Malloy’s cuts to watchdogs have nothing to do with deficit

Like other agency heads, State Healthcare Advocate Victoria Veltri is contemplating how to cut her office’s budget, and possibly its staff. It comes amid a surge in the office’s caseload, helping consumers with health insurance problems.

But unlike most other agencies, the cuts to the Office of the Healthcare Advocate’s budget won’t save the state a dime.

With a $1.6 billion gap to fill in the two-year budget, created by the state employee union rejection of a concession deal, Gov. Dannel P. Malloy’s administration has assigned budget cut targets to state agencies and, for each, a recommended number of layoffs to get there.

That includes the healthcare advocate’s office, the Connecticut Insurance Department and the Department of Banking, even though none of them are funded out of the state general fund. Their money comes from assessments paid by the insurance and banking industries, and cutting the agencies’ budgets will mean reduced payments by insurers, banks and credit unions, not savings to the state.

Similarly, the Office of Consumer Counsel, which advocates for utility ratepayers, is funded by an assessment on customers’ utility bills. It, too, is facing a budget cut.

Gian-Carl Casa, undersecretary for legal affairs at the Office of Policy and Management, Malloy’s budget office, said one benefit of making the cuts on industry-funded agencies is that it helps “reduce the burden on industries that are important to the state’s economy.”

“We hope to make policy and program changes across state government that will bring down the overall cost to Connecticut taxpayers–both individuals and businesses,” he said.

The cuts that most of the assessment-funded agencies face are relatively modest compared to what agencies like the Department of Transportation and the Department of Correction were assigned. But no matter what the size, they don’t help the state close the budget deficit.

Consumer Counsel Mary J. Healey said budget cuts to the office have not been uncommon during her 10-year tenure.

“We explain that these cuts don’t impact the general fund, but they do impact our advocacy and our ability to be strong advocates,” she said. “And I think the general response over the years has been that everybody has to share in the pain and that this is a tangible way that you can share in the pain.”

Healey’s 14-person office has been told to cut $79,109 this fiscal year and $105,087 the next. “We’re deliberating on how we can achieve the recommended cuts that have been asked of us, and we will cooperate with that,” she said.

The insurance department, which has a staff of 135 and regulates what is by some measures the largest insurance industry in the country, has been assigned to cut 3.4 percent of its budget, or $831,037 this fiscal year and $813,608 the next.

“We’re continuing to do our job with the resources that we have now and in the future,” spokeswoman Donna Tommelleo said. “That’s all we can do.”

The banking department was told to cut 3.2 percent of its budget this fiscal year and 4.4 percent next fiscal year.

“Of course the cuts are going to be hard, and the commissioner is going to continue to work to provide services to consumers and to the banking industry under the fiscal constraints that we’ll be facing,” spokesman James Heckman said.

The healthcare advocate’s office, which has eight employees and a budget of $1.495 million this fiscal year, has been charged with cutting 10 percent of its budget this fiscal year and 13.7 percent for the year after.

Veltri said some savings can be realized by not filling the office’s vacant general counsel position, which had been her job until she was appointed to lead the office earlier this year. That would leave about $70,000 to cut, and Veltri hopes to find savings that will allow her to avoid eliminating another job.

“I’m trying to do everything I that I can to avoid losing another body,” she said.

The office has been busy this year. In the first half of 2011, the office’s caseload was double what it was during the first six months of 2010.

Veltri attributed the increased caseload to outreach, increased demand for services among consumers, and greater public awareness about the office. Since January, insurers have been required to list the Office of the Healthcare Advocate and its contact information on denial letters sent to consumers.

The office measures the costs consumers would have had to pay out of pocket if it had not intervened. So far this year, it was $6.4 million, Veltri said, more than the savings to consumers for all of last year.

The office also has been getting help from three employees working under a federal consumer assistance grant. But the grant runs out in October, and Veltri is seeking to extend it by five months.

“We really need those people really badly,” she said. “They are contributing quite a bit to picking up the caseload.”