Governor Patrick started the FY 2010 budget process today with the filing of House 1, the administration’s budget proposal. Given the steep decline in existing revenues, the budget was bound to be a good news/bad news situation. The budget proposes no direct cuts to benefits or eligibility in health coverage programs. The Governor’s deep commitment to health reform is maintained. But deep cuts in public health, along with ongoing cuts in provider rates for public programs, will stretch our health safety net and threaten gains made in the past years.

We’re still looking at the details ourselves, and have a number of questions for the administration. But here’s our initial take.

The extensive online materials include a helpful page summarizing the accomplishments of health reform, and an overview of the health access program budget levels proposed in House 1. The budget assumes a cut in MassHealth spending of $374 million. Without the cuts, MassHealth would grow about 7.3%; the cuts reduce the spending growth rate to 3.14%. Because of the loss of federal revenue, the $374 million in cuts saves the state only half of the amount, $178 million.

Speaking of federal revenue, it’s not clear from a quick read how the Governor proposes to use the additional federal Medicaid reimbursements expected as part of the recovery package. The package is expected to include several categories of additional federal aid. The budget does count additional federal revenues, but we will seek clarification to make sure that all of the Medicaid revenue goes to health, as Congress has indicated.

No direct cuts were proposed to MassHealth services or eligibility levels. The cuts include the elimination of outreach and enrollment grants, which have been critical in helping people get connected to health programs and navigate the maze of health care programs. Assistance from local community groups has become more important as many people encounter difficulties staying enrolled once they initially sign up.  Other savings come from holding rate increases to around 1% on average, tightening some service management, and expanding the use of generic drugs. We were pleased to see a $10 million investment in expanding “medical homes,” a patient-focused primary care model for patients with chronic disease.  Details on the MassHealth savings can be found here  (scroll down to Medicaid Cost Controls and Savings).

The budget funds the Commonwealth Care program at $880 million, compared to spending this year  estimated at to be at $820 million (this is less than the $869 million originally budgeted, due to the stagnation in net enrollment growth).  This amount assumes some renewed growth in CommCare enrollment, based on the worsened economy.

The Health Safety Net program (formerly the Uncompensated Care Pool) is expected to continue its slow decline, as insurance coverage expands. Spending is estimated at $381 million, compared to $406 million this year. Because of the decline, the administration proposes that no General Fund  subsidy will be required for the program. The budget materials do caution, however, that there is uncertainty around the forecast and that a cushion has been built in the assumptions.

The outside sections include a welcome provision that allows benefits to be adjusted in the Children’s Medical Security Plan. Under current law, many low-income kids exhaust their CMSP benefits, and the Children’s Health Access Coalition is sponsoring legislation to bring CMSP benefits up to the MassHealth level. CHAC will work with the administration and legislature to strengthen the CMSP benefits to meet the goal of keeping kids healthy.

Several initiatives will cut needless spending and improve health quality. One outside section prohibits payments for healthcare-associated infections, and another authorizes a hospital payment demonstration that would creating incentives for hospitals to integrate services, manage costs and utilization, and ensure high-quality care. MassHealth will also expand its pay for performance contracting.

The steep public health cuts are worrisome, and ultimately counterproductive. The budget does propose some innovative dedicated revenue streams for public health, but these do not make up for the blunt cuts. For example, today the Governor made an additional $99,000 cut to the Department of Public Health’s oral health services line item for FY09. Oral health programs funded through DPH were cut by $570,000 during the first round of 9C cuts in October. Therefore, approximately $670,000 has been cut from oral health programs since October, affecting the BEST oral health program, the Cape Cod Dentist Care program, the ForsythKids program, Taunton Oral Health Center and Tufts Dental Facilities. We will be working with the Mass Public Health Association and United We Stand for Public Health Coalition to reverse these cuts and prevent further cuts from going this deep.
Brian Rosman