Yale New Haven Health System has launched a letter-writing campaign in opposition to possible Medicaid cuts in Gov. Dannel Malloy’s proposed state budget.
On Feb. 18, Malloy submitted his proposed budget for the next two years to the state legislature. The budget, if passed, would lead to a $67 million reduction to the Medicaid payment system at YNHHS, causing the network to lose 60 cents on every dollar used to treat a Medicaid patient. The system currently loses 40 cents per dollar. Moreover, the proposed budget would reduce the number of people who qualify for Medicaid in Connecticut by roughly 34,000 while imposing a tax, to the tune of a total of $165 million, on hospitals across the state.
Almost immediately after the budget was announced, YNHHS began an online campaign to encourage state legislators to reconsider the governor’s proposal.
“This [budget] seems like a politically viable strategy,” said Howard Forman, professor of diagnostic radiology, management and public health at the School of Medicine and director of Yale’s M.D./MBA joint-degree program. “But in the long run, it is a failed strategy.”
Alongside education spending, Medicaid accounts for one of the largest portions of Connecticut’s expenses. Connecticut’s budget deficit is nearly $173 million, and the state is statutorily mandated to fix it.
Malloy’s $40 billion two-year budget deals with this by cutting spending rather than raising taxes. In fact, sales tax will decrease from 6.35 percent to 5.95 percent over the two years.
Though Patrick McCabe, senior vice president of corporate finance at YNHHS, agreed that expenditures on Medicaid are currently too high and need to be controlled, he characterized the state government’s methods of reducing spending as “short-sighted,” adding that some hospitals are more negatively impacted by these cuts than others.
Forman explained that there are already many physicians in Connecticut who refuse to see Medicaid patients because of how expensive it is for them to do so. Dean of the School of Medicine Robert Alpern agreed, adding that while academic medical centers provide care to Medicaid patients and will always do so, academic physicians will be forced to find ways to cut costs and compensate for the lost revenue if the budget passes unamended.
According to McCabe, in order for YNHHS to have a margin that allows them to invest in programs and benefit structures for employees, such as pensions and retirement funds, they will need to make up for the $67 million of lost funds. That loss in funding, McCabe said, will likely hit their expenditures the hardest.
Though McCabe said YNHHS is not looking at layoffs, he said that advanced vacancy techniques — which involve leaving vacancies unfilled — might have to be used.
“We will be focusing on reductions on our expense base, [which] consists of supplies and people,” McCabe said. “At some point, it has to have an impact on the number of folks employed.”
Forman explained that if the state wants to keep costs down, it can either cut the types of services provided, reduce the number of people eligible for Medicaid or reduce the amount of money providers are reimbursed with for their services.
He noted that the least politically appealing solution for the government is to reduce coverage, and that cutting provider reimbursement seems more politically feasible in comparison.
Sheldon Toubman, an attorney for the New Haven Legal Assistance Association who has represented Medicaid clients for more than 20 years, said the reduction in coverage, which will roughly result in a 5 percent reduction in coverage statewide, will result in low-income individuals losing access to essential and comprehensive care.
He explained that although Malloy is arguing that people who lose Medicaid will be able to buy healthcare on the subsidized personal health insurance exchange, a high percentage of the 34,000 who will lose coverage will not be able to afford insurance on the exchange, even with the state subsidy. And even those former Medicaid patients who are able to afford private insurance may be unable to afford the copays and deductibles that come with it.
“It’s an inappropriate cut,” Toubman said. “Most people will be worse off than they were before Obamacare.”
YNHHS’s advocacy against the budget began on the system’s website. With some 20,000 employees spread across nearly every town in the state, the system asked its employees to spread the word to friends and family, inviting them to send an online message to their state legislators. So far, 11,000 messages have been generated, McCabe said.
Though the petition is being organized by YNHHS, McCabe emphasized that the budget cuts will have a negative effect on the medical community statewide.
“The hospital has had a very aggressive campaign to oppose these cuts and I am supportive of the hospital’s efforts,” Forman said.
McCabe said he hopes the state will appeal to more innovative payment models. He added that it would be better to give hospitals a block grant and put the onus on them to think about how care delivery should be amended to make the most of this money.
Toubman said a better approach would be reinstituting higher capital gains taxes like Massachusetts has done, shifting the burden onto higher-income individuals.
Almost one in five of Connecticut’s 3.6 million residents are currently on Medicaid.