Malloy: ‘Find the balance’ between healthcare and the budget

Dan Malloy is fond of saying that he’s not running for governor “to balance the budget on the backs of those who are most dependent on the government for their health and support.”

malloy, dan, 6-28-10

The Democratic nominee for governor sees health care as a moral issue, and a basic right. He wants the state to expand health care coverage to as many residents as possible, even more aggressively than federal health reform will.

Second in a series

He says the state must keep nursing homes from closing as the population ages and ensure that a comprehensive mental health system exists. And he considers many previously proposed cuts to safety net programs like Medicaid “penny wise, pound foolish.”

“We may have to expend additional dollars in the short run to save far more dollars in the long run,” the former Stamford mayor said during a recent interview.

But there is a budget to balance, one in which Medicaid and the health care costs of state employees and retirees account for one in four dollars spent. There’s also a budget deficit that is effectively the largest in state history, raising questions about the feasibility of even maintaining existing levels of health care spending.

Malloy is vague on how he would balance the competing demands of health spending and budget cutting.

He would not identify specific health programs that he would consider cutting. He said he would look to savings and efficiencies in existing programs and seek federal money before cutting programs.

To find savings, Malloy said he would conduct a “top to bottom review” of all state programs, which he believes will identify those that are not producing results. He believes the state can save money in existing programs – as an example, he cited a 2009 audit showing that the state could save nearly $50 million by paying lower rates to the managed care companies in the HUSKY program.

The state has failed to go after millions of dollars in federal money, he said, and he plans to pursue it aggressively. Other potential savings could come from the use of electronic medical records – something Connecticut providers have been slow to take up – and ensuring that patients have alternatives to emergency rooms to receive non-emergency care.

After that?

“Then we’ll have to make other decisions,” he said. “We’re going to have to put our financial house in order. I’m committed to that.”

Although he would not say what health care programs would be considered for cuts, Malloy was clear about what programs he does not plan to cut: Programs that serve people who most rely on the government for their health care.

“That’s what you’re electing a governor for is to find the right balance between the necessity of maintaining a program for a specific group of individuals and the necessity of bringing the state’s financial house in order,” he said, citing his record as Stamford mayor. “That’s what I do. That’s what leadership is.”

Expanding Coverage

Malloy wants as many state residents covered by health insurance as possible, and he wants to do it in a way that accesses as much federal funding as possible. When people receive health care that they cannot pay for, the state ultimately sees some of the bill, he said.

“Getting to the point that we wring out as much of the unreimbursed expense is going to be terribly important,” he said. “I do think that a universal system ultimately becomes less expensive, but there is probably a run-up in expense as you build it.”

As mayor of Stamford, Malloy developed a program to use schools, which already collect medical information about pupils, to identify children who are uninsured but eligible for the state’s HUSKY insurance program, then help their families access it. He wants to do the same statewide.

Malloy supported a proposal last year that would have established universal health coverage in the state with a public insurance option, called SustiNet. A scaled-back version became law, and a board is working to create a SustiNet plan, intended to be offered as an insurance option for state employees, Medicaid recipients and the public. Malloy said he expects SustiNet will play a lead role in extending health care coverage to the uninsured.

The state can also make health insurance more affordable by using its purchasing power to benefit municipalities, non-profits and other employers, Malloy believes. State legislators passed bills in 2008 and 2009 that would have opened the state employee health insurance pool to other groups, but Gov. M. Jodi Rell vetoed them, citing concerns that widening the pool to an unknown risk group could increase insurance rates.

Malloy believes expanding the state employees’ pool would lower costs for “a substantial number of communities,” and he wants to take the idea a step further: Offering multiple plans to make coverage available to employers that could not afford the standard state employee package.

“What you’re doing is you’re harnessing the purchasing power,” he said. “Spreading that around doesn’t bother me at all.”

Rethinking the System

Having more people with health insurance also means more patients in a health care system already struggling with capacity issues. Malloy believes the state must “rethink” the health care system. And he wants to place particular emphasis on community health centers.

The state’s 13 federally qualified health centers focus on delivering primary care and dental and behavioral health services. Their patient base consists largely of people with Medicaid or no insurance. Last year, 65 percent of the nearly 213,000 patients treated in community health centers fell below the poverty level.

Community health centers are expected to absorb many of the the millions of people who gain coverage as federal health reform rolls out. The Patient Protection and Affordable Care Act includes $11 billion for community health centers nationwide, intended to help them keep up with an increase in patient volume. Health centers in Connecticut have also upgraded and expanded their facilities using $25.8 million in bonding money Rell authorized for them.

Malloy said he would put substantially more emphasis on the community health center model. He also wants to see a closer relationship between them and hospitals.

“To the best of my knowledge, there’s no one in the current administration who’s sitting down with the CHC providers and the hospitals and saying how do we build a better system?” Malloy said. “There’s competition, there’s resentment from one to the other.”

As a better model to pursue, Malloy cited an example from his hometown, where Stamford Hospital in 2007 turned over its four primary care clinics to Optimus Health Care, a Bridgeport-based community health center.

Demand at the clinics had been increasing, Stamford Hospital spokesman Scott Orstad said. It posed a financial challenge, since many of the clinics’ patients were uninsured or covered by Medicaid, which typically pays less than the cost of care.

As a community health center, Optimus was eligible to receive more federal funding to treat the same patients, making it easier, financially, to run the clinics.

When the plan was first announced, Malloy remembered thinking, “Gee, this is a terrible thing, the hospital’s going to get out of this business.”

Now Malloy says it is a model worth pursuing.

“We’ve got to be brave enough and bold enough to rethink our system of care,” he said. “We talk about continuum of care along disciplines, mental health, aging. What we need to think about continuum of care is along broader lines. How do we make sure that everybody gets the level of service that’s most appropriate to them? Sometimes it’s going to be in a hospital, sometimes it’s going to be in a doctor’s office, sometimes it’s going to be with a public health nurse, sometimes it’s going to be at a CHC facility. Ok, let’s build that system.”

“The Aging Tsunami”

Malloy is keenly interested in nursing homes. Stamford has a city-run nursing home, and Malloy speaks about learning from it as mayor. He won the endorsement of the Connecticut Association of Health Care Facilities, an industry group, and has walked picket lines with striking nursing home workers.

He worries about the financial conditions nursing homes face. The state will have a problem, Malloy said, if it loses nursing home beds as it approaches what he called “the aging tsunami.” Over the next 15 years, the number of people over 65 is expected to rise by 40 percent, while the population under 65 declines.

Malloy believes the state needs to raise the Medicaid rates it pays nursing homes – not at full operational expense, but enough to guarantee that facilities can stay in business. Medicaid covered 69 percent of the patients in Connecticut nursing homes, but paid, on average, less than 65 percent of what private payers did per patient during the 2009 fiscal year, according to the Connecticut Commission on Aging.

“Right now we set Medicaid rates and we don’t care whether the place stays open or not,” Malloy said. “In fact, I would argue that we’ve been on a pretty active campaign to close nursing homes for a long period of time.”

In some ways, Malloy is going against the tide on an issue with significant budgetary impact. This fiscal year, the state is expected to spend $1.3 billion in Medicaid costs for people in institutional care, although the federal government reimburses the state for at least half of its Medicaid costs.

Research commissioned by an alliance of public, private and institutional leaders has suggested that the state could save up to $900 million a year by changing how Medicaid long-term care is delivered. Currently, 53 percent of people covered by Medicaid receive home or community-based care. The state’s Long-Term Care Plan calls for raising that to 75 percent by 2025. That could reduce the need for nursing home beds by close to 25 percent by 2030, according to projections by the University of Connecticut Center on Aging.

Home and community-based care tends to cost less than institutional care, and research suggests people would prefer it. With the state facing a massive budget deficit, lawmakers have started embracing the idea with greater urgency.

Malloy is skeptical.

“I just don’t think that that’s true,” he said of the projected $600 million to $900 million savings. “And if we do that, what we end up with is a dramatic shortage of nursing home beds to fill the void.”

He wants to make it easier for people to access hospice care. There will be a need for multiple types of care, he believes, as the population ages and lives longer, in more compromised health.

“I want to maintain this system, and then I want to invest wisely in alternatives to that system, understanding that those alternatives may cover a period of time of treatment,” he said.

“Penny wise, Pound foolish”

Malloy believes the state can save money by eliminating duplicate services and bureaucracy, including in social service programs. He said he will use data to examine what programs are effective, and eliminate those that are not.

“I don’t think all the moneys that we’re spending are wisely spent and I have a very large suspicion that the management-level bureaucracy has grown too fast, too big too fast and is not justified,” he said.

With a cost of nearly $5 billion, Medicaid has been targeted for cuts in recent years, although the legislature has resisted some that Rell proposed.

Connecticut covers services under Medicaid that are not required by the federal government, including dental care for adults, which Rell proposed cutting. Asked if he would consider such programs for budget cuts, Malloy said, “I hope not. I hope things aren’t so bad that that has to be considered.”

“That’s one of those penny wise, pound foolish tradeoffs,” he said. “You have short-term gain for a long-term greater expense. And it’s my hope that I won’t run the state that way.”

Comments

comments