HARTFORD, CT — Some Senators expressed skepticism about the fiscal restrictions included in the state’s settlement with the Connecticut Hospital Association, but they ultimately agreed to the deal.
The settlement, negotiated by Gov. Ned Lamont’s administration, Attorney General William Tong, and the Connecticut Hospital Association, will cost the state $872 million over seven years. The hospitals will gain $1.8 billion over that same seven year period.
“Today marks the start of a desperately needed reset between the state and our hospitals, and I am thankful that we were able to come together and negotiate a settlement in good faith that provides stability for both sides while reducing the losses the state would have incurred in the absence of this agreement,” Lamont said following passage of the settlement.
Jennifer Jackson, CEO of the Connecticut Hospital Association, added that it’s the “start of a new partnership with the state that will strengthen healthcare in Connecticut for the benefit of everyone who lives here.”
Tong told lawmakers last week that the state decided it was in their best interest to settle the lawsuit.
“The Office of the Attorney General believes this is a fair and reasonable resolution to a very significant potential exposure for the state of Connecticut,” Tong told three legislative committees during a joint informational hearing in the House chamber.
The potential liability to the state was estimated at $4 billion, according to Office of Policy and Management Secretary Melissa McCaw.
“We believe this settlement is a better alternative, a better course to limit the states long-term risk. So this is a matter of risk management,” Tong said.
The Connecticut Hospital Association and most acute care hospitals in the state sued the state in 2016 after if stopped returning money it initially promised to the hospitals.
The original intention of the legislation passed in 2011 under former Gov. Dannel P. Malloy was an attempt to leverage increased federal reimbursements by increasing the tax on hospitals. The state promised to give hospitals back some of the money, but as deficits increased the amount hospitals received shrank.
Some lawmakers complained this locks the state and future legislature’s into a deal for seven years.
“I’m being extorted to vote in favor of something I never would have agreed with,” Sen. Rob Sampson, R-Southington, said.
Sen. John Fonfara, D-Hartford, said the settlement “does not prohibit the legislature from considering or imposing any new taxes as long as the tax on hospitals is proportionate.”
He said the hospitals “who employ a lot of people in this state do amazing things. We’re just grateful we have the hospital system in the state that we do.”
Other lawmakers talked about how Connecticut found itself in this situation and mostly blamed former Gov. Dannel P. Malloy’s administration, which came up with the taxing scheme.
In 2015, Malloy’s budget director, Ben Barnes,was asked why the state was taxing hospitals.
“It’s like why do you rob banks?” Barnes said. “It’s where the money is.”
Senate Republican Leader Len Fasano, R-North Haven, said they are “fixing a wrong and making it right.”
“We put ourselves in that position ignoring the promises we made,” he added.
While lawmakers applauded the increase in Medicaid funding for hospitals, some wondered if the hospitals couldn’t give a little more as part of this agreement.
Sen. Doug McCrory, D-Hartford, said hospitals have a larger responsibility to the communities they serve because they are tax exempt.
He said there’s nothing in the deal that speaks to reducing health care costs or eliminating health disparities.
During a public hearing the Connecticut Hospital Association pointed out that they are trying to improve access to community organizations that will help make sure their patients are able to take care of their basic needs like food, housing and transportation.