With negotiations over the debt ceiling in Washington on life support, Gov. Dannel P. Malloy wrote Congressional leaders Friday to let them know how devastating failure to raise the debt ceiling would be for Connecticut.
“For Connecticut, such a failure would result in a serious disruption to our cash flow, negatively affect our access to capital markets, and harm our local economy,” Malloy wrote in this letter to Sens. Harry Reid and Mitch McConnell and House Speaker John Boehner and House Minority Leader Nancy Pelosi.
“If the debt ceiling’s not lifted it would be very consequential,” Malloy said in an interview last week. “It would damage the state, it would damage all the country and probably the world economy. I think you’re playing with gasoline there.”
“We are looking at our cash situation trying to understand exactly where we are,“ Malloy said outside a Southbury bed and breakfast. “We absolutely have prepared for that. We are looking at it on a daily basis also trying to understand… we know what our cash base is and if it’s short-lived I think we can survive but I don’t think it will come to that. I think they’ll come to an agreement.”
In his letter to Congressional leaders, Malloy said federal spending programs targeted for cuts include matching Medicaid funds and the state Children’s Health Insurance Program, which in Connecticut known as HUSKY. If these spending proposals are enacted the Center for Budget and Policy Priorities has estimated Connecticut will lose $456 million over the first 10 years and damage the Medicaid program.
“A better way to reduce overall Medicaid spending would be to enhance the partnership between the federal government and states by better coordinating care to the highest cost populations,” Malloy said. “For example, Maryland Governor Martin O’Malley has outlined a way to achieve approximately $100 billion in real federal savings by improving how we serve ‘dual eligibles‘.”
Dual eligibles are those individuals eligible for both Medicaid and Medicare and are considered the most expense, and most sickly individuals in the system, who, according to O’Malley, get the most expensive care bouncing between nursing homes and hospitals and also some of the lowest quality care.
In an interview last week with MSNBC’s Daily Rundown , O’Malley said the “ping pong” of costs for these individuals gets shifted from Medicaid to Medicare and Medicare to Medicaid and the cost savings get lost in the back and forth. He said if the government was better able to managed those costs in a more “holistic way,” it could save the $100 billion President Barack Obama is looking for in Medicaid savings.
Malloy, who was with O’Malley more than a week ago in Utah at the National Governors Association meeting, agrees.
O’Malley said there are “two rocks” in the path of job creation for the governors. “One of them is needlessly driving our country into default. The other is driving us into really damage cuts that would trigger massive job layoffs in the public sector,” he said.
Malloy warned that federal cuts must not disproportionately shift the burden of deficit reductions to the state and local governments.
“These were my principles when I proposed and enacted a balanced budget that addresses Connecticut’s budget shortfall without one-time gimmicks or cost-shifts to local governments, that promotes economic development, and that preserves the core countercyclical programs assisting Connecticut’s most vulnerable populations weather the aftershocks of the Great Recession,” Malloy said.
There are Republicans lawmakers in Connecticut that disagree Malloy’s two-year, $40.11 billion budget actually accomplishes the goals set forth by his budget principles. None of them voted for his budget, but unlike in Washington D.C. Connecticut’s General Assembly is controlled by Democrats, making Malloy’s situation different than the one Obama faces.
In addition to Medicaid, Malloy said he’s concerned about federal funding for graduate medical education. Malloy, who anticipates using $864 million in borrowing to pay for an expansion of the University of Connecticut Health Center, said enrollment at the school is expected to grow by 30 percent.
“However, reduced funding for graduate medical education would not only jeopardize these efforts, but also drive up the delivery costs for the same amount and quality of health care across Connecticut,” Malloy wrote. “If reports are true that sixty percent cut to graduate medical education is under consideration, such cuts would result in a loss of more than $42 million to all of the UCHC teaching partners, harms the health of the citizens we serve, and harm the health of our economy.”
In closing Malloy called for the federal government and Congress to work in concert with the states.
“I urge you to consult governors as you continue negotiations. But, in the meantime, you must increase the debt ceiling without delay to avoid default and the concomitant harm to the United States that would result.”
Hugh McQuaid contributed to this report.