One day after lawmakers ignored his appeal to be frugal with special education, Gov. Ned Lamont previewed the looming fiscal nightmare that is Medicaid.
In other words, be careful with the state budget, because it soon could be in for a world of pain.
It likely will be months before states will know how deeply Congress and President Donald Trump will cut into the federal entitlement program that funds health care for 1.2 million Connecticut residents. But the Republican-controlled U.S. House is targeting $880 billion in overall federal budget cuts — a figure that can’t be achieved absent major reductions in Medicaid, according to a report this week from the Congressional Budget Office.
“We’re modeling that out right now to see what those consequences could be,” the governor said during an afternoon press conference at Charter Oak Health Center in Hartford.
The only thing that’s certain at this point, according to the Lamont administration, is the likely impacts here of all cuts Congress is considering would be ugly.
What happens if Medicaid is converted into a block grant system, giving states a fixed amount regardless of patients’ needs or demand? Connecticut loses $1.3 billion over the next seven years, or an average of $186 million per year.
And should Congress lower or abandon the current guarantee that Washington reimburses at least 50% of all states’ Medicaid costs? Lamont said Connecticut’s stands to lose $880 million “virtually overnight.”
Faced with a scenario like that, “I don’t think there’s any way the taxpayers of the state of Connecticut can make up all the shortfall,” the governor added. “But I think we’ve got to do everything we can to help the people most in need.”
State Comptroller Sean Scanlon echoed the governor’s concerns. Connecticut received more than $6 billion in federal Medicaid grants this year — an amount equal to roughly one-quarter of the entire state budget.
“We cannot possibly replace what we have been getting from the federal government. And that is something that I think worries all of us,” Scanlon said.
Neither Lamont, Scanlon, nor Connecticut’s 1st and 2nd District congressmen — John Larson and Joe Courtney, who also attended the press conference — speculated on how state officials might trim Medicaid under some nightmare scenario. Officials said it’s too early to focus on that.
Still, there are benefits that Connecticut offers that aren’t required for states to participate in Medicaid. These include dental and pharmaceutical coverage, and home care for elderly patients.
But state Sen. Cathy Osten, D-Sprague, who co-chairs the General Assembly’s Appropriations Committee, told the Connecticut Mirror she isn’t ready to accept any cutbacks.
“We’re not pre-supposing … in a program as important as Medicaid,” Osten said. “We’re not going to start off looking at cuts to programs that keep people alive — and that’s what Medicaid does.”
And the two nightmare scenarios Lamont discussed Thursday no longer are under consideration, U.S. House Speaker Mike Johnson said this week, according to a report in Politico.
Lamont’s social services commissioner, Andrea Barton Reeves, said during a press conference earlier this week that adding work requirements for Medicaid eligibility will be “the most realistic first step” taken by Washington policymakers. On Thursday, she took aim at the policy, saying that, in Connecticut, most Medicaid enrollees have jobs.
“It’s this really wrong-headed assumption that people who are on Medicaid or receive some kind of support just simply aren’t working,” Barton-Reeves said. “In many instances, work requirements haven’t worked in other states because it’s incredibly expensive to implement.”
Lamont and his fellow Democrats in the state legislature have not always seen eye-to-eye on Medicaid, nor on how tight Connecticut should be with its purse strings.
Last year, the governor launched a study to return the state’s Medicaid program to a model known as managed care, garnering fierce criticism from legislators and advocates.
Connecticut currently uses what’s known as a managed fee-for-service model for its Medicaid program, where the state pays providers directly for services delivered to Medicaid beneficiaries. In managed care, or a traditional “capitated managed care” model, the state instead pays a set monthly fee per member to insurance companies to manage the Medicaid program, and the insurance companies pay providers.
The eventual report, authored by independent consultants, found that Connecticut’s Medicaid program boasts lower costs and similar levels of access when compared to peer states, leading to the conclusion that employing managed care would not likely save the state money, prompting Lamont to back off.
More recently, the governor bumped heads with legislators over plans to send $40 million in supplemental grants to local school districts to mitigate a growing crisis in special education costs.
Lamont, a fiscal moderate, noted Connecticut’s budget already is on pace to exceed the constitutional spending cap — which keeps growth in line with household income and inflation — by $61 million.
And while he vetoed the special education grants, which would have pushed the cap problem beyond $100 million, lawmakers prepared to override.
Lamont ultimately conceded, agreeing to sign a bill that would send the $40 million to local schools after first shifting the funds to an off-budget account — an accounting gimmick that kept the spending cap problem from getting worse.