Federal health care reform will put new demands on shrinking state workforce

Implementing health reform could strain the capacity of state government workforces at a time when tight budgets make hiring new employees difficult,  a new report warns.

The report, written by researchers at the Kaiser Family Foundation and the Center for State and Local Government Excellence, grew out of an effort to understand how states were addressing the requirements of the Patient Protection and Affordable Care Act while grappling with fiscal pressures and workforce cuts. Researchers focused on five states, including Connecticut.

Cristine Vogel

Nationwide, states, localities and school districts have cut 231,000 jobs since 2008, the report’s authors noted.

“These workforce issues have left agencies responsible for implementing federal health reform chronically short-staffed,” they wrote.

The authors also noted that 37 states are holding gubernatorial elections this fall. Many states have political appointees in charge of implementing the requirements of the health reform law, and with a change in administrations, those people could be out of state government by next year.

In Connecticut, which is certain to have a new governor in January, Cristine Vogel has been leading the state’s implementation effort as special advisor to Gov. M. Jodi Rell.

Vogel said it is too soon for the state to determine the exact workforce changes health reform will require. The state has applied for a planning grant from the federal government that Vogel said could be used in part to assess workforce requirements.

Two provisions of the law are likely to pose the biggest workforce challenges – expanded Medicaid eligibility and the health insurance exchanges.

One of the major ways the health reform law will cover more people is by expanding eligibility for Medicaid. In Connecticut, as many as 130,000 people could become eligible. Vogel said the state Department of Social Services will have to ensure that it is able to receive an influx of applications and process the paperwork to get new enrollees into the system by Jan. 1, 2014, the date by which they are to be covered.

“Those are truly the people that health care reform is supposed to be helping, and what you do not want as state government is by January 1, 2014 to not be able to provide that insurance card to people,” she said.

Vogel said it will be “a balancing act” for the department to hire and train enough people with a tight state budget.

The report noted that Connecticut’s recent early retirement incentive program for state employees led to a 10 percent drop in the state’s medical care administration workforce.

It also described the changes to Medicaid eligibility as presenting “both challenges and opportunities.” While building the infrastructure required for the expanded programs will stretch staff capacity and expertise, developing streamlined methods for enrolling people could ultimately improve Medicaid programs and create efficiencies for staff.

By 2014, each state must also have in place a health insurance exchange, which will serve as a marketplace for people to purchase coverage.  The exchanges will have multiple responsibilities, including certifying and rating insurance plans, operating a toll-free hotline and complying with a range of federal reporting requirements.  By 2015, the states must also have a way to pay for them.

States can outsource the functions of their exchanges, or form regional exchanges with other states, or have the federal government operate their exchanges.

A state agency in Massachusetts that performs functions similar to what the exchanges will do has close to 50 employees, Vogel said. She said the exchanges will likely require staff with a range of skills, including experience with insurance, marketing and communications, and health care.

The report noted that states plan to use consultants for technology and insurance expertise, but that since all states will be working to meet the same requirements in the same time frame, contractors with particular expertise could be in short supply.

The Connecticut Insurance Department also will have additional responsibilities because the law created additional reporting requirements for insurance companies. Vogel said most other state agencies affected by the reform law will likely be able to accommodate additional tasks with their existing workforces or do so with a few additional workers.

State Rep. John Geragosian, co-chairman of the appropriations committee, said he expects discussions and decisions about the state’s responsibilities under health reform to take place during the next legislative session.

“This is on everybody’s radar screen,” the New Britain Democrat said. “2014 is right around the corner.”

Geragosian said it’s not yet clear how the state will bear the administrative costs. Some changes, such as streamlining the Department of Social Services’ enrollment system, could ultimately save money, he said.

State House Speaker Christopher Donovan, meanwhile, bristled at the idea that the health reform law could require additional state costs. Donovan, a Democrat from Meriden, noted that the state is to receive up to $30 million a year under the health reform law to help pay for retiree health coverage,  and said the law is designed to save money.

“Up to this point, it’s cost savings,” he said.

The bulk of the health reform implementation work will take place under a new governor, making it difficult to predict the direction it will take.

Vogel said the current administration has been careful not to commit the next governor to a particular policy direction in implementing health reform. In applying for a federal planning grant, for example, Vogel said she was careful to focus on planning and research, rather than policy decisions.