New York Republicans ask Dr. Oz to spare state's MCO tax

And Zohran Mamdani missed a third of the 2025 legislative session.

Good afternoon — it’s Thursday and Avocado Day.

In today’s CapCon:

• Republicans in Congress from New York are asking the Trump administration not to abruptly kill the state’s MCO tax, a key revenue raiser.

• Zohran Mamdani missed a third of this year’s legislative session. A Republican from Long Island didn’t step foot in the Assembly once.

• Hochul called on Israel to allow humanitarian aid into Gaza amid the hunger crisis that’s been documented in the region.

• The Department of Financial Services has started the process of regulating buy-now-pay-later loans as required by this year’s state budget.

• Hochul will soon have to decide if New York should create a special commission to combat workers’ compensation fraud, which totaled $2.4 million in 2024.

Names in today’s CapCon: Nick Langworthy, Elise Stefanik, Andrew Garbarino, Claudia Tenney, Nicole Malliotakis, Mike Lawler, Nick LaLota, Kathy Hochul, Steve, Witkoff, Zohran Mamdani, David McDonough, Michelle Hinchey, Jamaal Bailey, Harry Bronson, Linda B. Rosenthal

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(Siqui Sanchez/Getty Images)

📨 Republicans ask Trump administration to spare NY’s MCO tax revenue

You may recall how Hochul and lawmakers last year agreed to a revenue measure intended to help the state get more Medicaid funding from the federal government.

The idea was to impose a new tax on managed care organizations but reimburse them the same amount using state Medicaid funds. That would trigger the federal government to send New York the same amount in matching funds.

The state could then keep those funds, essentially forcing additional federal funding without spending more of its own.

It’s a loophole the state was eager to take advantage of. The U.S. Center for Medicare and Medicaid Services gave New York approval late last year for the scheme, which the state had projected to produce $3.7 billion over two years.

The tax took effect in January of this year and began to produce revenue for the state. That revenue was taken into account when Hochul and lawmakers crafted the state budget this year.

But then, less than a week after the Legislature approved the budget, the Center for Medicare and Medicaid Services proposed a new rule that would close the loophole that New York is using for the revenue raiser, which has been coined as the “MCO tax.”

The federal agency wrote the rule to revoke permission for the tax-reimbursement method from states that had received approval for it within the last two years. New York falls into that camp.

That means, if the rule is finalized as it was proposed, New York would have to immediately stop raising revenue through the MCO tax, resulting in hundreds of millions of unanticipated lost revenue.

That was complicated by the “One Big Beautiful Bill,” which addressed the same scheme and is supposed to allow states a three-year transition period to move to a different way to raise revenue. That conflicts with the proposed rule.

Republicans in Congress from New York wrote Thursday to the federal agency’s administrator, Mehmet Oz, to ask that the state’s MCO tax not meet an abrupt end.

“The proposed rule would effectively invalidate New York’s newly approved (MCO) tax immediately,” the Republicans wrote. “This approach undermines the flexibility Congress included and would place hospitals, nursing homes, and other health care providers in New York at a serious disadvantage.”

All seven who represent parts of New York in Congress — Nick Langworthy, Elise Stefanik, Andrew Garbarino, Claudia Tenney, Nicole Malliotakis, Mike Lawler and Nick LaLota — signed the letter.

“Implementing the full transition period would provide a fair and balanced path forward, allowing providers to adapt while upholding the policy’s long-term goals,” they wrote.

The three-year transition, rather than an immediate cutoff, would allow New York to raise the revenue it had planned for and that health care providers were anticipating from the state over the course of this and the next fiscal year.

Nursing homes are anticipating $445 million in funding through the tax scheme as part of this year’s state budget and $385 million in next year’s spending plan.

Read the letter here.

The State Assembly (Will Waldron/Times Union)

✅ Mamdani missed a third of session, McDonough didn’t step foot in the Assembly

When the state Legislature had to give up its two-week break in April to negotiate the state budget, I became curious about the session attendance of several members.

I noticed that a few members were more absent than others and wanted to know if I was imagining that or if they were actually skipping session days.

So I requested the attendance records for each day of session through mid-April. When I received those files, I started to look for the members who were frequently absent from the Assembly chamber.

One member stood out: Assemblyman David McDonough, a Republican from Long Island.

I noticed that, for every day of session that had been recorded up until that point, McDonough was either marked as “EOR” — excused for other reasons — or “PV” — participating virtually. He hadn’t been physically present in the Assembly all year.

That was a story by itself but I wanted to wait until the end of session to see if McDonough started to show up. So after session ended in June, I requested and received records for every day of session in 2025.

It turned out that McDonough’s attendance didn’t change in the second half of session. He was still either excused or participating virtually. I confirmed that he was actually logged into session through staff.

McDonough had been absent more than any other Republican in the chamber. I next turned to finding out which Democrat had the worst attendance this year.

That turned out to be Zohran Mamdani, the Democrat who’s now his party’s nominee for New York City mayor.