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No Easy Answer To Medicaid Overspending

by Christine Stuart | Nov 19, 2012 6:30am
(5) Comments | Commenting has expired
Posted to: Health Care, State Budget

Christine Stuart file photo

Department of Social Services Commissioner Roderick Bremby, right, with Lee Voghel, DSS director of finance and administration

Lawmakers learned last week that the state is currently spending $223 million more than it budgeted this year on its Medicaid program for low-income adults, and overall the $5.8 billion social services budget will end the year with an estimated $260 million deficit.

Republican lawmakers tried to pin down Department of Social Services Commissioner Roderick Bremby on exactly where the new Medicaid enrollees are coming from.

Is it the economy, or are new individuals moving to the state because it’s one of a handful that agreed to start enrollment in the program before the Affordable Care Act goes into effect in 2014?

Rep. Craig Miner, R-Litchfield, wanted to know why the increase in the population wasn’t forecast when the budget was created this past summer.

“Are people moving to Connecticut to take advantage of our programs?” Miner asked last week at an Appropriations Committee hearing on state budget deficiencies.

Unlike the Supplemental Nutritional Assistance Program, previously known as food stamps, which is operated in all 50 states, the Medicaid program for low-income adults is a new program.

Connecticut was the first state to expand Medicaid under the federal health care reform act and as of August it had more than 517,000 recipients under that program. That number includes the HUSKY program, as well as the expansion under Medicaid for low-income adults, according to DSS.

In two years, enrollment by low-income adults has grown from 45,000 to more than 83,000, according to department officials.

Over the past five years, demand for food stamps has increased 80 percent and demand for Medicaid services has increased 30 percent, Bremby told the committee. But he said that it’s hard to say with any great specificity, aside from the downturn in the economy, as to why there’s been an increase in the Medicaid program for low-income adults.

“I’m not sure you have a handle on where they’re coming from,” Miner told Bremby.

Bremby reminded Miner that his department operates more than 90 different programs and services. The department’s $5.8 billion budget accounts for about 30 percent of the entire state budget.

Miner said he wants to know if it‘s the same population the department was dealing with two years ago, and if that population has just grown irrespective of the economy, or if it‘s new people moving to the state to take advantage of the program.

Last year, Republican lawmakers wanted the state to hire more Medicaid fraud investigators, but Democratic lawmakers declined to include that suggestion in the budget adjustments.

Republicans argued that the positions would be reimbursed 75 percent by the federal government, but Democrats panned the idea saying the state wouldn’t see the savings necessary to offset the additional hiring of more employees.

“Nobody wants to see it [Medicaid] go up like a quarter of a billion dollars. Nobody does, but the reality is there are people out here that need services that are now getting them,” Sen. Toni Harp, D-New Haven, told the committee. “I’m not one to say this is a bad thing to occur.”

She said when they were putting together the budget they were led to believe the low-income adult population had stabilized.

She asked Bremby how lawmakers figure out what it should budget for next year, since they were obviously wrong about this year.

Bremby said they look at the trends and try to base future growth on past experience.

“I think we have seen an acceleration in that growth by processing improvements,” Bremby said. “The best handle on the growth in this population can be derived from the forecasts for the number of people who will be presented through the Health Insurance Exchange.”

The Medicaid program also has seen an increase in hospital services, but it’s unclear how much is attributable to increased costs for services and how much is attributable to increased utilization.

That said, “We don’t believe it’s a cost-driven phenomenon,” Bremby opined. “We believe principally it’s utilization driven,” but it’s something the department is investigating further, he added.

Further complicating the budget scenario for lawmakers is the waiver the department is seeking from the Centers for Medicare & Medicaid Services.

The Appropriations Committee green-lighted the waiver proposal by the DSS this summer. Essentially, it would impose a $10,000 asset test to be eligible for the Medicaid program for low-income adults. This asset test and new requirements regarding parental income likely would remove as many as 13,000 recipients from the program.

Currently, the state is receiving more than 50 percent reimbursement for this low-income population from the federal government, but starting in Jan. 2014 under the Affordable Care Act, it will receive 100 percent reimbursement. However, it needs to find $50 million in savings in each of the next budget years, which is why it is seeking the waiver.

The administration argues the waiver will help prevent college students living at home with their parents from taking advantage of the program, but New Haven Legal Assistance attorney Sheldon Toubman argues the state has no idea who will impacted by the asset test or parental income reporting.

Toubman has filed an injunction against the state to prevent it from further pursuing it. The two sides will be in federal court this Wednesday to discuss the underlying class action, but it’s unclear if the judge will ask for argument on the injunction.

Bremby told the Appropriations Committee last week that his department’s budget estimates are based on receiving the waiver. If the state doesn’t receive the waiver, lawmakers and Gov. Dannel P. Malloy will have to find $100 million more in savings over the next two years. That’s on top of the $2.13 billion two-year deficit reported last week by Malloy’s budget office.

Click here to read Bremby’s written testimony.

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(5) Comments

posted by: ACR | November 19, 2012  11:13am

ACR

The only logical answer; Means Testing.

The long term might require *real* healthcare reform which would include things such as tort reform, putting a leash on the idiots running the FDA into the ground for the last 40+ years and maybe an opt-out for younger people who wish to invest in a private insurance package that might well cover a lot more and better albeit at their own high cost.

posted by: redman | November 19, 2012  2:22pm

A basic law of human behavior. Give away free stuff and people will come for it.

posted by: DirtyJobsGUy | November 19, 2012  2:25pm

Medicaid was for the poor and there were (are) strict limits for participation.  These are often ignored or allowed to be circumvented in the case of long term care.

Obamacare allowed and encouraged states to expand medicare coverage to the not so poor with these predicable results.

posted by: Sheldon Toubman | November 19, 2012  4:09pm

What seems to be lost in all this is an appreciation of how very low income one has to be to qualify for the Low-Income Adult Medicaid (LIA) program.  Right now, in all parts of the state (except Fairfield County with its higher cost of living), a person cannot have income in excess of a mere 55% of the federal poverty level- that is, adults cannot qualify for Medicaid if they have incomes over $512 per month ($623 for Fairfield County).  The only CT residents with incomes this low are people who are unemployed or working part-time in very low wage jobs. 

In addition, as Connecticut’s budget director, Ben Barnes, has acknowledged, “the SAGA program was only marginally better than being uninsured.”  By contrast, as Secretary Barnes also has noted, Medicaid provides a meaningful safety net: “Because serious illness is so often financially crippling, even for those with jobs and insurance, many of the sickest at any age group end up on Medicaid”.

That is why this program is so important for coverage of essential medical treatment for the lowest income among us, especially under the current recession, and CT should continue providing coverage even if it required a 50% contribution from the state.  But, fortunately, starting January 2014, thanks to the Affordable Care Act, literally the ENTIRE cost of medical services under the LIA program, and for other newly-enrolled categories of Medicaid enrollees, will be covered by the federal government.  This will continue for three years, after which it drops down to the federal government still funding 95%.  This is a great deal, and one of the most efficient means possible for state taxpayers to provide for the neediest among us.

In sum, while the state’s budget deficit problems shouldn’t be minimized and the legislature did make an error in budgeting for the program based upon certain assumptions, the Medicaid program is a success story, and the adoption of the Low Income Adult Medicaid program has been a great early success story of the Affordable Care Act.

posted by: middleoftheroad | November 19, 2012  11:20pm

The $100 million in savings referred to in the article are fiction.  The LIA changes were never going to save $50 million a year.  That number is pure fiction, and to pretend that the state would have saved that is the state’s fault, not the LIA recipients’.