OPINION

New York’s Hochul Administration Coddles Medicaid Fraud While Attacking Rural Hospitals

Jenn Pellegrino • February 22, 2026

As a native New Yorker, I’m appalled to see what has become of my home state government.

New York under Gov. Kathy Hochul has become a textbook case of failed blue state governance: bloated bureaucracy, rampant waste, and performative concern for working people while the institutions they depend on collapse.

The rhetoric is far from the reality. Nowhere is that failure more visible than in how Albany handles Medicaid fraud with kid gloves while letting rural hospitals bleed out.

A recent federal audit by the U.S. Department of Health and Human Services exposed the depth of that mismanagement.

Investigators found that nearly half of the $445 million paid to transport companies in New York City’s Non-Emergency Medical Transportation program during 2018-2019 was mishandled.

The report documented unauthorized rides, unverified trips, unlicensed drivers, and services billed but never provided.

Washington has ordered New York to repay $84 million immediately and placed another $112 million under review. The Hochul administration’s response has been little urgency, few reforms, and the same weak oversight culture that allowed hundreds of millions in taxpayer dollars to vanish in the first place.

That failure has a direct human cost.

The same administration that shrugged at Medicaid fraud is now slow-walking decisions that will determine whether rural hospitals live or die.

Claxton-Hepburn Medical Center and nearby Carthage Area Hospital have spent years working in good faith with state officials on a restructuring plan to keep their doors open.

Instead of acting, Albany keeps requesting “more information”—the bureaucratic equivalent of running out the clock. Hospitals have warned they may not survive the winter.

Local hospitals are not optional amenities. Growing up in Canton, my family relied on Claxton-Hepburn. It is the largest employer in the region, a cornerstone of economic stability, and for many patients their only access to care. When a rural hospital closes, expectant mothers travel hours for prenatal care. Cancer patients face interruptions in treatment.

Nearly 1,700 health care workers face uncertainty about whether their employers can make payroll.

And it is not just two hospitals. According to the Center for Healthcare Quality and Payment Reform, 58 percent of New York’s rural hospitals are at risk of closing. The Hochul administration has not treated this as a crisis. It has treated it as a talking point to acknowledge in press releases while the health department continues to be weaponized against the very institutions it is supposed to protect.

This is the Hochul model, and it is sadly becoming the blue state model writ large: transfer wealth upward through waste and fraud, ignore the communities that can’t fight back, and dress it all up in the language of care and equity. Medicaid dollars flow freely to unverified vendors in New York City while rural hospitals beg Albany for a decision—any decision—that might let them survive another season.

Pretending these problems don’t exist won’t make them disappear. If this trajectory continues, hospitals will close, communities will fracture, and New Yorkers outside the city will be left to conclude what many already suspect: that Albany was never looking out for them at all.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of The Daily Signal.

Jenn Pellegrino | Contributor

Jenn Pellegrino is the Founder of Defend Forgotten America, a nonprofit dedicated to amplifying the voices of underserved rural and working-class communities. She previously served as Chief Spokesperson for the America First Policy Institute, where she advocated for policies prioritizing American workers, families, and national interests.

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