The state's $365 million budget deficit dates, in part, to two years ago when Connecticut became the first state to expand medical coverage to low-income adults as an early adopter of federal health care reform.
In 2010, Connecticut had the largest percentage increase of any state in Medicaid enrollment among low-income adults — a 32 percent jump. And Connecticut's experience was echoed the following year when Washington, D.C., and Minnesota had similar increases, according to the Kaiser Family Foundation, a health policy research group.
In two years, Medicaid enrollment by low-income adults has grown from fewer than 50,000 to more than 83,000, greatly outpacing the state's expectations, according to state figures. Total Medicaid enrollment was 588,488 at the end of the last fiscal year in June, up 13,676 in a year.
"The number of people enrolled in that program has shot up," said Benjamin Barnes, secretary of the state's Office of Policy and Management. "One, the economy has been poor. More people have been impoverished as a result of high unemployment, things of that nature."
Advocates for the poor and disabled say that the unexpected rise shows that the safety net is working.
"Rising insurance costs are tough on employers and employees," said Janet Davenport, a spokeswoman for the Universal Health Care Foundation of Connecticut. "Faced with rising premiums and co-pays or no insurance options, more low-income adults are eligible for Medicaid."
As a medical expenses program, Medicaid is funded by a mix of state and federal money. Lawmakers discovered this week that it was a lot of state money when new figures showed that 61 percent of a $365 million budget deficit is attributable to the state's Medicaid population for the fiscal year that will end next June 30. The state's Medicaid bill is more than 25 percent of Connecticut's annual budget.
In about a year, more people will qualify for the government-funded health care program when eligibility standards change in January 2014 from 56 percent to 133 percent of the federal poverty level. That will be the next phase of the federal Affordable Care Act.
That means that the threshold for eligibility will rise from $14,655 to $34,806 for a family of five annually and from $6,098 to $14,483 for a single person.
Those newly eligible people will be funded 100 percent by federal Medicaid funds, said David Dearborn, a spokesman for the state Department of Social Services. That 100 percent federal reimbursement will decrease over time to 90 percent by 2020.
At the same time that more people are becoming eligible for Medicaid, costs are driven up by the same factors that drive up medical expenses overall. For example, people are using more medical services, and the government is paying higher reimbursement rates to hospitals, nursing homes, doctors and other providers, according to a state report.
Nursing home care, in particular, continues to be an expensive part of Medicaid, accounting for about one in four of the dollars spent. The state is spending $1.2 billion to care for 18,000 residents in nursing homes, Dearborn said.
"Eventually, the state gets 50 percent back in federal financial participation, as revenue to the general fund," Dearborn said.
In general, the federal government reimburses all Medicaid-eligible expenses at 50 percent, including mental health, acute care, long-term care and outpatient services, Barnes said. The federal government will increase reimbursement for primary care in January 2013, including additional payments to bring up the reimbursement rates to medical providers, Barnes said.
A New System
Although the economy has played a role, the state did, too, when it implemented its new program — the new Medicaid Low Income Adult program, also called HUSKY Part D — in 2010 that granted eligibility to younger people and relaxed standards about a person's assets. It eliminated its State Administered General Assistance program.
The old system — State Administered General Assistance, or SAGA — accepted people from ages 21 to 64, but the new program lowers the eligibility to age 19. The old system would only allow people who had less than $1,000 in assets, aside from a car worth $4,500 or less and a home.
"You could essentially have one crummy, old car and no money in the bank, or a couple hundred dollars in the bank, and still qualify," Barnes said. "But if you had any assets at all, then you didn't qualify. You had to spend down those assets on medical services before you were eligible. So, that ruled some people out of eligibility."
The new system doesn't have a limit on assets, although Connecticut is asking federal officials if they might implement an asset requirement to curb the enrollment growth and its related costs.
Benefits are more robust in Medicaid than in SAGA, government officials and patient advocates agree.
"The fact that the services are greater probably prompts more people to enroll in the program whereas, honestly, the SAGA program was only marginally better than being uninsured," Barnes said.
In addition to better benefits costing more, Medicaid clients are often more expensive to care for than people who have private insurance, Barnes said.
"Because serious illness is so often financially crippling, even for those with jobs and insurance, many of the sickest at any age group end up on Medicaid," Barnes said.
One of the arguments for increasing Medicaid eligibility on the state and federal levels was to help reduce the number of uninsured people. It has done that, and it offers far better coverage than the minimum required by federal law as provided in Mississippi, said Dr. Suzanne Lagarde. She is a gastroenterologist who works in the New Haven area and also helps serve uninsured people through a program called Project Access in New Haven. She also travels to Mississippi to help the uninsured population there.
Lagarde's work as a doctor for three decades has interested her in health policy, and she is working on a master's of business administration specifically related to health care at Yale School of Management.
"I'm bullish on Medicaid," Lagarde said, but added that she sees many inefficiencies. She hopes to address those in Connecticut through a new Medicaid committee of the Connecticut State Medical Society.
In the meantime, Lagarde said: "Connecticut does a lot more for its citizens, and, for that, I am grateful."