Hospitals brace for cuts

Connecticut hospitals are urging lawmakers to avoid cuts that threaten their operations, arguing they provide an important safety net both from a health and jobs perspective as the state struggles to recover from the recession.

At last count, Connecticut”™s acute care hospitals employed more than 48,000 people, and in the 2007 fiscal year they spent $7.6 billion.

“Hospitals drive jobs and investments throughout the state, and cutting their funding will devastate the health care safety net on which so many vulnerable people depend,” said Jennifer Jackson, CEO of the Connecticut Hospital Association (CHA), in a written statement. “While we appreciate the situation confronting the governor, cutting healthcare is exactly the wrong medicine for Connecticut.”

In part due to the state having lost 100,000 jobs since the start of the recession, Connecticut”™s Medicaid and SAGA insurance counts have increased by 75,000 people, with combined enrollment now at 500,000 in a state with a population of 3.4 million.
In both 2008 and 2009, CHA calculates that insufficient state reimbursement for those patients”™ care cost hospitals $300 million.

 

 

While the state”™s current budget called for SAGA funding to increase to match Medicaid ”“ currently SAGA pays less than half that rate ”“ the state Department of Social Services has delayed implementing those raises, citing the uncertainty of federal health reform, and limited funding for needed actuarial work and staff. (The State-Administered General Assistance ”“ SAGA ”“ program covers most services covered under the Connecticut Medicaid program with the exception of long-term care and non-emergency medical transportation.)

“During those two years, one of the traditional means hospitals use to make ends meet ”“ non-operating investment income ”“ fell short of what was expected by over $620 million,” said Steve Frayne, senior vice president of health policy for CHA, in testimony before a Connecticut General Assembly committee last month. “The magnitude of that loss cannot be overstated ”“ we expect it will take well over a decade to recover what was lost.”

On March 1, Gov. M. Jodi Rell announced her latest deficit mitigation plan to address Connecticut’s estimated $500 million budget shortfall in the current fiscal year. The governor’s plan defers the state”™s yearly employee retirement system contribution; transfers money from other state funds into the state”™s general fund; cuts expenditures; and uses $219 million of the “rainy day” fund targeted for the fiscal 2011 budget to help close this year’s gap.

The plan also would impose a “hospital user” fee that has yet to be defined.

The Rell administration also called for a 5 percent reduction in Medicaid rates for hospitals and most other Medicaid providers; a 2 percent reduction for nursing homes and chronic disease hospitals; and a 10 percent reduction in disproportionate share hospital funds that reimburse facilities that serve a higher-than-average number of low-income families.

The plan calls for a variety of other healthcare-related reductions, including increases in co-payments and premiums, and the elimination of certain optional services in the Medicaid and SAGA programs.

Rell”™s bill would cap co-payments at $20 monthly and would exempt some services provided under Medicaid, including inpatient hospitalizations, emergency room visits, lab work, home health care, and ambulance trips or nonemergency transportation.