The federal government rejected Connecticut’s proposal to tighten its standards for Medicaid eligibility Friday.
The proposal, which Gov. Dannel Malloy’s administration first put forward in August, was designed to save the state $50 million in Medicaid expenditures, according to Gian-Carl Casa, undersecretary for legislative affairs at the state Office of Policy and Management. Under current Medicaid laws, the federal government has the authority to determine recipient criteria, as it subsidizes roughly 50 percent of the state’s Medicaid costs. Had the federal government approved Malloy’s plan, over 13,000 low-income adults in the state would no longer qualify for benefits.
“The [proposal] would eliminate coverage for as many as 13,381 very low-income individuals for an approximate one-year period, which is not consistent with the general statutory objective to extend coverage to low-income populations,” Marilyn Tavenner, the acting administrator of the federal government’s Medicaid system, said in a letter announcing the decision last week to Connecticut Department of Social Services Commissioner Roderick Bremby.
Current Medicaid standards in Connecticut require that low-income adults make less than about $6,000 per year to qualify for benefits. The governor’s proposal would have imposed an additional cap, limiting an applicant’s total assets to under $10,000. The Malloy administration also wanted to disqualify adults between the ages of 19 and 26 from benefits if they were claimed on a parent’s tax return, maintaining that these young adults could either opt into a parent’s plan or receive health care from a university.
Critics of the governor’s plan were especially opposed to the latter part of the proposal, as the population it would eliminate from the Medicaid program is the exact demographic that the Medicaid expansion under the Affordable Care Act will cover fully starting in 2014. Jane McNichol, executive director of the Legal Assistance Resource Center, said that it is widely expected Connecticut will accept this Medicaid expansion with a Democratic governor at its helm.
McNichol added that Malloy’s plan, if it passed, would have harmed Connecticut residents waiting to be approved for benefits, as the Department of Social Services would be required to check all of its approximately 75,000 existing recipients to ensure they did not fall outside of the new, tighter restrictions.
“It seems like a pretty onerous burden to put on an already overburdened department,” McNichol said. “The department already has a lot of problems keeping up with what it has to do.”
Spokesmen for the Department of Social Services could not be reached for comment.
Still, without the $50 million in savings from Medicaid expenditures, the state is projected to face a $163.7 million deficit this year. Casa said that Malloy never factored Medicaid savings into the 2013–’14 biennial budget he released last month.
Fred Carstensen, the head of the Connecticut Center for Economic Analysis at UConn, said that tightening Medicaid eligibility standards would have been worth the savings given the state’s current fiscal situation.
“This is a fairly small part of this much bigger issue of, how is the state going to address this huge problem it has?” Carstensen said. “The budget is in a very, very serious deficit.”
Despite the federal government’s rejection of this proposal, Malloy’s administration is moving ahead with a second plan to limit Medicaid eligibility — one over which the federal government does not have oversight.
Malloy is proposing to lower the Medicaid income threshold for low-income families from 185 percent of the poverty line to under 133 percent. That policy would eliminate 40,000 residents from Medicaid rolls, about three times as many people who would have been impacted by the original plan.
Starting in January 2014, these families would be required to buy health insurance from the state’s health care exchange system, a change which would cost a three-person family an additional $750 to $2,000 per year, McNichol said.
If this second proposal goes through, the state will save approximately $66 million in the two-year budget period starting on July 1.