The New York Health Department recently announced it would be closing the state’s Medical Indemnity Fund, a fund that pays medical expenses for children affected by birth injuries. The closure blindsided many people, including families, depending on the funds. The fund has since been given a short-term reprieve with enough state funding to continue through 2025, but its future remains uncertain.
About the Medical Indemnity Fund
Governor Cuomo established New York’s Medical Indemnity Fund in 2011. The goal was to help families affected by birth injuries while also lowering healthcare costs overall. Birth injuries are rare but devastating for families and children who have lifelong disabilities and medical needs. The costs to hospitals to cover these patients’ expenses are very high and have raised the costs of care for all patients.
Under the Medical Indemnity Fund, families are still required to bring malpractice lawsuits against hospitals to get verdicts or settlements. However, the hospital does not have to pay the entire cost. The fund steps in to pay all future medical care for the child.
The establishment of the fund also required that hospitals implement better safety protocols to reduce expensive birth injuries. New safety measures included adding staff and increasing training.
The Fund Became Unsustainable
In spite of the safety protocols put in place with the establishment of the Medical Indemnity Fund, birth injury rates in the state rose. The number of children eligible for the fund was three times what actuaries predicted when it opened.
The surge in enrollment was just one reason the fund became unsustainable. A 2017 change made by lawmakers increased reimbursement rates. This pushed the number of children receiving over $1 million in benefits from just one to more than 14.
The Future of the Medical Indemnity Fund
Due to the changes, the fund faced a $3.2 billion shortfall. Experts predicted this would only rise as more children were enrolled in the fund. Although the problems were clear, the closing came as a surprise to families, their attorneys, and lawmakers. The state Health Department quietly announced the closure on its website.
Budget officials in the state allocated $58 million in state funds to continue the program through 2025. Currently enrolled children will still get their promised benefits. The additional funding also ensures that children affected by birth injuries can continue to be enrolled and get benefits through the end of 2025. After that, the future of the fund is uncertain.
The closing of the fund affects medical facilities as well as individual children and families. Maternity wards have been closing in the state for years due to the high costs of birth injury claims. The fund took the pressure off these facilities, and with its closure, even more maternity wards may close, especially those serving poorer communities and patients.
Families already enrolled in the fund faced anxiety over the poorly announced closure but were soon assured their benefits would continue. State officials have not announced any plans for the fund after 2025.
