New-York News

Hochul spends $58M to bail out state health fund for babies harmed at birth

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Gov. Kathy Hochul has allocated $58 million to rescue a financially ailing state fund that covers lifetime hospital costs for people hurt by medical malpractice at birth, extending the program for the remainder of this year, state budget officials confirmed. But the fund’s future remains unclear.

The Medical Indemnity Fund, which started in 2011, has served more than 1,000 families over its lifetime and cost the state just under $1 billion, said Tim Ruffinen, a spokesman for the state budget office. The fund primarily helps families whose children developed neurological diseases due to medical errors, such as encephalopathy, cerebral palsy or spastic quadriplegia. 

But as enrollment in the program grows and average medical costs per patient increase, New York is up against a shortfall of cash to cover care for medical injuries. The new funds allow the program to continue to accept new enrollees in the short term – a future that was uncertain just one week ago.

The bailout, announced Friday, comes a few weeks after the fund was forced to stop new patients from enrolling earlier this month due to wide funding gaps. The state Health Department, which manages the fund, posted a notice to its website in early May stating that the fund’s estimated future costs total more than 80% of its cash in the bank, requiring the agency to suspend enrollment under a state law.

Health officials made clear that halting the enrollment of new patients would not prevent the funds from covering the costs of the 992 families currently enrolled in the program. But the projected medical costs of those families are more than $3.2 billion, leaving New York with a shortfall before adding the costs of any new enrollees onto its tab, according to a state-commissioned actuarial analysis of the fund published in April.

Currently, the fund has $147 million in assets, the analysis says.

Hochul’s allocation reverses the suspension of new enrollment, allowing the Health Department to accept new patients in need of medical care for the remainder of the current budget year. The move was lauded by State Health Commissioner Dr. James McDonald, who said that agency staff have been “good stewards of the fund” since the Health Department was tasked to oversee it in 2019.

McDonald said that the Health Department will continue to work with agency partners and the governor’s office “to drive solution-based strategies for current and eligible enrollees.”

The recent bailout isn’t the first time state officials have had to offer a lifeline to the financially struggling benefit fund, and it likely won’t be the last. Last year, the state provided an additional $52 million to keep the fund up and running. 

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Amanda D'Ambrosio , 2024-05-28 22:16:17

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