After only paying a portion of what it promised to Connecticut hospitals, Gov. Dannel P. Malloy’s administration told them Wednesday that it was suspending the rest of the payments due to the state’s declining revenue.
Malloy administration Budget Director Ben Barnes sent a four sentence letter to hospitals Wednesday to let them know the state doesn’t intend to pay the inpatient supplemental pool or the small hospital pool of money until it deals with “this fiscal year’s budget deficit.”
“While I hope to have this task completed later this month, due to the significant drop in revenues, I am not optimistic that we will be able to move forward with any further state payments this fiscal year. This decision will also impact federally qualified health centers, which will be receiving a similar letter,” Barnes wrote. “I apologize for any inconvenience this may cause.”
The hospitals have been paid two-fifths of the state share of the inpatient supplemental poll and four-sevenths of the state share of the small hospital pool, which amounts to about $22.4 million. Those payments, the first of which was due last summer, weren’t made until February 2016.
Hospitals were asked as part of the budget to pay $556 million in taxes and they were expected to get $256 million back. But in September after the state experienced a budget deficit, the amount they were expected to receive dropped. Lawmakers partially restored the cut in December during a special session, which would have brought the total hospitals would receive back up to $164 million. However, Thursday’s news means that the state is cutting their reimbursement by about $141 million.
“We are outraged by the governor’s refusal to pay hospitals for care provided to patients,” Jennifer Jackson, CEO of the Connecticut Hospital Association, said. “His actions are breaking the healthcare system and increasing costs for patients.”
The suspension of the hospital payments comes after news last week by the legislature’s nonpartisan Office of Fiscal Analysis that found the state is facing a $1.2 billion deficit over the next 18 months.
Republican legislative leaders criticized the move.
“Hospitals are struggling to meet their core functions and serve the neediest in their host communities and surrounding towns,” House Minority Leader Themis Klarides, R-Derby, said. “Typically, they are the largest employers anywhere and this added bad news will only make things worse.”
More than 3,000 hospital jobs have been lost since 2013, according to Jackson.
Senate Minority Leader Len Fasano, R-North Haven, said withholding this money from hospitals could impact access.
“Withholding these payments that hospitals were promised and are counting on will push them to make cuts that could threaten health care accessibility for those on fixed incomes including poor and elderly people across our state,” Fasano said. “It could result in layoffs, service reductions, facility closings and longer wait times.”
Fasano added that “This ill-advised decision is skirting a core responsibility of government to care for those most in need.”
But Chris McClure, a spokesman for Malloy, said then Republicans should be suggesting alternative spending cuts.
“What alternative cuts to social programs are being proposed to offset any restoration of these funds?,” McClure said. “Leadership is about choices – do you cut from social programs that serve those who need it most, or do you cut from hospitals that are seeing soaring profits? You cannot be for all things, all the time. As the Governor has said repeatedly, if there are concrete ideas that are better, they should be put on the table.”