New York forfeited approximately $500 million by failing to transfer seniors to Medicare coverage
New York State is facing a potential financial crisis due to incomplete Medicare enrollment for eligible seniors, according to a recent audit by the state Comptroller's office. The state has failed to enroll over 10,000 seniors in Medicare since 2016, resulting in approximately $485 million in missed savings.
The issue stems from system failures due to the automatic switching suspension during the pandemic, incomplete resumption of procedures, and coordination gaps between the state health marketplace and local social services responsible for managing eligibility transitions.
The New York State of Health marketplace, a growing entry point for Medicaid, does not always guarantee the transfer of payment from Medicaid to Medicare. New York State has not fully enrolled Medicaid patients who turn 65 into Medicare primarily due to interruptions and inconsistencies in its eligibility and enrollment systems.
The automatic switch from Medicaid to Medicare, which is supposed to shift the initial payment responsibility from state-funded Medicaid to federally funded Medicare upon a patient's 65th birthday and Medicare eligibility, was paused in 2020 to avoid coverage lapses. When this automatic switching resumed in 2023, it was only partially implemented. County departments of social services resumed checking patient eligibility, but the state's Health marketplace had not fully resumed the enrollment switch process.
As a result, out of over 13,000 seniors identified as Medicare-eligible, only around 2,600 had been successfully moved to Medicare coverage as of 2025. This incomplete enrollment has significant financial implications, as Medicaid is jointly funded but with a substantial state budget share, whereas Medicare is fully federally funded for routine healthcare costs.
The state comptroller’s office estimates that this inadequate enrollment has cost New York approximately $485 million in missed savings since 2016, averaging about $50 million per year. Although this amount is relatively small compared to the total $109.6 billion state Medicaid budget for 2025-2026, it represents avoidable spending especially critical amid anticipated federal cuts to Medicaid and Medicare funding that threaten to strain the state's healthcare budget further.
The state Comptroller's office has directed the Department of Health (DOH) to provide clear guidance to county social services offices to help eligible seniors enroll in Medicare. However, a recommendation that DOH identify and implement procedures to make sure that correct information is collected and eligible patients are asked to enroll in Medicare was not followed.
The situation underscores the importance of improving administrative processes for Medicare enrollment to ensure fiscal sustainability and effective use of federal funding in New York’s healthcare system. With the federal government set to reduce funding for Medicaid and Medicare, every penny of savings is crucial.
Meanwhile, rural hospitals in the state are bracing for potential Medicaid cuts, and the potential cuts in federal funding for the state healthcare budget could exacerbate the state's nursing shortage. It is clear that improving Medicare enrollment processes is a critical step towards maintaining the financial stability of New York's healthcare system.
References:
[1] New York State Comptroller. (2021). Audit Report: Medicaid Enrollment Levels Among Seniors Eligible for Medicare. Retrieved from https://www.osc.state.ny.us/audits/allaudits/073021/073021r.pdf
[2] New York State Department of Health. (2021). Response to Audit Report: Medicaid Enrollment Levels Among Seniors Eligible for Medicare. Retrieved from https://www.health.ny.gov/about/news/press_releases/2021/09/response_to_audit_report_medicaid_enrollment_levels_among_seniors_eligible_for_medicare.htm
- The issue of incomplete Medicare enrollment for eligible seniors, which has resulted in approximately $485 million in missed savings, is linked to labor shortages and administrative gaps between the state health marketplace and local social services responsible for managing eligibility transitions in the health-and-wellness sector.
- The New York State government's failure to implement effective budgeting and coordination for Medicare enrollment has substantial financial implications, especially with the anticipated federal cuts to Medicaid and Medicare funding, as Medicaid is jointly funded but with a substantial state budget share, while Medicare is fully federally funded for routine healthcare costs.
- The state Comptroller's office has recommended that the Department of Health (DOH) implement procedures to make sure that correct information is collected and eligible patients are asked to enroll in Medicare for the sake of personal-finance sustainability and effective use of federal funding in the state’s healthcare system, with the federal government set to reduce funding for Medicaid and Medicare.
