County Executive

                        Bradford Kendall, Chairman, Legislature

From:              Kevin D. Fish, Budget Director

Date:               May 24, 2002

Re:                  Medicaid 

I am writing to advise you that state mandated Medicaid costs paid by Dutchess County Government on behalf of county residents continue to skyrocket, with spending totaling $13.9 million so far this year—an increase of 11.4% over the same period in 2001.  Should this rate of growth continue, the year-end deficit could be $1.5 to $2.0 million and could require an additional appropriation by the legislature to close the gap. 

Medicaid, an outgrowth of the “Great Society” programs of the 1960’s, provides health services, medical and nursing home long-term care for income eligible individuals and families.  Program costs are the joint responsibility of the federal and state governments. The federal government pays between 50% and 83% of the service-related costs in each state according to a formula based on state per capita income compared to the national average.  In New York State however, the federal government pays only 50% of Medicaid costs.   

New York State is one of twenty states mandating county governments to shoulder a portion of the non-federal share.  New York State mandates that counties pay 50% of the non-federal share for medical costs and 20% of the non-federal share of nursing home costs.  The 2002 Dutchess county budget provides $37 million for these services. 

During the past five years, Dutchess county property taxpayers paid $166 million as the local share of Medicaid costs while taxpayers in counties outside New York State paid far less or nothing at all. 

Medicaid represents approximately 73 cents of each one dollar of property taxes paid to Dutchess county government and with the exception of employee salaries, is by far the largest single expense in the county budget. 

According to Dutchess County Commissioner of Social Services Robert Allers, the rapid increase in Medicaid costs results from the combination of skyrocketing costs for pharmaceuticals, medical services, long-term care, medical transportation and program enhancements approved by the State Legislature.  A recent study by the University of North Carolina at Chapel Hill reported that only the New York State and North Carolina Legislatures have opted to provide all thirteen categories of Medicaid services. 

Decisions regarding who is eligible for Medicaid benefits, what the benefit package will include or how much Medicaid will pay for each service provided are made in Washington and Albany.  Neither the County Executive nor the Dutchess County Legislature has any control over these matters, yet our local property taxpayers are forced to pay the state mandated bill. 

Earlier this year the State Legislature amended the state’s Health Care Reform Act (HCRA) to increase funding for the health care industry.  Counties were assured by the state that the local cost of these enhancements would be offset by a permanent increase of three percent in the federal Medicaid share—from 50% to 53%.  It is now clear that the state’s request to the federal government for the permanent increase does not have support in Washington. 

The bottom line if things don’t change is clear; our county fund balance will need to be reduced by $1.5 to $2.0 million before year-end to cover the estimated deficit.  Not that this helps, but the Medicaid problem is not unique to Dutchess County.  Your diligent financial decision-making has placed us in a stronger position to deal with the problem than other counties.  However, as the attached news article demonstrates, a county’s financial viability can and does change quickly.  We know the fund balance will shrink significantly for pending labor settlements and we know we have a long way to go to replenish the $9 million of fund balance draw down to support the 2002 budget.  It will take a continued, collective discipline and resolve to maintain the level of financial stability which our residents and property taxpayers expect. 


Cc:            Members, Dutchess County Legislators

2002 Press Releases