The Connecticut Hospital Association and employees and volunteers from hospitals across the state packed one of the smallest committee rooms in the Legislative Office Building on Thursday and called upon legislators to restore the funds Gov. Dannel P. Malloy proposed to cut in his budget.
Lawmakers are expected to release their own budget proposal next week and hospitals are fighting to get an estimated $550 million in cuts and state reimbursement for the uninsured population restored in the legislative proposal.
“We welcome real targeted reform, not sweeping cuts that will do nothing but slash the safety net in Connecticut,” Jennifer Jackson, president and CEO of the Connecticut Hospital Association, said.
The reductions in Malloy’s budget would impact patient care and force hospitals to lay off staff and reduce services, Jackson said.
In the past, Griffin Hospital President and CEO Patrick Charmel said the “go-to strategy to try and make up for state payment shortfalls, which have been chronic, was to simply charge Managed Care Companies — and indirectly Connecticut employers who pay their premiums — more.”
He said that strategy no longer works. Fewer people have insurance through their employers and if they do, patients are being asked to pick up a greater share of that monthly premium. He said if the hospitals have to shift more of their costs to insurance companies then more employers are going to be forced to drop coverage.
Medicaid reimbursement to hospitals hasn’t increased in three years, Charmel said.
But that’s not exactly true.
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 Medicaid program in order to take advantage of federal matching funds under the Affordable Care Act.
That means that 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 to more than 86,000 patients.
“The simple truth is that hospitals have benefited from extraordinary increases in state funding over the last decade, especially in the few years since Connecticut embarked on Medicaid expansion,” Office of Policy and Management Secretary Ben Barnes said Thursday in a statement. “In fact, their funding has increased from $712 million in 2003 to $1.75 billion this year, an increase of 245 percent.”
The hospital association argues that Medicaid funding was eaten up by the sheer volume of patients coming through its doors.
“It may be true that the amount of Medicaid spending is flat, but we’re going to be caring for over 100,000 Connecticut residents. That doesn’t happen for free,” Charmel said.
Charmel said the level funding argument Barnes makes ignores the reality that in 2012 the state proposed a provider tax, which at the time was supported by the hospital association because the tax on hospital profits was redistributed and returned to the hospitals.
Seven of the 29 acute care hospitals got less money than they gave to the state, but under that scenario the state was able to leverage federal matching funds, Charmel said.
What’s happening in Malloy’s budget proposal is that the state is still taxing the hospitals, but this time it’s not getting matching funds from the feds and it’s not giving the money back to the hospitals, Charmel said.
“Although hospital executives are now claiming they are being cut, they are simply trying to preserve large increases in state funding,” Barnes said. “The reality is that the governor’s proposal would hold them at just about the same amount of total funding through 2015 that they get this year.”
With the implementation of the Affordable Care Act on the horizon, the uninsured population is expected to decrease from 11 percent to 2 percent, which means more patients will have health insurance and the financial model hospitals rely upon will be restored.
But Charmel fears that the increase in revenue from serving a greater number of insured patients may not happen in time for hospitals to keep their doors open.
He said it’s unfair that the state wants to balance the budget on hospitals, which account for about 5 to 10 percent of the state budget.
Lawmakers on both sides of the aisle empathize with their plight.
Rep. Cathy Abercrombie, D-Meriden, said this issue is bigger than the Appropriations Committee. She said a cut of that size is not something the Appropriations Committee, of which she is a member, can absorb on its own. She said the Finance Committee will need to look at raising revenue as well if the legislature wants to hold hospitals harmless. But she did not offer any solutions.
Rep. Vincent Candelora, R-North Branford, also attended the press conference and suggested Malloy look at reopening the state employees contract to find money for the hospitals, while Sen. Anthony Guglielmo, R-Stafford Springs, suggested cutting the busway project about 100 yards short.
The legislature has no jurisdiction over either of those two suggestions.
Malloy was defiant Thursday when he was asked about the hospital press conference at an unrelated event.
“We don’t have money growing at the rate they’re spending it,” Malloy said. “In essence . . . what they’re saying is ‘Hey, raise our taxes another $250 million this year and another $250 million the next year.’ Everybody who’s got a different cause is saying the same thing.”
Malloy said the state needs to agree on a budget that reflects its spending priorities.
“Whatever we collectively agree they need to be. One priority is to not raise taxes,” he said.
Hugh McQuaid contributed to this report.