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Yale-New Haven Faces “Devastating” $126M Cut

by Melissa Bailey & Christine Stuart | Feb 8, 2013 1:48 pm

(13) Comments | Commenting has been closed | E-mail the Author

Posted to: Health, State

Melissa Bailey Photo Yale-New Haven Hospital may bear the brunt of a multimillion-dollar gamble on Obamacare: That uninsured people will no longer be streaming into emergency rooms.

The new budget proposed this week by Gov. Dannel P. Malloy assumes that’s the case.

The budget would shut off reimbursements for uninsured patients beginning next January.

If that assumption proves wrong, Yale-New Haven would be out a lot of money.

Overall, it will be out a lot of money period if a facsimile of Malloy’s two-year budget passes.

The proposed budget would slash $548.9 million in payments to hospitals over the two years. A significant amount, $320 million, comes from curtailing, then ending, reimbursements to uninsured patients as the state shifts toward Obamacare. The budget could send shock waves throughout the health-care system, from New Haven’s Connecticut Mental Health Center to families on HUSKY, the state insurance program for low-income people.

Yale-New Haven, the state’s largest hospital, would see its state subsidies slashed by $126.7 million, or 38 percent, over two years.

Yale-New Haven referred comment to the Connecticut Hospital Association (CHA) for this story. The cuts would “shred the state’s healthcare safety net,” warned Jennifer Jackson, president and CEO of the CHA, in a press release. “It is unacceptable for the state to balance its budget – yet again – on the backs of hospitals and the patients they serve.”

“We urge lawmakers to oppose the proposed budgetary cuts and fix this damage,” she said.

“We’re not shying away from the fact that it will be difficult for hospitals to absorb this,” replied Anne Foley, undersecretary of the state Office of Policy and Management, in an interview Thursday.

“But we’re saying it is fair,” she said, based on other forms of reimbursement hospitals are receiving, and based on the changing health insurance landscape.

Malloy’s administration said the main reason behind the cuts is extra federal funding that will make its way to the state in 2014 under the Patient and Affordable Care Act, aka Obamacare.

More than $513 million will be added to the state’s coffers as a result of the federal legislation. But it won’t arrive fast enough to spare Connecticut’s hospitals from deep cuts.

Malloy’s budget proposes continuing the one-time $103 million in cuts to hospital funding that went into effect in December—and adding more cuts. In the second year of the budget, hospitals would see reimbursement for the uninsured population cut in half in year one, and completely eliminated in year two of the biennial budget that begins July 1, 2013.

Ben Barnes, Malloy’s budget chief, said the amount of uncompensated care to hospitals will dramatically shrink as the state’s uninsured population drops from 11 percent to 2 percent.

“Are we doing it sooner than they will receive additional revenue from the private insurance market? Yes,” Barnes said in a budget briefing Wednesday. “We’re doing that because we need to reduce spending in the budget and live within our means.”

OPM’s Foley said the uninsured rates will drop for two reasons—patients switching to the new health exchange set up by Obamacare, and more patients enrolling in Medicaid.

State Rep. Pat Dillon, who has been closely tracking health care cuts, asked the question Thursday: What about immigrants?

Hospitals will still be on the hook if an undocumented immigrant walks through the door of an emergency room, Foley later acknowledged. Those visits are currently covered by the state as part of a hospital’s overall uninsured care reimbursements. Foley said the state is will continue reimbursing some uninsured patient care at community health clinics.

CHA President Jackson said her members are “profoundly disappointed” with the cuts.

“The administration has acknowledged that these cuts will hurt hospitals, but that is an understatement. Quite simply, it will devastate them,” she said.

Barnes acknowledged that the cut in funding won’t be painless. But he said the hospitals have been treated well over the years and will be able to adapt.

In 2004, the state capped and reduced by half the Medicaid rate it had been paying hospitals for the State Administered General Assistance (SAGA) population. The cut came at a time when that population was growing.

Then, in 2010 under former Gov. M. Jodi Rell, the state decided to transition the solely state-funded SAGA program into the Low Income Adult (LIA) program in order to take advantage of federal matching funds under the Affordable Care Act.

That means in 2010 the state was paying about 35 percent of the costs for the Medicaid patients, and today it’s paying 70 percent of the costs. However, since then the program has grown significantly from around 45,000 patients to an estimated 86,000.

“We might be receiving more money, but there are more people coming through the door,” Stephen Frayne, senior vice president of the Connecticut Hospital Association, has said. “It’s an aggregate loss.”

CMHC

Malloy’s proposal slashes $1.3 million per year from the budget for the Connecticut Mental Health Center in New Haven. Of that full amount, $906,438 comes from eliminating funding for research.

According to an internal CMHC analysis, CMHC would be forced to lay off workers due to the cuts, cutting back the number of psychiatrists available to children.

The research cuts would force layoffs and hurt patient care, because patients get mental health care through those research dollars, according to New Haven state Rep. Juan Candelaria. He said state dollars are a great investment: For every dollar the state pays on research at CMHC, Yale brings seven dollars in federal grants and outside money. The cuts would cripple the center’s research programs, he said.

Malloy’s budget also shortchanges by $175,000 a planned expansion of the CT Latino Behavioral Health System overseen by CMHC’s Hispanic Clinic. Candelaria said the program provides psychiatric services for suburban Latinos.

Candelaria said the cuts “don’t make sense,” especially as December’s mass shootings of schoolkids in Newtown have sparked new awareness about child trauma and mental health.

“I think the funding should be fully restored,” Candelaria said.

HUSKY

The hospitals aren’t the only ones to be hit with increased costs.

Parents on HUSKY will be asked to purchase their insurance through the exchange starting in 2014.

The poorest of parents would remain on the HUSKY program, but those who earn between 133 percent and 185 percent of the federal poverty level will be kicked off under Malloy’s budget proposal. Pregnant women and children are exempted and allowed to stay in the program even if their income falls within that range.

Barnes argues that those families will be able to get insurance through the exchange and receive a subsidy from the federal government to help pay for their monthly premiums. The change will save the state $5.9 million this year and $59.5 million in the second year of the biennium.

Melissa Bailey Photo New Haven state Rep. Toni Walker (pictured) said the legislature will look at moving HUSKY parents over to the exchange to make sure it doesn’t end up doing more harm than good.

“Making sure though that what we’re doing is not going to cost other citizens in other areas. We cannot rob Peter to pay Paul,” Walker said. “We need to make sure all of the things that we lay out are going to be leading toward the direction of saving money, but also making sure that we sustain the services we have for the people who need it most in the state of Connecticut. We cannot walk away from them.”

Advocates argued that’s exactly what Malloy’s budget would make happen.

“Few of these parents will, as a practical matter, be able to afford the premiums and other cost-sharing required to buy insurance on the exchange, even with the federal subsidies,” said Sheldon Toubman, an attorney with New Haven Legal Assistance.

Toubman, who has filed a class-action lawsuit against the state for failing to process Medicaid applications in a timely manner, said these low-income families will not be able to afford the monthly premiums and other out-of-pocket costs associated with exchange plans.

The federal government has yet to rule on Connecticut’s request to impose an asset test on Medicaid clients, a move that could kick as many as 13,000 individuals off the program. Toubman and advocates have opposed implementation of the asset test.

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posted by: Noteworthy on February 8, 2013  2:03pm

The real question is at what intersection do the funds from Obamacare intersect with state subsidies? Malloy’s plan seems a bit abrupt and not very well reasoned.

posted by: TheMadcap on February 8, 2013  2:20pm

Dear god, the “subsidies” are hilariously low. Most of those Husky people are not going to buy health insurance on the exchanges. The same is true for many people in the general population(heck, this is part of the reason they made it so you’re exempt from the mandate if insurance would cost more than 8% of your income). Uninsured people are still going to flood the ER, especially when part of your plan calls on kicking tens of thousands of Medicaid until the Feds can pick it up. The Medicaid expansion in 2014 though still won’t do anything to cover the before mentioned groups.

posted by: anonymous on February 8, 2013  2:25pm

Yep. Let’s give tax breaks to car owners, so that we can raise taxes on homeowners in the cities, make further cuts to transit, and cut insurance to poor families… while making it cheaper for folks to clog our highways and pollute our air. 

Brilliant plan, Malloy.

posted by: SteveOnAnderson on February 8, 2013  2:57pm

Let’s see how long it takes for these local neoliberal austerity measures to turn “Yale-New Haven Hospital” into “Yale Hospital”.

posted by: Bumpercar on February 8, 2013  5:41pm

Poor Yale-New Haven! Maybe this will mean some of their executives will have to earn less than a few million dollars a year.

Poor CMHC! Maybe their psychiatrists will have to earn less than several hundred thousand a year.

I can see them now, their yachts docked side by side, clucking about how terrible it is the taxpayers of the state won’t cough up more money—or take some away from education—so they won’t have to accept less for treating the poor.

So CARING!

posted by: Threefifths on February 8, 2013  6:19pm

Why are people crying and belly aching.You voted them in.

P.S. To the union haters can not blame this on the unions or state workers.

posted by: Christopher Schaefer on February 8, 2013  9:09pm

“It is unacceptable for the state to balance its budget–yet again–on the backs of hospitals”. Yet this is precisely how ObamaCare “fixes” healthcare. As last year’s Medicare Trustees’ report points out, Medicare hospital fees are less than 70% of what private insurers pay, and this percentage will decline over time, as part of ObamaCare. The Medicare actuaries predict that one in seven hospitals will not survive these cuts. Rather than directly helping hospitals to reduce their cost, Obamacare reduces their incomes and increases penalties which will drive many hospitals out of business. “Uninsured people will no longer be streaming into emergency rooms”–because, according to the Congressional Budget Office, ObamaCare will result in significantly more people being placed on Medicaid. This is not healthcare “reform”; it’s a delusional shell-game.

posted by: anonymous on February 8, 2013  9:11pm

Bumper car has a point. The medical industry will need to pay its workers less and corporate profit in the lucrative medical device industry may shrink too. In Denmark doctors make 3X the average wage. Here they make 7X as much. Fewer yachts, but the alternative is a society where everyone except doctors and CEOs lives in a cardboard box.

posted by: Kris on February 8, 2013  9:32pm

Bumper,how much less do you want them to get for treating the poor. Seriously, as a health care worker i expect to get my same hourly rate for taking care of all my patients. People seem to think hospitals should make less. Sure so let’s give them less so they can pay the nurses less and when the poor uninsured come in we can all work for free. Does the grocery store charge less based on income? Does a car dealer.? Does the cell phone carrier?  Then why should Yale. Trust me when I tell u,the Medicaid pts walk in like the world owes them something…...and the insured come in panicking about how much the co pay is going to be!!

posted by: Bumpercar on February 9, 2013  11:02am

Not quite, Kris, providers routinely negotiate lower fees for the insured than they charge private payers. Those rates, then, are what the market will bear - just as what cell carriers and supermarkets charge (the ones subject to competition, unlike most hospitals).

In 2014, under the A.C.A, only 1-2% of CT residents will be uninsured, so (a) they’ll get the rates they have agreed are acceptable and (b) they will be providing significantly less uncompensated care than they have been. They will be better off.

The hospitals would have you believe that the poor will suffer because of these cuts. That is nonsense. They provided more in uncompensated care before the state switched its program two years ago. They have already been better off.

The state of Connecticut pays $1.6 BILLION to hospitals each year. The state has budget troubles. What makes more sense: cutting other public services, taxing people more or asking wealthy hospitals to do what they were doing up until two years ago, for which they will again be fairly compensated under “Obama care”?

On the list of those “suffering” due to the long economic downturn the hospitals are way down the list.

posted by: Christopher Schaefer on February 9, 2013  11:03am

Re. Kris’ comment: I have a relative who is an APRN @ Yale-NH. Because Medicaid patients—unlike privately ensured—cannot be charged a “no show” fee for not showing up for appointments, no-shows are almost the norm among Medicaid patients at the hospital clinic where she works. When the govt. gives away something for free, it has little value for the recipient: just one of the many drawbacks re. our rush to copy European-style socialism.

posted by: Threefifths on February 9, 2013  12:11pm

posted by: Christopher Schaefer on February 9, 2013 10:03am

When the govt. gives away something for free, it has little value for the recipient: just one of the many drawbacks re. our rush to copy European-style socialism.

But the government pays to run the V A Hosptial.Would you say that that is European-style socialism.Also how come under Socialism employment is much higher then under the U S system run by Capitalism.

posted by: Christopher Schaefer on February 9, 2013  2:03pm

Portugal is the only country in Europe that is specifically socialist via its constitution. Portuguese unemployment rate: over 16%.  Denmark is the most radically social welfare state in Europe—and also has one of the highest tax rates in the world. However in Denmark, as in the US, there is “fundamentally an effort to create a feeling of reassurance that the current system can be upheld—without any serious cutback, sacrifices or changes.”  http://www.forbes.com/sites/realspin/2012/10/25/european-socialism-why-america-doesnt-want-it/ As for the tax revenues needed to maintain all of the programs our politicians promise to implement, keep in mind that this country was founded primarily because colonists didn’t want to pay their taxes. And that’s something that hasn’t changed in over two centuries.

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