The disbanding of the much-criticized Office of Health Strategy and a revised hospital tax agreement topped Gov. Ned Lamont’s list of health care priorities in his spending plan for the fiscal year that begins July 1.
The governor also proposed protecting public health budgets from federal cuts that could reduce the number of people with health insurance, including an effort to design a “Connecticut option” — a long-term goal he’s been touting on the campaign trail.
In his budget address, Lamont reiterated his commitment to developing a public option, commonly understood as a government-backed health insurance plan, in the state. Details are still sparse, but the governor insists a public option would save money for residents and the state.
“We can and will finally move to universal, affordable health care here in the state of Connecticut,” Lamont said. “This plan will encourage state employees, retirees and small businesses to go to hospitals where you get the best value.”
Disbanding the Office of Health Strategy
Lamont’s budget would eliminate the state’s Office of Health Strategy, transferring core operations and staff to other departments.
The office has been responsible for some of the Connecticut’s most important health care oversight programs, including Certificate of Need, a regulatory process that requires providers to obtain state approval before making substantial changes in the health care sector, such as hospital mergers and closures, and the cost growth benchmarking program, which sets annual targets for health care cost increases.
The Department of Public Health would absorb the Certificate of Need initiative and the data collection and analyses related to CON decision making, officials said Wednesday. The cost growth benchmarking program, the state’s health information exchange, the all-payer claims database and rural health initiatives involving information technology will be moved to the state’s Office of Policy and Management.
“This adjustment will provide long-term efficiencies and avoid duplicative efforts,” Joshua Wojcik, Lamont’s budget director, said Wednesday.
The move would need legislative approval and would take effect sometime in 2027, officials said.
Acting OHS commissioner Amy Porter said that the governor’s proposal “maximizes the value” of the agency’s work by embedding it within larger agencies:
“The important work of the Office of Health Strategy has been instrumental in advancing healthcare affordability, access, quality, and equity,” Porter said. “These efforts have built strong programs and partnerships that will continue to benefit the state and its residents.”
Sen. Jeff Gordon, R-Woodstock, a practicing physician and fierce critic of OHS, called the proposal “long overdue” and “a step in the right direction.”
“It’s about time we took the Office of Health Strategy [and] cut it down to size to what it’s supposed to be. Which is protecting patient care, protecting health care jobs,” Gordon said.
Sen. Saud Anwar, a South Windsor Democrat who is co-chair of the Public Health Committee, said the office was never properly funded to carry out its duties.
“Everybody who had been upset that they weren’t responding in a timely fashion, that they weren’t effective, and that they were not doing their job well — we never funded them fully as a state, and so that was part of it.”
Scaling back the hospital tax
The governor also asked lawmakers Wednesday to eliminate most of a previously ordered tax hike on Connecticut’s hospitals.
The health care provider tax is a complicated levy that raises funds for the state. But it’s also a tool to leverage more Medicaid dollars from Washington, which Connecticut invests — along with its own resources — back in hospitals.
Lamont now wants to reduce the new tax hike from $375 million to $100 million while preserving the plan passed last year to boost payments to hospitals by $140 million annually, netting the hospitals a collective $40 million a year.
But the industry still has concerns. In a statement, Connecticut Hospital Association CEO Jennifer Jackson said that, even with the reduction in taxes levied, the proposal doesn’t do enough for hospitals given how little the state pays providers to treat patients with Medicaid coverage.
“Adding to the tax burden without meaningfully addressing this shortfall forces hospitals to make difficult choices,” Jackson said. “When Medicaid underpayment isn’t addressed, costs shift to employers and families through higher premiums and out-of-pocket expenses.”
Another issue at stake is the treatment of Waterbury Hospital for purposes of taxation and supplemental payments. The state is in the process of purchasing the facility from the now-bankrupt hospital operator Prospect Medical Holdings.
Once the hospital moves to state ownership, it will no longer pay taxes, but, under Lamont’s proposal, would still receive supplemental payments from the state, according to Wojcik. The ownership change will bring the net benefit of the supplements payments to all private hospitals to just $25 million, not $40 million, Wojcik confirmed.
Other health initiatives
The governor’s budget also calls for initiatives aimed at tempering the impacts of federal cuts to public health.
Lamont proposed the creation of a pilot program, administered by the Department of Public Health, to provide free flu vaccines to uninsured and underinsured residents. The state would spend $892,000 to launch the service, which would offer up to 52,000 doses of the vaccine, designed to reach about a quarter of the state’s uninsured population.
The governor also proposed $3.3 million at the Department of Social Services to fund 50 new positions to meet the increased workload tied to expanded eligibility requirements linked to federal changes to SNAP and Medicaid.
A slew of smaller efforts focus on expanding access to health coverage for Connecticut residents.
The first considers spending $1 million to design and develop a Connecticut public option. Another proposes creating portable health care benefits accounts that are tied to workers and can follow individuals, even if they switch jobs.
The governor’s budget also includes significant new funding to stem a string of deficits in Connecticut’s Medicaid program.
Lawmakers and Lamont previously agreed to dedicate an extra $79 million to Medicaid starting July 1 to stem another program deficit. The governor’s proposed adjustments Wednesday would trim that increase modestly but would still add $73 million to keep the Medicaid program out of the red.
CT Mirror reporter Keith M. Phaneuf contributed to this story.