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FEBRUARY 13, 2017

How health care and Medicaid fare in Malloy’s budget


About 9,500 parents would lose Medicaid, fewer seniors would receive home care, mental health and substance abuse treatment providers would receive millions of dollars less from the state, and school-based health centers would see a 10 percent funding cut under the budget plan Gov. Dannel P. Malloy proposed Wednesday.

The plan aims to close a budget deficit projected at nearly $1.7 billion, and many of the individual cuts drew concern from providers and advocates for health and social service programs. Still, some said the plan left them more optimistic than had previous proposals by Malloy.

Unlike in past years, when Malloy relied heavily on cuts to health care and social services, the governor called for turning to other funding sources to cut the deficit this time, relying more on reductions in aid for cities and towns, and anticipated concessions from state employee unions.

“We’ve all kind of gotten in the mode of expecting really deep budget cuts, and this was not as substantial as we might have expected,” said Heather Gates, president and CEO of Community Health Resources, a mental health and addiction treatment agency. “But when you start with a system as now, where every last dollar has been wrung out of it, any reductions are going to result in program closures.”

Other cuts include capping dental coverage for adults covered by Medicaid, reducing burial funds for poor people, cutting back the amount of income people in nursing homes can keep, requiring people covered by both Medicare and Medicaid to pay more for their medications, and reducing eligibility for a program that helps Medicare recipients pay for their care.

“This budget erodes the programs, from prescription drugs to nutrition programs and more, which make it possible for seniors to afford to stay at home and avoid more costly institutional care,” AARP Connecticut said in a statement.

Ben Barnes, Malloy’s budget director, acknowledged Wednesday that some of the social service cuts were unpleasant to suggest.

“There are plenty of individual reductions there that are difficult, and nobody would like to do them if we didn’t have a shortfall in our ability to pay,” he said.

Medicaid cuts: Parents lose coverage, dental limits

The governor proposed several changes to HUSKY, the state’s Medicaid program, which covers nearly 750,000 people and costs close to $6 billion in state and federal funding for their health care.

The plan would cause approximately 9,500 people to no longer qualify for Medicaid by raising the income limit for parents of minor children from 155 percent of the poverty level to 138 percent – for a family of four, it would drop from $37,665 to $33,534. The change would not apply to children or pregnant women, who have higher income thresholds.

Malloy has for years proposed scaling back eligibility for parents in HUSKY, arguing that they could instead buy coverage through the state’s health insurance exchange at prices deeply discounted by the federal government. After rejecting past proposals to do so, legislators agreed two years ago to scale back the income limit for parents.

But advocates warned that those parents would likely end up uninsured rather than paying for private insurance, and data on the previous cut indicates that few bought insurance through the exchange. As of December, four months after more than 17,000 parents lost HUSKY eligibility, only 16 percent had coverage through the exchange. Another 39 percent were still covered by Medicaid – some qualified for other portions of the program or had lower incomes than previously reported – and the coverage status of the remaining 42 percent was unknown, according to officials at the exchange and the state Department of Social Services.

“We recognize that the state has challenges putting together the budget, but we’re disappointed that the governor’s budget reduces yet again income eligibility for low-income parents on HUSKY, and we are unfortunately assuming that a pretty large portion of these parents will become uninsured,” said Sharon Langer, advocacy director for Connecticut Voices for Children.

Malloy’s plan also calls for capping dental coverage for adults in Medicaid to $1,000 per year per person, although there would be exceptions based on medical necessity.

Home care program narrowed

The plan calls for freezing caseload levels in a portion of the Connecticut Home Care Program for Elders that serves people who need nursing-home levels of care but whose finances place them above the threshold for receiving Medicaid to cover long-term care. As of Oct. 31, approximately 2,500 people were covered by the “category 2” portion of the program; Malloy’s proposal would freeze the number of slots at the number in use as of June 30. If anyone leaves the program after that, a new person could enroll.

Claudio Gualtieri, associate state director for AARP Connecticut and an expert in long-term care, said reducing access to that program would most likely just delay when people get into another portion of the program that is funded by Medicaid, since they would likely be spending down their assets on home care while waiting.

“It would really be an unfortunate change if they did that,” he said. “It’s a very short-term gain.”

And Gualtieri noted that projections suggest that one-quarter of the state’s population will be over 60 by 2030, meaning demand for the home care program will only grow.

As an alternative, Gualtieri recommended that the state explore creative ways to cover people who need nursing home-level care but don’t qualify for Medicaid financially. Massachusetts, Vermont and Minnesota have gotten permission from the federal government to provide limited respite and home care benefits to people in that category, he said.

Help with prescription drug costs cut

Fewer seniors and people with disabilities would qualify for help with their Medicare cost-sharing obligations under Malloy’s proposal, which would scale back the eligibility for the Medicare Savings Program. Barnes said Connecticut has the nation’s most generous progam, and would, after the changes, become the second-most generous in the country. The change would save $29.5 million in the 2018 fiscal year and $39.5 million in 2019.

In addition, people who are eligible for both Medicare and Medicaid – poor seniors and people with disabilities with low incomes – would face higher prescription drug costs. The state currently caps the co-pays they must pay for drugs at $17 per month, covering the rest, but Malloy’s plan would remove the limit. The administration says Connecticut is one of only a few states that provides this assistance. But advocates have said in the past that the cut targets some of the poorest, sickest state residents, including many with serious mental illness, for minimal state savings: $80,000 in the first year and $90,000 the year after. This cut was made in 2015, but reversed in last year’s budget.

Public health: A new vaccine, less funds for local health departments

The governor’s proposal would cut funding for local health departments and districts by 20 percent, saving $921,020 each year. School-based health centers, which provide primary care and behavioral health services in schools, would face a 10 percent cut, while community health centers would lose all funding they receive through the state Department of Public Health.

Children aged 11 and 12 covered by private insurance would all have access to the human papillomavirus vaccine under Malloy’s proposal, which would add it to the state’s immunization program. The state buys childhood vaccines and provides them free to health care providers, who don’t charge patients for the vaccines. The money for vaccines comes from a fund paid into by insurance companies, who generally pass the cost on to customers. The proposal estimates adding the HPV vaccine would cost $9.5 million, with an additional $100,000 in the first year for an education campaign. Children covered by public insurance programs already have access to the vaccines through a federal program.

Mental health: Privatization, moving beds, cuts

Southeastern Mental Health Authority, one of the state-run mental health authorities that could see some of its services privatized.

Providers of mental health and addiction services have braced for cuts after facing reductions in previous years, and Malloy continued the trend. His proposal includes a $4.7 million annual cut to grants for mental health and substance abuse services, and employment opportunities, based on the premise that there is less need for state subsidies because more people have insurance under the federal health law.

The mental health and substance abuse grants have been a major source of dispute between the Malloy administration and legislators, who have generally kept the cuts lower than the governor has proposed. Treatment providers say Medicaid rates pay less than the cost of care, making it impossible to make up the lost grant dollars by billing the program for services, and note that some of their clients remain uninsured. And, Gates noted Wednesday, the federal health law – the vehicle through which many state residents have gained Medicaid or private insurance coverage – has an uncertain future.

Treatment providers have warned that cuts could lead to program closures or decisions to stop taking new clients.

The governor’s proposal would also save $1.2 million per year by reorganizing behavioral health boards and councils. The state has 13 Regional Action Councils that provide advocacy and prevention services, and five Regional Mental Health Boards, which evaluate state-funded mental health programs, educate the public about mental health and mental illness, and are meant to ensure that state residents have a say in mental health services.

Other changes the governor proposed would not lead to service cuts, according to the administration.

For example, the administration called for privatizing some services provided by state-run local mental health authorities, saving $2.5 million in 2018 and $5 million in 2019. In addition, the governor’s plan would relocate the 21-bed detox program at the department’s Blue Hills campus in Hartford to Connecticut Valley Hospital in Middletown, saving $900,000 in 2018 and $1.2 million in 2019.

Gian-Carl Casa, president and CEO of the CT Community Nonprofit Alliance, which represents private human service providers that contract with the state, said the proposal included both painful cuts and positive steps.

Privatizing state-run mental health and substance abuse services would “prevent cuts in vital programs for thousands of the state’s most vulnerable citizens,” he said. But Casa noted that some of the cuts also targeted “the very programs being moved to the community.”

Legal assistance for housing issues cut

One proposed cut, to funding for the Connecticut Legal Rights Project, will have an immediate effect, executive director Kathleen Flaherty said: the organization, which serves low-income people with mental health conditions, will stop accepting new cases for clients with housing issues.

Malloy proposed cutting $388,290 from the $921,947 the organization was budgeted to receive this year. That remaining amount represents what the state is required to pay as part of a consent decree. The cut will remove funding that the organization would spend representing people in housing cases, including people who get eviction papers or denied housing because of past problems. Taking on a new case would require the organization to see it through, which Flaherty said might not be possible if the cut goes through.

Flaherty said she wasn’t surprised by the cut, but said it could make it harder for the state to continue to reduce homelessness.

“It hurts, and now we just deal with it,” she said. “Now we move on to the Appropriations Committee.”

The next step in the budget process is for legislators to hold hearings and then submit their own proposals.

Health care system oversight

The governor’s plan would also create an Office of Health Strategy, which Barnes said would not add cost but reorganize some existing agencies. It would combine the Office of Health Care Access, the health information technology officer, and the State Innovation Model program, which is working to redesign the state’s health care payment and delivery system. Creating such an office was recommended by the state’s Health Care Cabinet, which spent most of last year looking into ways to address health care costs.

The state would also increase its oversight and monitoring of health care mergers and acquisitions. Malloy’s plan calls for adding two positions in the Office of Health Care Access for planning that would help increase access to care and promote health equity, and to implement changes to the permitting process – known as certificate of need – for health care service and facility changes.

In addition, the state would begin to license urgent care centers, something intended to help the state Department of Social Services promote the use of alternatives to emergency rooms for clients. Currently, urgent care facilities are licensed as medical practices and don’t have their own designation.

Another panel, a task force on the system that regulates health care services and facilities, recommended several changes to the state’s permitting process for health care services and facilities, known as the certificate of need process. Malloy’s proposal calls for adding two positions to the Office of Health Care Access to increase monitoring and oversight of health care mergers and acquisitions, including compliance after deals go through.

Burial funds, spending money for nursing home residents

Several of the cuts have been proposed in the past but rejected by legislators, or make deeper cuts in areas that have already faced reductions in recent years.

Those include proposals to:

Eliminate funding for independent living centers, serve approximately 17,000 people with disabilities each year. The cut would save $202,005 per year. Supporters say cutting the centers could lead to higher costs for the state if it prevents people from living independently.

Reduce the amount of money nursing home residents can keep each month if their care is paid for by Medicaid. Currently, residents get a “personal needs allowance” of $60 to cover items such as gifts, clothing, haircuts, phones and reading materials; the rest of any income they receive, including Social Security, goes to offset the cost of their care. The administration says cutting it to $50 per month would be in line with other Northeast states. Legislators have rejected similar proposals in the past.

Cut the amount of money paid for funeral and burial costs of people who die without the ability to pay for a funeral, cremation or burial from $1,200 to $900. The state reduced this from $1,800 to $1,400 in 2015, and cut it back to $1,200 last year.

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