Federal cuts threaten state’s health reform

Feb. 26--Massachusetts has led the nation in health coverage reform, but policy analysts say the Bay State is not immune from the impact of federal cuts or changes to the Affordable Care Act.

A report this month by the Massachusetts Budget and Policy Center says this fiscal year one in four dollars in the state budget comes from federal sources, meaning that cuts engineered by politicians in Washington could mean less money for programs and services -- from health care subsidies to payments for foster care and nutrition subsidies for women, infants and children.

"Massachusetts is every bit as much at risk as every other state," said Noah Berger, president of the nonprofit Massachusetts Budget and Policy Center.

The biggest chunk of the nearly $11 billion in federal funds flowing to the Massachusetts state budget this year is $9.4 billion for Medicaid, also known as MassHealth.

A repeal of the ACA or a change in how MassHealth is funded "would shift costs from the federal government on to state government," Berger said.

The state would likely respond to the loss of a billion or more dollars by reducing the number of people getting benefits or cutting benefits, Berger said.

"This is something I've been thinking about since Election Day," said State Rep. Sarah Peake, D-Provincetown. "It is potentially a very large impact. The question is how much and how severe."

Berger said a repeal of the ACA would cost Massachusetts up to $1 billion, and a change in the way MassHealth is funded would also reduce funds flowing into the state budget.

Currently, MassHealth is an entitlement program, meaning that anyone who qualifies by income and circumstances is entitled to enroll in the government-subsidized insurance program, with the cost generally being split 50/50 between the state and federal governments.

Politicians in D.C. are discussing whether to convert Medicaid financing to a block grant or per capita cap. A block grant is a set amount of money that would go to the states, while a per capita cap is a flat amount per enrollee, Berger said.

Both the block grant and per capita cap models "could reduce federal Medicaid spending over time," according to a report released Thursday by the Kaiser Family Foundation.

Although the block grant or per capita cap could give states more flexibility in running their Medicaid programs, the new funding mechanisms could also shift costs to states, beneficiaries and providers, the Kaiser report said.

They could limit states' ability to respond to demands for Medicaid services, the Kaiser report said.

The implication for the Cape's federally qualified, nonprofit health centers "is huge," said Karen Gardner, CEO of the Community Health Center of Cape Cod in Mashpee.

While 44 percent of the Mashpee health center's 12,500 clients are on MassHealth, MassHealth accounts for about 55 percent of the center's revenue due to enhanced reimbursements from the government, Gardner said.

Officials at the state level also are struggling with the costs associated with MassHealth, which takes up 40 percent of the state budget.

Expanded under Massachusetts health reform under Gov. Mitt Romney, MassHealth enrollment got another boost when the ACA broadened eligibility requirements.

Currently, 1.9 million Massachusetts residents are enrolled in the MassHealth program, according to the office of Gov. Charlie Baker.

Baker recently came up with proposals to rein in MassHealth costs, including a plan to penalize businesses with 11 or more employees that don't offer health insurance $2,000 per employee.

The proposal hit "like a lead balloon," Peake said. "I don't think that's the answer."

Ken Brynildsen, of Sandwich, said he doesn't want to see cuts in the MassHealth program that he credits with saving his life.

An artist, Brynildsen said he dropped his health insurance during a downturn in his business because it came down to a choice between paying his premium or his mortgage.

When Massachusetts enacted health reform with its mandate for coverage, Brynildsen found out he qualified for a subsidized health care plan and signed up in 2008.

It was just in time, Brynildsen said. He said he went for a colonoscopy to check out the source of some discomfort and bleeding and found he had stage III colon cancer, requiring surgery, radiation and chemotherapy.

"My feeling is it's a disgrace for this country, the strongest country in the world ... not to have a national health program for all its citizens," said Brynildsen, who is on dialysis because his kidneys were compromised by his cancer treatment.

Massachusetts won't lose all its federal funding, but "there'll be a trimming of the sails," Peake said. She said leaders at the Statehouse are talking about increasing revenue by closing loopholes on the room tax to cover all short-term rentals.

Cuts in the flow of federal funds could also affect highway projects in Chatham, Eastham and Orleans, Peake said. "The impact of the federal budget is significant in the Commonwealth."

State Rep. Randy Hunt, R-Sandwich, said he did not want to speculate on "'what if' scenarios."

"We'll manage through whatever challenges might come up, just as all the other states will," Hunt said in an email.

-- Follow Cynthia McCormick on Twitter: @CmccormickCCT

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