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MassHealth Cuts: A Better Way

MassHealth Cuts: A Better Way

November 18, 2009

Wednesday is the last day of formal legislative sessions for the year, and the House and Senate are expected to act on the Patrick administration's request for flexibility to permit a number of reductions in services and increases in copays to MassHealth members.

MassHealth is now expected to spend around $300 million more than was appropriated last summer, due to mix of faster enrollment, service cost increases, and other issues. This is not unexpected in a program that spends some $9 billion a year. In a normal year, shortfalls are dealt with by a mix of administrative savings and appropriating additional money at the end of the year. This is not a normal year, however. Some of the gap will be filled by additional appropriations, but the administration proposes to deal with some of the shortfall by making $34 million in cuts in benefits. Another $1.7 million would come from increased copays. Further cuts will also come to provider payments, including delaying some payments.

This MassHealth powerpoint gives some of the details on the proposed solution to the FY 10 budget.

We acknowledge and appreciate the immense fiscal challenges the state is experiencing. We know the Administration has spent a significant amount of time weighing its options, attempting to put together the least-harmful solution to the problem. The Administration's top goal is to avoid cuts that hurt the most vulnerable, and in this they are markedly different from how previous administrations dealt with economic crisis.

We particularly appreciate that the administration is proposing only temporary changes to state laws. Their draft proposal would sunset after next year, which, by the way, is expected to be even tougher fiscally than this year.

Cuts that hurt
Still, a number of the proposed cuts are particularly egregious, and we think there are better alternatives. We would a point out a few among the many that concern us.

For one, the proposal calls for eliminating restorative dental care and dentures for most MassHealth adults. The roughly one in nine state residents who rely on MassHealth would be covered only for the extraction of an affected tooth. After that, there would be no coverage.

Another proposal would eliminate the outlier payments that reimburse hospitals for the extraordinary costs of very high cost patients. This cut could hurt the sickest patients who typically have high costs due to very severe multiple illnesses or injury.

We're also strongly opposed to the increased copays being proposed. For example, specialist visits would increase to $6 for those just over the poverty level, discourage care for people who are struggling to make it on a very low income. What makes this action especially foolish from a fiscal point of view is that federal rules will require the state to send to Washington 61 cents of every dollar collected in additional copays.

A better way
A number of revenue options need to be looked at first. Some targeted revenue proposals would increase state resources and improve public health. For example, when the state raised cigarette taxes last year, it did not enact a corresponding increase in the tax rate on smokeless and roll-your-own tobacco. This inequity leads teens to shift to other forms of tobacco, abetted by the tobacco industry. More broadly, the state needs to look at additional general revenue, whether through closing loopholes identified in the tax expenditure budget, or restoring corporate or other tax rates to earlier levels.

A report just issued today by the Mass Medicaid Policy Institute, Global Payments to Improve Quality and Efficiency in Medicaid: Concepts and Considerations, suggests another better alternative than blunt cuts.

The report details the key role MassHealth can play in moving the payment reform agenda, and it deserves serious consideration by policymakers. One key recommendation is that MassHealth implement "shovel-ready" cost saving payment reforms such as reduced payment for preventable readmissions immediately. This would provide real savings right now, and build capacity for better care coordination, improving quality and setting the stage for further payment reforms. Other states are moving in this direction, and Massachusetts should take the lead in finding savings through delivery system reform, rather than cuts to services.

We urge the legislature to consider this and other revenue ideas before rushing to make even more cuts to MassHealth.
-Brian Rosman and Lindsey Tucker