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Deficit projected as Medicaid spending balloons

A new report shows Connecticut is on pace to end the 2013 fiscal year with a $60.1 million deficit, largely as a result of rising Medicaid costs and what one official described as “skyrocketing” enrollment.

Medicaid caseload growth has caused the state Department of Social Services (DSS) to exceed its original budget allowance by $100 million for the current fiscal year, Comptroller Kevin Lembo wrote in a Nov. 1 letter to Gov. Dannel P. Malloy.

“The department’s active assistance report for September indicates a jump of almost 6,800 participants from one year ago,” Lembo wrote. “An upward trend has continued in Medicaid’s low-income adult population.”

That in turn has led the Office of Policy and Management (OPM) to project fiscal year 2013 general fund spending will exceed original appropriations by $80 million, Lembo wrote. The state fiscal year runs through June 30.

OPM Secretary Ben Barnes said Connecticut is in better fiscal shape today than at any time since the 2008 financial collapse.

“We are closely monitoring revenue and expenditure trends and will recommend actions that further our efforts to bring the state’s finances into long-term balance while protecting the health and safety of our residents,” Barnes said in a statement.

To call the increase in Medicaid enrollment an upward trend is an understatement, said David Dearborn, DSS communications director.

“In the last two-plus years, enrollment in that part of Medicaid (serving low-income adults) has skyrocketed and outpaced the state’s funding projections and funding capacity,” Dearborn said.

In 2010, Connecticut became the first state in the country to gain federal approval to expand Medicaid coverage to low-income adults under a provision of the Affordable Care Act known as Section 2001.

The move allowed DSS to transfer recipients of the former State-Administered General Assistance (SAGA) medical program – which was entirely funded by the state budget – to a new Medicaid Low-Income Adults (LIA) program.

Under the Medicaid LIA program, the state is able to split the cost of the program with the federal government.

The result has been a dramatic increase in the number of low-income residents covered by Medicaid.

Enrollment in the Medicaid LIA program nearly doubled from its inception in June 2010 to September 2012, rising from 46,156 to 83,278, according to DSS data.

In all, more than 600,000 residents are covered under the state’s Medicaid program. Since the 2008 fiscal year, state Medicaid spending has increased 35 percent from $3.47 billion to an appropriated $4.7 billion for the current fiscal year.

In response to the enrollment growth that has outpaced DSS’ ability to fund the Medicaid program, the department proposed to curtail several eligibility criteria for the Medicaid LIA program.

“What happened this past legislative session was a proposal by the administration to not eliminate the program by any means but to curtail two eligibility criteria to try to get the program focused on the neediest part of that population,” Dearborn said. “In other words, to try to focus the program on those who truly were in need, not those who had money in the bank who could afford to pay for part or all of their health care.”

The proposal was passed by the state General Assembly, and the state has since submitted a Medicaid waiver request to the federal Centers for Medicare & Medicaid Services that would allow DSS to implement the changes.

Under the General Assembly bill, individuals with assets exceeding $10,000 – excluding home property and one car – would not be eligible for the Medicaid LIA program and eligible individuals would be limited to 90 days of covered nursing facility care per admission.

Additionally, the bill provides that the income and assets of the parents of an individual who is under the age of 26 would be considered when determining that individual’s eligibility if they live with a parent or are declared as a dependent for tax purposes.

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Patrick Gallagher

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