Federal reform bill may help balance the state’s budget

Despite her initial skepticism, the administration of Gov. M. Jodi Rell is eagerly pursuing the money available under the new federal health care reform law.

So far the state has targeted more than $200 million to cover health care for low-income individuals, for those in high-risk pools, and for retirees under age 65.

But none of that will bring health care coverage to the estimated 305,000 state residents who currently lack insurance. Rather, the state is seeking federal funds to reduce the money it spends on benefits it already provides.

“Gov. Rell has maintained that the state must be aggressive in applying for any and all federal funds for which we are eligible under the new federal health care act,” said Rell’s spokesman Donna M. Tommelleo.

The state already has applied for $53 million from Washington to help pay for moving low-income individuals who now receive coverage from the state into the federal Medicaid program. Connecticut also will apply in the coming days for another $50 million over the next four years to continue its high-risk pool for residents with preexisting conditions.

And the state also intends to go after another $100 million in reimbursement for state employees who retire before they are 65.

Tom Woodruff, Comptroller Nancy S. Wyman‘s director of health care policy and benefit services, said the state will apply this month to be partially reimbursed for the health benefits it provides to the almost 20,000 retirees between the ages of 55 and 64 and their dependents.

“We want to reduce the cost of these benefits to the state, that’s the main objective,” he said, estimating the state is eligible for $25 million a year over the next four years.

The purpose of the Early Retiree Reinsurance Program is to encourage employers to provide coverage for retirees who are not yet eligible for Medicare, U.S. Rep. Joe Courtney, D-2nd District, said last week.

There is a real problem in getting this demographic insurance,” Courtney said at a joint appearance with U.S. Department of Health and Human Services New England Regional Director Christie Hager.

But for state retirees, these benefits were never at risk: The state is contractually obliged to provide health insurance to all retirees and their families, Woodruff said.

The state spends around $500 million a year to cover all 42,000 retirees and dependents. If the state’s application is granted, Washington could reimburse 5 percent of what the state is spending to cover this population over the next four years.

“This is new money coming into the state’s budget. We could really use this,” said Christine Vogel, deputy commissioner of the Department of Public Health and chairman of Rell’s Health Care Reform Cabinet.

The state may run into one major problem in their bid for this $100 million: competition.

Nationwide, $5 billion has been allocated in the federal health reform law to be divvied up among public, private and nonprofits employers, and applications will be processed on a first-come, first-serve basis, Hager and Courtney said.

“What we have been told by the White House is qualified employers who apply for this will be eligible, so it’s not going to be allocated by state. It’s going to be driven by employer behavior,” Courtney said.

In a a recently published regulation on the program by HHS, officials wrote, “Applications will be processed in the order in which they are received. Because funding for this program is limited, we expect more requests for reimbursement than there are funds to pay the requests.”

When HHS released the draft application early last week, Woodruff said the comptroller’s office made it a priority to get it filled out right away so Connecticut will be at the front of the application line.

“I am very confident we will qualify. The question remains though, will there be enough money for everyone applying?” he said.

And the state isn’t the only public employer to go after the pot. Towns and cities–which also offer benefits to their early retirees — are planning their own applications. The comptroller’s office is meeting with town leaders this week to help draft their requests.

“Everyone seems interested in applying,” said Woodruff.

Kevin Maloney, Connecticut Conference of Municipalities spokesman, said it’s an easy call for towns. “They will be applying for any money they can get ahold of.”