Nicole Gaudiano and Joseph Spector

USA Today Network

WASHINGTON - A controversial proposal House leaders added to the GOP health care bill to win support from upstate House Republicans has touched off a battle between the members and Gov. Andrew Cuomo over who should pay for Medicaid costs.

The GOP members said in a joint statement Tuesday that the plan would no longer require counties to pay a portion of Medicaid costs in New York, bringing property-tax relief to constituents.

But Cuomo says the loss of $2.3 billion paid by counties outside New York City creates a “death trap” that will devastate most hospitals, nursing homes and assisted living facilities in upstate New York and on Long Island.

At a news conference Tuesday, Cuomo ripped House Republicans in New York and Speaker Paul Ryan for the proposal, saying New York would end up with a nearly $7 billion hole in federal Medicaid reimbursements: the piece from the counties and a cut from changes to the Affordable Care Act.

"My greatest fear from last year’s election has actually come true, which is you have a rabid, conservative ideology in Washington that would tell New York to drop dead, and that is exactly what is going on," Cuomo said.

New York raises more than any other state in the nation from its counties to fund its $27 billion Medicaid liability and ranks second-highest in the nation in both Medicaid spending per year and spending per Medicaid beneficiary.

Overall, New York's Medicaid system is the largest in the nation at $60 billion when local and federal costs are included, and it provides health insurance to more than 5 million New Yorkers.

Inclusion of the provision, backed by county officials, was key to securing support for the overall health care bill from several upstate New York GOP delegation members, according to Rep. Chris Collins’ office.

Collins, R-Clarence, Erie County, introduced the measure with the help of Rep. John Faso, R-Kinderhook, Columbia County, while other upstate GOP Reps. Tom Reed of Corning, Claudia Tenney of New Hartford and Elise Stefanik of Willsboro also jointly expressed their support.

“Year after year, Albany’s leadership relies on counties to foot the bill for New York state’s out-of-control Medicaid costs,” Collins said in a statement. “Enough is enough. This amendment will stop Albany from forcing its unfunded mandate down the throats of taxpayers, and help counties lower the property tax burden on hardworking families.”

Faso, citing an independent estimate, said individual county property taxpayers in his district can expect to save nearly $360 per taxpayer annually if the provision becomes law.

Counties have long fought with the state over Medicaid costs, which gobble up a majority of the counties' budgets and account for more than 44 percent of the county property tax levy in New York. Under Cuomo, the state capped the cost to counties for Medicaid, a savings of $3.7 billion to them, his office said.

But now the state faces the prospect of picking up an additional $2.3 billion in Medicaid costs from counties, which Cuomo said the state could not afford.

The state's fiscal year starts April 1, and Cuomo and lawmakers are negotiating a final spending plan.

He was joined by health-care leaders in New York who warned that the bill in Congress would hurt providers and patients.

"What they leave out is, if the county doesn’t pay its share, there’s another $2.3 billion cut to Medicaid on top of everything else and that means less people are going to get health-care assistance," Cuomo said.

Republicans modify Obamacare repeal bill to win more GOP votes

The provision is one of many modifications intended to shore up support among both conservatives and moderates for legislation to replace the Affordable Care Act. It goes before the House Rules Committee, where Rep. Louise Slaughter, D-Fairport, is the top-ranking Democrat, on Wednesday before the House votes Thursday.

Slaughter said she strongly opposes Collins’ “backroom deal,” calling it a “gimmick and nothing more than pure political cover for wavering New York Republicans that know the Republican health care plan would devastate our state, especially upstate rural areas.”

“Shifting the local cost share to the state is a political sleight of hand — if Republicans steal billions from New York to pay for tax cuts for the wealthy it doesn’t matter if taxpayers have to cover the cost at the county or the state level,” she said. “Either way, congressional Republicans are proposing New Yorkers pay for their terrible plan.”

The Collins-Faso provision was written so that New York is the only state impacted by the change.

Faso said Tuesday that he has long supported taking the cost of Medicaid off the backs of counties, which now pay about 13 percent of the total bill.

"This is the ultimate of government consolidation if you will," Faso said on WGDJ-AM (1300) in Albany. "The counties have no business, and the property taxpayers, should have no business paying for state Medicaid costs."

John Flanagan, the Senate majority leader in New York, questioned how the change would help taxpayers — saying it's all the same state.

There have been questions about whether counties would be willing to give back a portion of their sales-tax revenue to cover the state's increased cost of Medicaid.

"If the counties are alleviated of that burden, are they going to lower their sales tax?” Flanagan said Tuesday on The Capitol Pressroom, a public-radio show. “It’s all the same taxpayers."

Twitter had fun coming up with names for it, including “Empire Earmark” and “Manhattan Transfer.”

Rep. Joe Crowley, D-Queens, went with “Empire State Kickback,” saying it will lead to cuts in health care services and higher property taxes.

“New York City will be expected to pick up the budgetary slack, which means the burden would fall directly on NYC residents who will see increased taxes or diminished services," said Crowley, chairman of the Democratic Caucus.

The bipartisan New York State Association of Counties, which serves all counties and the city of New York, supports the measure introduced by Collins as a way to help counties reduce property taxes.

One reason for high property taxes is that New York counties must pay for state services and programs that other counties across the nation do not, said Stephen Acquario, the group’s executive director, in a March 10 statement.

“It's time for the state to stop playing the blame game and start lowering the costs it imposes on counties so that we can begin to lower property taxes,” he said.

Monroe County had a five-year side deal with New York state that involved swapping 40 percent of its sales tax revenue in exchange for the state picking up its Medicaid bills. Monroe was the first and only county to engage in a “Medicaid swap” starting in 2007 after it was offered by the state. Then-County Executive Maggie Brooks ended the swap in 2012 after the deal became less beneficial when the state began picking up a portion of county Medicaid costs.

NGaudiano@Gannett.com

Nicole Gaudiano is a correspondent with USA TODAY Network's Washington Bureau. Joe Spector is chief of the USA Today Network Albany Bureau.

Includes reporting by Maureen Groppe of USA TODAY.