In a state of great wealth, all the health care some can afford
This is the third article in an occasional series exploring wealth and income inequality in Connecticut and its impact on a state struggling to cope with massive debt. Find the other articles here.
Up until Sally Grossman became pregnant in 2012 at the age of 30, she had been trying to live without health care.
Struggling to get her interior painting business going, Grossman routinely sacrificed her health, toughing out painful migraine headaches without medication. In her early 30s, she generally avoided doctors unless they would agree to phone in a prescription for her without requiring an office visit.
But when she experienced complications with her pregnancy, she quickly learned that her health insurance didn’t cover prescription drugs or maternity care.
“The person on the end of the phone laughed at me.”
Ultimately, it was the state’s HUSKY program – as Medicaid is known in Connecticut – that covered Grossman and her infant son, who was born prematurely. She credits HUSKY with ensuring that her son is alive and healthy today.
Despite her current coverage, however, Grossman is one of tens of thousands of Connecticut residents whose access to health care is hanging by a thread, despite Connecticut’s tremendous wealth and strong embrace of the federal Affordable Care Act, health care advocates say.
Among the challenges is that HUSKY, which covers more than 800,000 low-income state residents, could face steep cuts — either because of Connecticut’s continued struggles with huge budget deficits, or because Congressional leaders succeed in changing how Medicaid is funded.
Another factor is that private insurance plans, which cover the majority of Connecticut residents, increasingly come with high deductibles that require people to pay thousands of dollars before their plan begins covering care.
This means that while the overall health care system in one of the nation’s wealthiest states ranks high, hundreds of thousands of middle-class residents are seeing their earnings gobbled up by a health care system with outcomes as disparate as income is in Connecticut.
The Lancet, a prestigious medical journal, published a 2017 analysis of the impact of income inequality on health care and concluded that the two are inextricably tied together.
“As economic inequality in the USA has deepened, so too has inequality in health. Almost every chronic condition, from stroke to heart disease and arthritis, follows a predictable pattern of rising prevalence with declining income,” the article concluded.
Perhaps the sharpest distinction, according to that analysis, is a life expectancy gap that has been widening since the late 1970s. Simply put, the wealthiest one percent of American women are expected to live 10.1 years longer than the poorest one percent. Among men, the gap is even greater — 14.6 years.
“This is choosing who is going to live and who is going to die,” said Rep. Toni Walker, D-New Haven, longtime House chairwoman of the Appropriations Committee and one of the legislature’s staunchest defenders of social services.
Some of the income inequality in Connecticut is the result of vast wealth, particularly along the state’s southwestern shoreline, which is home to a significant share of the financial services sector centered on Wall Street.
While it is true that for many years Connecticut had a robust middle class and a generous social safety net that elevated its poorest residents above their counterparts in most other states, the state is now struggling to maintain both.
Massive budget deficits – the result, largely, of the failure over several decades to save for retirement benefits promised to state employees — have eroded that safety net and, as debt and other fixed costs continue to squeeze the state budget, health care advocates say things could soon change for the worse.
“I appreciate Connecticut’s bipartisan commitment to health care,” said Patricia Baker, president and CEO of the nonprofit Connecticut Health Foundation. But for thousands of residents, “we are one [state] budget away from it all being at risk again. We are in a period of unknowns.”
Some say many Connecticut residents are already feeling the impact of years of an eroding safety net.
Betty Gallo, who retired this month after spending more than four decades lobbying for health care and social services at the Capitol, has seen that erosion firsthand.
“It’s very, very clear that there are huge holes in the safety net that people fall through every day,” Gallo said.
Ground Zero for wealth inequality
Connecticut has been on an accelerating swing toward income and wealth inequality.
For more than five decades, between 1928 and 1979, the nation was moving the other way, toward greater equality in income and wealth — a trend stemming from rising minimum wages, widespread growth in collective bargaining, low post-war unemployment and advances in civil rights.
Since then the pendulum reversed its swing, erasing entirely more than five decades of progress. More importantly, the movement away from equality has accelerated dramatically in Connecticut coming out of the last recession.
Between 2009 and 2013, the top 1 percent nationally captured 85 percent of all income growth, leaving the remaining 99 percent — on average — to share the remaining 15 percent of income, according to a 2016 analysis by the Economic Policy Institute of Washington, D.C., a nonprofit, nonpartisan think tank.
But in Connecticut, the top 1 percent took home 100 percent of the income growth over that period. Specifically, the top 1 percent got 17.2 percent richer, on average, while the remaining 99 percent actually got poorer, losing 1.6 percent of their income.
In Connecticut, the top 1 percent earn almost 43 times what the bottom 99 percent — not just the poor, but everyone else including some very rich people — earn. Nationally, the ratio is 25 to one.
In Fairfield County alone, the top 1 percent earn almost 74 times what the bottom 99 percent average.
In other words, Connecticut is Ground Zero for wealth and income inequality on the planet.
And while economists and politicians differ over how to address the problem, those on all sides of the inequality debate generally agree there is an economic tipping point — namely, when disparities become too extreme and too many are struggling.
‘The goal is not to need HUSKY anymore’
Grossman didn’t expect to ever need Medicaid.
When she was pregnant in 2012, she had private health insurance. It cost her more than $300 each month and “didn’t cover a lot. It was more like a catastrophic plan” and she was responsible for “thousands of dollars” in out-of-pocket expenses.
When Grossman went into pre-term labor early in her sixth month, she went to the hospital where she received steroid shots to promote her child’s lung development.
Doctors managed to stop the contractions, and after three days she was released. A nurse friend told her about the state’s HUSKY A program – which covers children and their parents, as well as pregnant women – and Grossman received coverage.
She carried her son, Parker, for 37 weeks. He was born small but healthy at 5 pounds, 7 ounces and remains healthy today.
“If I hadn’t had HUSKY coverage I think the outcome could have been vastly different,” she said,“I don’t want someone to have a different outcome than I had.”
Since Grossman’s pregnancy, the state has rolled back eligibility for HUSKY A, although it has not cut back the income limit for pregnant women.
Grossman, who worked with health care advocates to lobby against cuts to HUSKY in 2018, said the benefit has helped her not only to stay employed, but to grow her painting business.
Her family does not take the coverage for granted and looks forward to a time when it is no longer necessary.
“You don’t say ‘When I am big I want to be on Medicaid.’ The goal is not to need HUSKY any more,” she said, as she sat at the kitchen table in the small, two-story house she shares with her boyfriend, Doug Schoner, and their two children. Their daughter, Sadie, was born 18 months ago.
Schoner works as a carpenter and together they earn about $48,000 per year. They and their children remain on HUSKY A, a Medicaid program that covered more than 485,000 state residents as of August.
“I’d never heard of HUSKY before,” she said. “Now I expect when I am sick to get help. … I feel like that should be a right for everybody.”
Yet advocates worry that changes on the horizon could mean more barriers to health care for a wide swath of Connecticut residents – for low-income individuals and families, those who rely on safety-net clinics for care, those in the middle-class whose income has been squeezed by health care costs, and those with insurance whose plans increasingly require them to pay more for care.
Legacy of debt still looms large
One of the primary concerns for health care advocates is the state’s precarious fiscal condition.
After more than seven decades of irresponsible savings habits, state government finances are being overwhelmed by massive debt.
Connecticut has nearly $80 billion in long-term obligations — a burden the state Commission on Fiscal Stability and Economic Growth says is closer to $100 billion, if more realistic assumptions are applied to pension fund investment projections.
Analysts say paying pensions for municipal teachers and pensions and retirement health care for state employees will place unprecedented pressure on state finances for the next 15 to 20 years.
The fastest-growing segment of state spending is the cost of retirement benefits and payments on state debt. Those consumed about 12 percent of the General Fund 20 years ago, but now eat up close to one-third of the state budget.
The legislature’s nonpartisan Office of Fiscal Analysis says finances, unless adjusted, will run $2 billion in deficit in the first fiscal year after the November election.
More importantly, the potential budget gap will grow by an average of $567 million per year for the next three years after that.
And with retirement benefit costs projected to surge at least into the early 2030s, Connecticut’s expenses are expected to outpace its revenues for many years to come.
In short: As Connecticut grapples with extreme inequalities in wealth, and the economic risks that come with them, it simultaneously must confront its own daunting budget problems.
For those who worry about the future of health care and Connecticut’s safety net, this is hardly comforting news.
ACA is not a cure-all
Those worries exist in spite of a major expansion of health care coverage through the Affordable Care Act.
Enacted in 2010, with most key provisions implemented by early 2014, the ACA expanded Medicaid eligibility nationally to 138 percent of the Federal Poverty Level.
That would mean a family of three earning less than $28,676 per year would qualify for HUSKY. In Connecticut, the threshold is 155 percent.
Connecticut was the first state to expand Medicaid eligibility as part of the health law – it raised eligibility partially in 2010 before fully expanding it in 2014 – and has used several provisions of the law to develop programs that bring the state additional federal funds. Connecticut also has its own health insurance exchange, Access Health CT, to sell private insurance.
Equally important, more than 90 percent of the cost of Connecticut’s Medicaid expansion has been covered by federal funds. (Overall, the federal government pays about 58 percent of the cost of Connecticut’s Medicaid program.)
But while health care advocates are universal in their praise of the ACA’s overall impact, they also caution that it is not a cure-all for Connecticut’s health care challenges.
In recent years the governor and General Assembly have forced Connecticut to take a few steps backward in terms of health care as they grapple with the state’s huge pension debt.
After enacting major state tax hikes in 2011 and 2015, Connecticut lawmakers largely have taken an austerity approach to state finances, which has taken a toll on health care programs for the poor.
Starting in 2016, an estimated 23,700 working poor adults lost Medicaid coverage through the HUSKY A program. Income eligibility guidelines were reduced from 201 percent of the federal poverty level to 155 percent.
At the time, that meant families of three earning between $40,380 and $31,139 lost coverage.
Supporters of the cut argued that those losing coverage could instead buy insurance through the state’s exchange because federal subsidies in the ACA would deeply discount the premiums they would have to pay.
But health care advocates estimate 80 percent of those cut from HUSKY A could not afford to purchase insurance on the state’s health care exchange. Advocates are convinced many of these people are unofficially part of Connecticut’s uninsured.
Lawmakers ordered a second tightening in 2017, from 155 percent to 138 percent of the federal poverty level — a limit of $28,676 for a family of three. This would have removed coverage for another 13,500 families, but the General Assembly reversed that decision in May.
Critics of the cut said it was unrealistic to expect that low-income families losing Medicaid would have the money to buy private insurance through the exchange.
“If we know 80 percent of those people (earning between 201 percent and 155 percent of the federal poverty level) couldn’t buy health insurance, where are the people below that going to go?” Gallo asked. “We will lose 99 percent of them. What happens when their kids get sick?”
But Baker said concerns about the future of health care for state residents goes far beyond the HUSKY program. The state’s federally qualified health centers and school-based clinics have also lost significant funding since the last recession, and these are key “access points” for health care for minority adults and children.
Losing access to medical specialists
Another big gap in Connecticut’s health care safety net, advocates say, involves specialists.
The more than 900,000 Connecticut patients enrolled in Medicaid can usually find primary care doctors willing to treat them in return for the discounted rates the state pays. Federally Qualified Health Centers and school-based health clinics play a big role meeting this need, particularly in the cities.
But what happens when Medicaid recipients in Connecticut need to see a specialty physician?
A 2013 study on this topic commissioned by The Commonwealth Fund — a private foundation promoting “a high performing health care system” — examined Medicaid models in Connecticut and five other states.
It warned that “many Medicaid patients face problems finding specialty physicians to treat them in a timely manner” and that “low Medicaid payment rates typically are the main barrier.”
The authors of the study added that the Affordable Care Act “does not explicitly address the likely increased demand for specialty care stemming from the coverage expansion.”
A 2013 study published in the Journal of Pediatric Orthopaedics found 76 percent of orthopedists in a nationwide audit refused to offer an appointment to a Medicaid-insured child with a fracture. In contrast, only 18 percent of orthopedists refused appointments to privately insured children with the same condition.
What about those residents who don’t qualify for HUSKY, but still need to buy their insurance on the health exchange?
Sheldon V. Toubman, an attorney with the New Haven Legal Assistance Association for the past 27 years, has spent that time helping the poor, disabled and other Connecticut residents secure health care benefits, employment, housing, and other basic needs.
When it comes to the state health care exchange, the problem is “we have a lot of low-income folks whose income is too high for Medicaid, but they are still low income,” Toubman said.
Too many are offered only policies with thousands of dollars in deductibles and out-of-pocket costs — and little in-network access to specialists.
“Exchange plans typically have skinny networks,” Toubman added.
Anti-smoking program bogs down
While the state’s financial troubles threaten health care coverage and safety-net providers, the state’s demand for cash to shore-up the budget has also gutted anti-tobacco programs that could be helping thousands of people to stop smoking, advocates say.
“For decades, the tobacco industry has thrived on the business of addiction by marketing to children and lying to adults about the harms of its deadly products,” said Bryte Johnson, director of government relations for the American Cancer Society’s Cancer Action Network.
Johnson added the industry spends an estimated $73 million annually in Connecticut, “specifically targeting vulnerable populations.”
In theory, there should be a lot of money to curb tobacco use, a problem that disproportionately affects low-income state residents.
Connecticut was one of 46 states to participate in a landmark lawsuit against five major tobacco companies. The result was a 1998 settlement that awarded $246 billion settlement to the states, and dramatic new restrictions on how tobacco companies could market their products. Connecticut’s guaranteed share for the first 25 years: between $3.6 billion and $5 billion.
But most of those funds simply have become a new revenue source for the overall state budget.
The annual report of the state’s Tobacco and Health Trust Fund, touts a “significant decrease” in adult cigarette use from 22.8 percent shortly after the settlement to 13.5 percent by 2015. But it also acknowledges adult tobacco use rates “remain disproportionately high” among: 18-24-year olds at 30.5 percent; low-income residents, 29.3 percent; and individuals with less than a high school education, 31.6 percent.
Over the same period, the state says cigarette use among Connecticut high schoolers fell from 25.6 percent to 5.6 percent.
But the American Cancer Society says Connecticut’s progress has actually been slower, with 10.3 percent of high school students smoking.
More importantly, e-cigarettes have become more popular among Connecticut’s youth, with 14.7 percent of high school students reporting that they were vaping in 2017.
Why has the state not made more progress?
While $29.2 million was dedicated directly to prevention and cessation programs since the settlement, slightly more than $277 million have been transferred to other segments of the budget. And legislators have awarded no resources to the Tobacco and Health Trust Fund since 2015.
“Nearly every state gets a failing grade and is spending a minuscule portion of tobacco revenues to fight tobacco use and the enormous public health problems it causes,” a coalition of eight anti-tobacco networks, including the American Cancer Society and the Campaign for Tobacco-Free Kids, wrote in a December 2017 analysis of the post-settlement cessation efforts.
But in a room filled with under-achievers, Connecticut ranks last in the class.
The federal Centers for Disease Control and Prevention (CDC) recommends funding levels for comprehensive tobacco control programs for all states. And while the national average in 2017 was 15 percent of the CDC’s recommended funding level, Connecticut ranked last at less than 1 percent, the American Cancer Society wrote in its 2018 “Cancer Facts and Figures” report.
Galvanizing racial inequalities
The battles to prevent tobacco use, to protect Medicaid and community-level clinics, and to preserve health care access in general have another common thread, advocates say: Race.
In other words, inequalities in wealth and health care aren’t borne equally along racial lines.
While 10.1 percent of white Americans lived in poverty in 2014, 23.6 percent of Hispanics and Latinos and 26.2 percent of African-Americans experienced that problem, according to the Lancet analysis. The national average was 14.8 percent.
The ratios of Americans in poor health followed that trend. While the national average was 8.9 percent, among whites it was 8.3 percent, among Hispanics and Latinos it was 12.2 percent and among African-Americans it was 13.6 percent.
In Connecticut, some of the disparities are even greater, according to analyses prepared by the Connecticut Health Foundation using data from the 2016 U.S. Census, the Kaiser Family Foundation and the state Department of Public Health.
Just 7 percent of the white population lives in poverty here, while 22 percent of African-Americans and 18 percent of Hispanics and Latinos live in poverty.
Similarly, while just 4 percent of the white population here is uninsured, almost 6 percent of African-Americans and 12.3 percent of Hispanics and Latinos lack health insurance.
And while 7.3 percent of Connecticut’s white population reported in a 2016 survey that they could not see a doctor when otherwise necessary because of cost, that problem was cited by 10.7 percent of African-Americans and 21.3 percent of Hispanics and Latinos.
“What the state budget cuts have been in the last few years, they have dramatically impacted the minority communities,” Walker said.
And in Connecticut’s poorest cities, poverty and health care can fall into a dangerous spiral, Walker added. “So many of these people don’t have paid leave. They don’t have the opportunity to say, ‘I can’t come into work today because I have to take my child to the doctor,’ and not lose income. When we cut school clinics and health centers, we are not just shutting these services.
“We are playing a real class war game now.”
Health care gobbles up middle-class incomes
But it’s not just the poor who see a link between their health care problems and their financial security.
Rising insurance and treatment costs are also gobbling up a hefty share of the incomes of middle-class families and retirees.
Direct out-of-pocket spending is the most regressive form of health-care financing, the journal Health Affairs concluded in 2011 when it published a study conducted by the Rand Corporation. The uninsured, most of whom are poor, pay for much of their care out of pocket and, because they do not have insurers’ negotiating leverage, are charged the highest prices.
And as premiums, co-payments and deductibles grow, middle-income and elderly patients also must devote an increasing and disproportionate share of their resources to health care.
Private insurance premiums grew threefold between 1999 and 2016, Health Affairs wrote. The poorest fifth of Americans spend, on average, 6 percent of their income on health insurance premiums while the wealthiest fifth spend 3.2 percent.
“Given the perilous state of the U.S. economy, the fiscal burdens imposed on all payers by steadily rising health care costs can no longer be ignored,”wrote David I. Auerbach and Arthur L. Kellermann, authors of the study.
Their analysis considered a typical family’s premiums, out-of-pocket costs, state and local taxes, and employers’ contributions toward health insurance. They also noted that economists generally agree that employees bear the costs of employer contributions through reduced wages.
Their typical American family — a median-income married couple with two children and employer-sponsored health insurance — saw its income grow by $23,000 between 1999 and 2009. But rising health care costs left them with just $1,140 extra income after adjusting for inflation.
‘I’m not going to sleep easy at night’
Despite all of these factors, many are worried health care could remain on the chopping block for years to come, both at the state Capitol and in Washington, D.C.
The state Commission on Fiscal Stability and Economic Growth, created through a bipartisan legislative compromise last November, struggled through the early months of 2018 to map a strategy by which Connecticut could survive the crush of pension bills coming over the next 15 years.
The controversial panel, which critics argued lacked racial diversity and was dominated by affluence and business interests, issued a broad range of recommendations focused chiefly on cutting taxes and spending.
Perhaps one of its most controversial recommendations was that a “nationally prominent third-party consultant” be tasked with finding $1 billion in “non-fixed costs” to strip from the state budget “without adversely impacting the social service outcomes of the state.”
But with pension, other debt, and labor costs falling largely into the fixed category, critics said this could not be done without cutting deeply into health care, social services and aid to poor cities.
“I’m only seeing sacrifice from the same people over and over again,” said Rep. Robyn Porter D-New Haven, who charged that the recommendations threaten to worsen an income inequality trend of historic proportions. “When do we strike a balance?”
The two major party candidates for governor, Republican Bob Stefanowski and Democrat Ned Lamont, also provoke varying degrees of concern among some health care advocates.
Stefanowski, by far, raises the most red flags, having pledged to phase out the state income tax — which pays for 51 percent of the General Fund — over eight years.
Even though many critics argue this is mathematically and legally impossible given the state’s long-term obligations and Connecticut’s economic reality, even striving toward that goal, they say, would decimate a social services safety net that already is fraying badly.
Stefanowski, who has said at several debates that “I will rip costs out of the state budget like you have never seen in your life,” told the CT Mirror that while he supports emergency assistance for seniors, the disabled and the poor, the safety net must be on the table.
“We certainly need to look at ways to cut costs,” the Stefanowski campaign wrote in a statement. “Over $6 billion annually is spent on Medicaid alone and undoubtedly savings can be achieved. We need to collect and review in-depth data on the effectiveness of our programs that will help us determine whether each program is successfully providing a hand up that empowers citizens to escape poverty.”
Even though state legislators reversed a second major cutback to HUSKY A last spring, Baker said no one can be sure what will happen with that program, or health care in general, in 2019. “I have no illusions about what it means in terms of stability in the future,” she said.
The Stefanowski campaign added that the first step should not be to reduce benefits, but rather to privatize more human service functions currently performed by state employees.
“Private providers do a great job, at a fraction of the cost to its state equivalent, with no reduction in the quality of care,” the campaign said.
Lamont has pledged his support for the safety net, yet also says it can’t be immune from spending cuts.
“Ned is committed to delivering better services at a lower cost to taxpayers, and will work with community-based providers, such as the successful community health clinics, detox clinics, and home health services he has visited around the state,” the campaign wrote.
And while Lamont has called Stefanowski’s pledge to eliminate the income tax “reckless” and “dishonest,” neither candidate has released details on how they would close the $2 billion state budget deficit projected for the first fiscal year after the election.
Walker said the idea that a cut of this size wouldn’t affect health care — let alone devastate it — is dangerous fantasy.
“I’m extremely worried,” she said. “There isn’t $1 billion of fat in this budget.”
And Connecticut’s struggle with its massive pension debt isn’t the only variable threatening access to health care in the future.
The results of this November’s congressional races could play a major role as well.
Even though Republicans in Congress failed in 2017 on their pledge to “repeal and replace” the Affordable Care Act, the law has changed in many ways in recent years.
President Donald Trump issued an executive order on his first day in office to minimize regulatory burdens imposed by the act. The order instructs federal agencies to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation” of any provision that creates a fiscal burden.
The U.S. Department of Health and Human Services responded by removing some information on how to sign up for benefits from the healthcare.gov website.
The department also has cut funding for outreach and advertising.
House Republicans proposed a replacement bill that the Congressional Budget Office estimated would leave about 24 million Americans without insurance by 2026 and raise premiums dramatically for older people while reducing them for younger residents. The House passed legislation similar to this bill, but it died from lack of support in the Senate.
“I’m not going to sleep easy at night,” Baker said. “There are unknowns at every level of government.”
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