New budget figures make agreement on Medicaid changes likely

Key Democratic lawmakers have bristled at the governor's proposal to scale back a Medicaid program that serves some of the poorest adults in Connecticut. But in light of new budget figures released this week showing that the state has a nearly $200 million budget deficit, some said they're willing to consider changes.

"We'll probably have to look at reducing something because we have a $200 million problem," Sen. Toni N. Harp, D-New Haven, said Tuesday.

Harp and her fellow Appropriations Committee Co-Chairwoman Rep. Toni Walker, D-New Haven, previously expressed skepticism about Gov. Dannel P. Malloy's proposal for changes to the program, Medicaid for Low-Income Adults, or LIA, which serves about 76,400 adults who are below the poverty level and don't have minor children.

The budget proposal the Appropriations Committee released in March did not include any changes to LIA, a contrast to Malloy's spending plan, which forecasted saving $22.5 million by restricting LIA eligibility to people with assets below $25,000 -- the program currently has no asset limit -- and counting family income and assets in determining eligibility for people under 26 who live with their parents or are being claimed as dependents by them. Malloy's proposal also called for reducing benefits, but the exact changes weren't specified.

The administration has called the program financially unsustainable, and said its eligibility rules allow people who have significant assets to get free state health coverage. But critics have questioned the administration's projected savings since the Department of Social Services doesn't ask applicants about their assets, meaning there's no information about how many enrollees would be excluded under a new asset limit.

Harp and Walker said Tuesday that they could be amenable to some eligibility changes, but they were less favorable toward benefit reductions.

"We probably have to look at an asset test," Walker said.

Harp said lawmakers would consider an asset test and requiring that parents' income be counted in determining eligibility for young people who live with high-income parents, as well as changing the program's coverage for long-term nursing home care to align with other Medicaid requirements. Those are the key elements the administration is now pitching.

Medicaid LIA is more generous than the state-funded program it replaced, known as state-administered general assistance, or SAGA, which was limited to people with less than $1,000 in assets, Harp noted.

"It will still be more generous than SAGA," she said.

But Harp drew the line at considering reductions to what the program covers, an idea the administration floated in the past.

"We're not going to look at benefits," she said.

Another key legislator, Human Services Co-Chairman Peter Tercyak, D-New Britain, was less willing to consider changes to LIA, which the federal government will fully fund beginning in 2014 as part of federal health reform.

"I know it's hard, but we just have to suck it up until 2014, when the federal government will pay for their health care," he said.

On this issue, certain legislators have more leverage than they ordinarily would. The changes the administration wants require getting a waiver from the federal government, and state law requires that two legislative committees -- Appropriations and Human Services -- approve any waiver application before it's submitted, effectively giving them veto power.

Benjamin Barnes, Malloy's budget director, said he's confident that legislators will support changes to the program, although the exact details, including how high an asset limit would be, have not been worked out yet.

"We are now facing a tighter budget," he said. "I think that the attractiveness of these (potential changes to LIA) is even greater."

Barnes acknowledged "some data weaknesses" in the savings projections the administration has used, since there's not enough information about assets or family income to be "highly confident." Still, he said he believes the numbers are low estimates of potential savings.

The only benefit change the administration is now seeking involves coverage of nursing home care for LIA recipients. LIA would continue to cover short-term nursing home stays, but with a time limit, Barnes said. People in LIA who need long-term nursing home care would have to meet the tighter asset limits of the Medicaid program that covers long-term care.

Last fall, DSS officials floated ideas for other benefit restrictions in a letter to federal officials. The options included restricting the number of outpatient hospital visits, home health visits and therapy services allowed. Advocates blasted the idea, saying it would put vulnerable adults into a "second-tier health care program" and increase the number of uninsured.

Barnes described the changes the administration is seeking as a matter of fairness, not an effort to withhold care from those who need state assistance. He cited the case of a retired couple in their late 50s who chose to go without health insurance, then went on LIA -- because they had limited income, despite high assets -- when one developed a major health problem and had to be hospitalized. People with enough assets for retirement should be responsible for their own health care coverage, such as through the state's $446-per-month Charter Oak Health Plan, rather than relying on state aid, he said.

"We barely have money for the people who don't have any money, much less for the people who may have $25,000 in the bank," Barnes said. "To me, it's a basic fairness question."

Medicaid LIA was created in 2010, shortly after federal health reform passed, allowing it to count as part of expansion of Medicaid the law requires all states to complete by 2014. At the time, officials expected that the program would save the state money because the federal government reimburses the state for a portion of its Medicaid expenses. The state had been paying the full cost of SAGA, the program LIA replaced.

But the shift from SAGA to Medicaid came with changes to eligibility as well as higher payment rates for health care providers. Enrollment in the program grew faster than expected, from 46,156 in June 2010 to 76,395 in March. Costs rose too. In the previous fiscal year, it had a shortfall of $139 million.

Advocates for Medicaid clients say the growth in enrollment represents a pent-up need for coverage among poor residents.

In January, the co-chairs of the Appropriations, Public Health and Human Services committees signed a letter to Social Services Commissioner Roderick L. Bremby, recommending against changes to the program. At the time, DSS was not running a deficit, they noted, nullifying an argument for scaling back the LIA program.

Last month, Barnes reported that LIA was one cause of a $92.3 million cost overrun in the state DSS this fiscal year. But Harp said this week that LIA is not the culprit.