Report: N.Y.’s minimum-wage rise to increase state’s Medicaid costs by $100M the next two fiscal years

ALBANY, N.Y. — New York’s State’s recently enacted budget sets forth a $15 minimum wage to be rolled out in stages across the state. Much of the contentious debate on the minimum-wage increase dealt with the impact on restaurants and retail stores. But a new report from New York State Comptroller Thomas P. DiNapoli sheds some light on the cost increases facing state taxpayers through the Medicaid program.

The minimum-wage hikes are projected to increase New York State’s Medicaid spending by $12.7 million in state fiscal year (SFY) 2016-17 and $88 million in SFY 2017-18, DiNapoli said in a 68-page report he recently issued about the newly enacted budget. The comptroller’s office says the figures were supplied by the state’s Division of Budget.

“These are the first official estimates of a little-discussed hit to taxpayers that’s bound to grow many times larger in 2019 and beyond,” Bill Hammond, director of health policy at the Empire Center for Public Policy, Inc. writes on the Albany–based think tank’s NYTorch blog. “While the minimum-wage debate focused largely on fast-food and retail businesses, the health-care sector also employs many thousands of workers who make substantially less than $15. A share of the cost of their raises will be passed along to Medicaid, the state-federal health plan for the poor and disabled that covers almost one-third of the state’s population,” he added.

The new budget raises the state minimum wage for New York City employers with at least 11 employees to $11 at the end of 2016, $13 a year later, and $15 at the end of 2018, according to DiNapoli’s report. Hikes to the minimum wage will take effect over longer periods for smaller employers in New York City, and for employers outside New York City.

“Because the wage escalates over time — and covers a larger and larger swath of employees — the figures in DiNapoli’s report are the tip of an iceberg,” Hammond contends.

Contact Rombel at arombel@cnybj.com

Note: Story updated on 5/7/16 at Noon to reflect that the state’s Division of Budget supplied the estimated numbers on the increased Medicaid spending expected from the minimum-wage increase.