New rate hikes for child care providers and a plan to cancel billions of dollars in medical debt topped the list of health and human service investments in Gov. Ned Lamont’s new two-year state budget.
But the biennial proposal wasn’t as kind to Connecticut’s community-based nonprofits that deliver the overwhelming bulk of state-sponsored social services. Though Lamont did recommend more state financing to help nonprofits with equipment and other capital expenses, the most pressing need — more funds for operating costs — was not addressed.
“While keeping more of what you earn helps, some people still cannot afford to get back to work,” Lamont told legislators in his budget address. “Affordable day care is a precondition to young families being able to get back to work and giving their kids the very best head start in life.”
Connecticut provided roughly $70 million in wage support to child care workers over the past year and another $25 million to subsidize 1,300 additional slots for infants and toddlers.
The new budget would follow that up with $67.5 million over the next two fiscal years combined, for a 10% rate hike for licensed care providers and a 5% increase for unlicensed providers.
The plan would allocate another $15.5 million in the 2024-25 fiscal year to support rate hikes in state-funded school readiness programs and child care centers serving the pre-kindergarten population.
Another $35 million in emergency federal pandemic aid would be sent as a one-time boost to the industry through the CT Care 4 Kids program, a partnership between the state and various child care services.
Sen. Cathy Osten, D-Sprague, co-chairwoman of the Appropriations Committee, said it was premature to say whether Lamont’s proposed investment in early childhood intervention goes far enough.
Majority Democrats in the House and Senate have been pushing for more than a year for a transformational investment in an industry that was devastated financially during the first two years of the coronavirus pandemic and still hasn’t recovered.
“We did not do enough last year,” Osten said. “We really do have to look at that very carefully.”
Child care services increasingly are employing staff with college degrees, yet many continue to pay salaries that match or barely exceed the state minimum wage, Osten said, adding this is not a sustainable situation.
Lamont also announced Wednesday the formation of a blue-ribbon panel including employers, providers and families “to focus on designing the next generation of child care, with incentives for the business community to provide more on-site support and to ensure the child care system works for all stakeholders.”
Canceling billions of dollars in medical debt
The other centerpiece of Lamont’s health and human service initiatives involves using $20 million in federal American Rescue Plan Act funding to erase $2 billion in medical debt.
Under the plan, the state would contract with a nonprofit that works directly with local hospital systems to purchase entire portfolios of debt. There is no application process, and nonprofits typically purchase the debt owed by low- and low-to-moderate income households.
Charities performing this task in other states have acquired debt for as little as 1 cent on the dollar because hospitals generally struggle to recover most of the funds owed.
Approximately 19% of American households carry medical debt, and the median amount is about $2,000, according to the U.S. Census Bureau. This burden falls more heavily on people of color, with 27.9% of Black families and 21.7% of Latino households carrying medical debt.
About 31% of U.S. households with a member in fair or poor health have medical debt, according to census data.
“Medical debt is the leading cause of bankruptcy, and it hangs like a dark cloud as you try to get your health and bank account back in shape,” Lamont said in his budget address Wednesday. “The ultimate solution to this problem is affordable access to quality health care for everybody. We must drive down the unsustainably high costs of medical care so consumers never again accumulate such debt.
“I am calling on all parties, including insurers, employers, hospitals, and pharmaceutical companies to step up and be part of the solution.”
Nonprofit social services come up short
But while the governor proposed major new investments to curb medical debt and bolster child care, he didn’t aim big when it came to the state’s nonprofit social services safety net.
His budget maintains more than $330 million in funding increases the industry has gained over the past two years.
But before that, nonprofits — which deliver the bulk of state services to people with intellectual and developmental disabilities, as well as patients suffering with mental illness or substance abuse — suffered from a decade-and-a-half of stagnant state funding.
And while funding increased over the past two years, the national inflation rate hit a 40-year high in 2022, undoing much of that progress.
The CT Community Nonprofit Alliance, which represents more than 500 community-based agencies, estimates the state would need to boost annual spending more than $480 million to reverse the fiscal damage that now dates back 16 years.
“After two years of inflation, COVID, workforce shortages and increasing demand, we are disappointed that the governor has not included across-the-board funding increases that our members desperately need,” said Gian-Carl Casa, president and CEO of the nonprofit alliance. “We look forward to working with his office and legislative leaders to ensure the funding is included in the final budget this spring.”
Lamont did propose $25 million in state borrowing in each of the next two fiscal years to help nonprofit agencies cover equipment and other capital costs. But such state borrowing, even if approved by the legislature, has a history of bogging down for months or even years. That’s because it also must be approved by the State Bond Commission, a 10-member panel chaired by Lamont, who has tried to tighten the reins on state borrowing.
For example, there already are $45 million in bond authorizations approved by the legislature to assist nonprofit social service agencies that still haven’t cleared the bond commission. In other words, the state still hasn’t even borrowed the money, let alone transmitted it to community agencies.
Osten said she expects the Appropriations Committee, which must develop the legislature’s counter-proposal to Lamont’s budget, likely will want to revisit the safety net issue closely.
“To think that we should not support them is probably not the wisest of moves,” she said, adding that “the debate is not closed.”
More funding for health agency staffing, specialized care units
With the price of health insurance climbing, Lamont has proposed adding 11 new positions in the state’s Office of Health Strategy to boost cost growth benchmarking efforts and other cost-controlling measures.
The benchmarking initiative requires OHS to come up with annual targets for the growing expense of health care, and it mandates that providers, insurers and others in the industry to report their yearly price increases.
The project is meant to expose the hospitals, medical practices and insurance companies whose costs soar beyond the state-imposed benchmarks. There is no penalty for those who exceed the targets, but Lamont has said the annual reporting mandate would put public pressure on those agencies and companies to keep costs down.
People hired in new positions at OHS would help “develop, estimate, and interpret metrics designed to control health care costs and improve access and outcomes.”
And with few long-term care facilities offering bariatric, ventilator and hemodialysis services, Lamont has also recommended using $4 million in ARPA funds to build more specialized care units.
“Medicaid members who require specialized beds are often moved out of state, resulting in additional costs and creating a poor patient experience,” the administration wrote in its budget narrative. “Increasing the number of specialized care units will allow patients to live closer to home, boost employment in the state by supporting the nursing home industry and reduce net spending for such services.”
To boost health equity efforts, Lamont proposed adding a position in the Department of Public Health dedicated to studying infant deaths and providing recommendations to combat health disparities in maternal care.
Babies born to Black parents in Connecticut are more than four times as likely to die before their first birthday than babies born to white parents, according to a 2020 study by the Connecticut Health Foundation. There are also substantial gaps in the rate of low-birthweight babies — those born weighing less than 5 ½ pounds. Babies born to Black parents are nearly twice as likely to be born at a low birth weight as babies born to white parents, the study found.
Among babies born to Hispanic parents, the infant mortality rate was 3.7 per 1,000 births, while for white parents, it was 2.9 per 1,000 births.