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.”
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.
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.
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.