Thank Your NH Lawmakers For What Got Cut and Who Got a Tax Break

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Distant Dome is co-published by InDepthNH.org and Manchester Ink Link

By GARRY RAYNO, Distant Dome

Every two years lawmakers decide what state government will spend on social services, economic development, education, prisons, highways, law enforcement and the courts, environmental protection, utility regulations, the legislature, or a tax break, etc. 

Those are conscious decisions. In the last budget cycle, those decisions were to flat-fund the university system, which increases student tuition, to reduce state aid for public schools, and to short-change the multitude of medical and mental health providers serving the poor.

The state’s true public policy is played out in the budget process, who will receive help and who will not, who will see additional tax breaks and who will not.

Garry Rayno

Recently “unintended consequences” for substance abuse treatment and recovery providers helping to combat the state’s opioid addiction epidemic have been raised and how to address their shortfall.

Changes lawmakers made in reauthorizing the Medicaid expansion program caused the new financial challenge for providers. Originally the expansion population received health insurance through the state’s insurance exchange with private companies providing the coverage.

Private insurers negotiate rates with providers that are more generous than those paid through the state’s traditional managed care Medicaid programs which are less than 50 cents on the dollar.

Until 2017, the federal government paid 100 percent of the cost of the expansion. Now the state has to pay a portion of the cost gradually increasing to 10 percent by 2021.

While the state’s share is small, the cost for the recently completed fiscal year is more than $40 million and it would increase in each succeeding year.

So a commission worked last year and recommended doing away with private insurance coverage and moving the expansion population into the traditional managed care program saving millions of dollars for the state but lowering reimbursements for substance abuse treatment and recovery providers as well as hospitals and other medical and mental health providers.

The Medicaid expansion reauthorization law includes a provision telling the Department of Health and Human Services to establish rates sufficient “to ensure access to, and provide capacity for, all behavioral health services.”

While that sounds like a solution, it does not tell the department to set rates sufficient to cover the costs of the opioid treatment and recovery programs.

A number of the providers have also had financial issues and have not accounted for how they spent the state money so some contracts have been delayed while those issues are sorted out.

Less help for addicts

The end result of the financial shortfall and financial problems will be layoffs, fewer beds and less help for those suffering from addiction.

An estimated $10 million to $15 million would fix the shortfall problem, but as always the question is how to pay for it.

And this goes back to the budget setting public policy. The state — on a cash basis (not audited) — has a nearly $170 million revenue surplus this year.

That is not to say there is a $170 million surplus because the books will be adjusted and audited to determine what the actual surplus is by the end of the calendar year.

But there is certainly enough money to take care of the problem and there would have been enough money to keep student tuition from increasing, for increasing medical provider rates across the board as the study commission recommended, to halt the clawback of state eduction aid to communities with declining student enrollments, and to provide higher salaries for health care workers to help eliminate the developmentally disabled wait list, but none of that was done under the public policy established through the two-year operating budget.

Business tax break

The state has plenty of money to spend and has for the past four fiscal years, but lawmakers do not want to spend it. Instead they cut business taxes and filled the state’s saving account or rainy day fund.

That was a conscious decision by the majority of lawmakers, not something that just happened as some would have you think or “unintended consequences.”

Lawmakers did pass a supplemental budget this session that funded some pet projects as well as the new collective bargaining agreement with state workers, and additional money to fix more red-listed bridges, to reach a settlement with hospitals over uncompensated care and for businesses willing to employ workers recovering from substance abuse.

Public policy is illusive. It may be in law, but if it is not funded, then it is not really the state’s public policy.

State Retirees

For the past few budget cycles, lawmakers tried to address a chronic shortfall in the fund covering state retirees’ health insurance.

The line item is determined in the budget process but often does not address the actual costs of “Medicomp” insurance for those on Medicare parts A and B.

Long ago the state promised its workers no-cost health insurance once they reached 65 years old and were eligible for Medicare.

But legislative promises are not set in stone and change from one legislature to the next, and last year older retirees began paying 10 percent of their health insurance premium. Retirees not on Medicare pay 20 percent of the premium for the state’s self-funded coverage.

With more and more state workers retiring the cost of “gap coverage” has grown and was expected to increase to $41 million over the next two years.

Medicare with its supplemental insurance is a point of service program that covers patients where ever they seek medical care in the United States. Some supplemental plans cover foreign travel medical expenses as well.

It is not a managed care system and recipients do not need a referral from their primary care provider to see a specialist although there are some restrictions.

Lawmakers hired a firm to study the retirees health-care system several years ago, and the firm recommended a group Medicaid Advantage plan.

Under an advantage plan, or what is called Medicare Part C, the money that would go for Part A and B coverage, goes to a private insurance company with a managed care system.

The recipient has to pay an additional premium or in the case of the state, it contributes to the plan but not as much as under the old system.

The state has a contract with Anthem to administer its health coverage through fiscal year 2021 for state workers, retirees who are not over 65 years old and retirees on Medicare.

When the recommendation for a Group Advantaged Plan was first proposed, Anthem did not have a big enough network to qualify for enough federal subsidies to make the changeover financially advantageous to the state.

$11.8M in savings

With a wider network now, that has changed and the state expects to save $11.8 million by moving retirees on Medicare to a Group Advantage Plan by Anthem.

Writing to Executive Councilors in May, Department of Administrative Services Commissioner Charles Arlinghaus wrote, “While being at risk for all claim costs, the insurance company is incentivized to manage that risk, maximize CMS (Center for Medicare Services) funding through risk adjustment strategies and minimize claim cost through medical management strategies. The insurance company is also incentivized to maintain a high level of member satisfaction. The insurance company’s success with all of these factors helps contain premium costs.”

The $11.8 million in savings is more than one-quarter of the projected costs of the old system which is a substantial reduction in medical dollars to be realized through a managed care program.

That means retirees will no longer be able to see a specialist or have tests, etc. without first going through their personal care provider and the insurance company.

No to retirees

A lot of the 10,500 retirees should expect to hear “No” more frequently if the state is going to save almost $12 million over two years.

“In addition to the estimated $11.8 million in projected Health Benefit Plan savings, the transition to a Medicare Advantage Plan will enhance the focus of our Medicare eligible retirees’ health and well-being,” Arlinghaus writes. “Anthem will work with retirees and their healthcare providers to coordinate care among a retiree’s various health-care providers to ensure the appropriate care is received.”

Welcome to the real world retirees, many older folks with limited pensions and no bump in benefits for many years due to the retirement systems’ unfunded liability.

The Executive Council approved the change, which went into effect July 1 at its June 20 meeting.

Garry Rayno may be reached at garry.rayno@yahoo.com

Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London. 

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