Kathy Hochul: $1B Medicaid contract sparks major scrutiny in Albany

The situation

Real talk: Albany is under the microscope after the Hochul administration expanded a contract with consulting giant Deloitte to a staggering $1.1 billion. The kicker? They skipped the usual public bidding process to make it happen.

Back in 2023, the New York Department of Health originally signed Deloitte to a $177 million contract. The goal was to centralize Medicaid applications into one statewide portal. But in August, the administration dropped an amendment that added $866 million to the bill. It’s giving major 'wait, what?' energy, especially since the expansion makes the deal more than four times its original price.

The backlash

Watchdogs aren't letting this slide. Bill Hammond, a health policy expert at the Manhattan Institute, told The Post, “For a contract expansion of this size it seems like they should be rebidding it.” Rachael Fauss, a senior policy adviser at Reinvent Albany, added that the massive jump “certainly deserves scrutiny to ensure taxpayers are getting the best deal.”

Before this latest jump, the deal had already grown to $317 million through smaller amendments. While the state has only spent about $200 million so far, the new setup is a massive increase in costs. The state was paying roughly $9 million per month for the first three years, but now that number is jumping to $25 million monthly.

The state's defense

Cadence Aquaviva, a spokesperson for the Department of Health, insists they followed the law. The move is supposedly necessary to replace an “outdated, error-prone system.” They’re also pushing back on the optics of the cost by noting that the federal government is covering 90% of the design costs and 75% of operations.

Still, Deloitte’s history with New York is… messy. They were behind the state’s “Excelsior Pass” during the pandemic, which cost taxpayers $60 million but saw low usage. Plus, the administration is already dealing with heat after former State Budget Director Sandra Beattie admitted to violating ethics laws by cozying up to a Deloitte lobbyist.

Why it matters

When a government contract bloats this fast without a competitive bid, it leaves taxpayers wondering if their money is actually being spent wisely. With the state now on the hook for a billion-dollar IT project, the pressure is on the DOH to prove this portal actually delivers on its promise to cut waste.