Preliminary Analysis:
The Governor's Fiscal Year 2012 Budget

 

As you may know, the budget process in Massachusetts takes several months from start to finish. In the first step in the process, Governor Patrick recently released his budget proposal for fiscal year 2012 which begins July 1. The budget, known as House 1, will move through the House and Senate and each branch will release a budget; the House and Senate will submit a “conference committee” budget; the Governor will submit his vetoes; and the House and Senate will have the opportunity to override the Governor’s vetoes.

The Governor's budget proposal (House 1) for Fiscal Year 2012 recommends both significant reforms and deep cuts.  While the national economy is still struggling to recover from a recession worse than any since the depression of the 1930s, the assistance that the federal government had provided to reduce the severity of state budget cuts during this economic crisis is ending. As a result, the coming budget year will likely be even more challenging than the past three.

This analysis is primarily from massbudget.org.

Health Care Proposals

MassHealth provides health insurance to close to 1.3 million low-income and disabled children and adults. The Governor expects that in FY 2012, MassHealth may add as many as 60,000 members, a 4.6 percent increase. The Governor essentially level funds MassHealth, and given expected health care cost inflation and increased caseload, the Governor’s budget proposes several aggressive measures to keep MassHealth costs down. It is important to remember that MassHealth spending is partially reimbursed by the federal government (at a rate of close to 50 percent.) When state spending is reduced, federal revenue is reduced as well, thereby limiting the budgetary savings to the Commonwealth. Some of the proposals that the Governor’s budget include are:

MassHealth

• A competitive procurement process for close to 60 percent of MassHealth membership, hoping that this competitive contracting would provide better managed care and save the state $175 million.
• More than $310 million in constraints on provider reimbursements and rates for capitated care, but because of the proportionate reduction in federal reimbursement, these cuts resulting in slightly more than $150 million in estimated savings to the Commonwealth.
• Co-pays would increase. MassHealth currently charges $3 copayments for most prescription drugs and a $3 copayment for a hospital admission. Copayments for generic drugs were raised from $2 to $3 in FY 11. State health secretary Dr. JudyAnn Bigby said that copayments for the poorest patients will increase from $3 to $4 and to $5 for those with somewhat higher incomes. The increases would not apply to medicines needed to control chronic health problems, such as hypertension, high cholesterol, and diabetes.
• There was no proposal to restore MassHealth adult dental benefits, but there were also no additional cuts to MassHealth adult dental.

The biggest savings come from revising and rebidding Medicaid contracts to encourage health care providers to work together to drive down costs. (First two bullet points above). With health care spending, including Medicaid, now making up 39 percent of the state budget, Patrick said it was time to take aggressive action to halt the relentless trend upward. “Through innovations in the way we pay for and manage health care, we expect to save nearly $1 billion next year alone and to put an end to years of double-digit growth,’’ Patrick said at a press conference.

But Patrick said the revamping of Medicaid contracts was not part of the more sweeping legislative proposal he expects to unveil this spring that would transform the way all hospitals and doctors are paid, by giving them a predetermined, per-patient annual fee that would cover all of a patient’s care. But greater coordination of care through new contracts could help lay the groundwork for this new “global payment’’ system. State health secretary Dr. JudyAnn Bigby said the new Medicaid contracting would focus on better controlling costs; she noted that about 60 percent of Medicaid spending ends up going to about 10 percent of the population, patients with chronic health needs. She declined to provide details of how the contracts might be structured.

Commonwealth Care

• As with MassHealth, the Governor plans to provide incentives for members of the Commonwealth Care program (the state-subsidized health insurance program for low- and moderate-income people who are not eligible for MassHealth) to choose lower-cost health plans.
• The Governor proposes level funding for the Commonwealth Care Bridge program at $50 million, in order to sustain this limited health care coverage for certain legal low-income immigrants who are not eligible for MassHealth.

The Prescription Advantage Program

The Prescription Advantage Program would be funded at $21.7 million. This is $9.9 million less than in FY11 but reflects expanded federal Medicare drug coverage for costs in the “doughnut hole.” Administration officials say they believe the proposed appropriation would be sufficient to support the current structure and do not intend to reduce program benefits.

Public Health and Mental Health Propossals

Public health and mental health services are both hit hard by the FY 2012 Governor’s budget proposal. Public health services are cut by 5 percent, including the complete elimination of health promotion and disease prevention programs, and elimination of some of the innovative programs designed to reduce health care costs that had been part of the state’s health care reform. Compared to the FY 2011 current budget, mental health services in the Governor’s budget are cut by 3 percent, including a $16.4 million cut in funding for mental health facilities.

An analysis by the Massachusetts Public Health Association, an alliance of leaders from social service agencies, showed that the single biggest reduction proposed for the Department of Public Health is in early intervention services that support families with developmentally disabled children. “It is a lifeline for those families, and they are very passionate about it,’’ said Valerie Bassett, executive director of the public health advocacy group. The early intervention program, which connects families with services that enhance the health and learning of children from birth to age 3, faces a $7.9 million cut.

A range of programs designed to prevent disease and promote health face cuts, including one that helps 15,000 women with insufficient or no insurance get access to cancer screening, nutrition counseling, and transportation to medical appointments. By eliminating $6 million in funds for that program, the Women’s Health Network, Massachusetts would forfeit $6 million in matching federal money.

The proposed budget also cuts $2 million from the public health agency’s HIV/AIDS office.

But funding was kept level for tobacco control, as well as for services that help substance abusers, programs that have faced cuts in previous years.

“While some preventative programs were cut . . . many other preventative services and intervention programs were preserved, such as substance abuse services, youth violence prevention grants, suicide prevention, and sexual assault and domestic violence services,’’ state Public Health Commissioner John Auerbach said.

Human Services Proposals

The Governor’s Fiscal Year (FY) 2012 budget proposal provides $3.34 billion for human services. This is a decrease of $7.5 million from the FY 2011 current budget. Human services include services for children and families, transitional assistance for low income families, services to the adults with developmental disabilities and other services.

Children, Youth & Families Proposals

House 1 proposes to fund Children, Youth, and Families at $873.4 million, a decrease of $14.3 million from FY 2011 current levels. Of this total, the Department of Children and Families is funded at $737.9 million, a decrease of $5.8 million from FY 2011 current levels, and the Department of Youth Services is funded at $135.6 million, a decrease of $8.5 million.

Elder Services & Disability Services Proposals

In an attempt to hold down increasing long-term care costs, the Governor’s budget proposal notes that the Commonwealth is making an effort to replace more costly institutional care with community-based long term care. For elders and younger adults with disabilities, this initiative would allow for the more flexible use of MassHealth long- term care funds for community supports. Nevertheless, the Governor’s budget proposal cuts community-based elder home care funding, and increases community supports for developmentally disabled adults only slightly over FY 2011 budgeted amounts.

• The Governor’s proposal would earmark the nursing home Personal Needs Allowance (PNA) at “up to” $72.80 rather than setting it at that amount as has been done in recent years. The PNA is a modest amount of money available to a nursing home resident to pay for items not covered in the MassHealth nursing home reimbursement.

• Administration officials say that they have budgeted a significant cut in adult day health (ADH) program reimbursements. ADH programs provide a range of daily health and social services to 11,000 frail elders at program sites throughout the state. Section 44 would authorize restructuring “to the extent permitted by federal law” across most MassHealth budget accounts and benefits, including ADH. While the scope of the proposed cut is undefined, Administration officials have said they will continue to reimburse only the most “complex” cases. This means that the majority of program participants who are considered “basic” will be ineligible for MassHealth reimbursements.

Transitional Assistance Proposals

• The Governor’s FY 2012 budget proposal eliminates the $150 clothing allowance provided to families receiving TAFDC grant payments, a cut of $11.5 million. It is estimated that 70,000 children will be affected by this elimination. The Governor’s proposal to eliminate the clothing allowance, reducing TAFDC benefits by about $12 million, would effectively be a 4.5% cut in TAFDC grants which have already lost nearly half their value to inflation since 1988.

• Eliminates the Employment Services Program, which provides job training and placement support to TAFDC recipients, is also eliminated in the Governor’s FY 2012 budget proposal. This program is funded at $15 million in FY 2011.

• EAEDC (Emergency Aid to Elders, Disabled and Children) would be level funded at $89 million, taking into account a $4.3 million supplemental budget signed into law this month. The caseload has been going up during the recession. The proposed amount would only be enough if the caseload trends reverse and the caseload goes down.

Housing Proposals

Homeless Families-

• The Governor’s FY 2012 budget proposes cutting $23 million in assistance to homeless families and reorganizing how the state supports these families. In FY 2011, the state is expected to spend $159.4 million (which is slightly more than the current FY 2011 budget) on its Emergency Assistance (EA) program which provides shelter and assistance to homeless families living at or below 115 percent of poverty. In his FY 2012 budget, the Governor proposes providing a total of $136.4 million to eligible homeless families and dividing services for homeless families into two accounts. His budget proposes creating a new Short Term Housing and Assistance Program (Home BASE) and transferring $38.6 million from EA to this account. Home BASE will provide families, at risk of becoming homeless, with help to find new housing so that they do not have to move into shelters. The Governor’s FY 2012 budget recommends providing $97.8 million to EA which will focus on providing shelter and assistance to a particular population of homeless families including parents who are 21 years old or younger, or to families who must leave their current homes due to fire, domestic violence or other emergencies.

Advocates say this amounts to denying access to emergency shelter to most homeless families. In other words, only families who are at risk of domestic violence in their current housing, are homeless as a result of natural disaster or fire, or are headed by a parent under age 21 would be allowed into shelter.  All other families who are eligible for EA shelter under current rules but who are homeless due to loss of jobs, due to illness or disability, due to foreclosure, due to being kicked out by those with whom they have been doubled up, or because they earlier fled a domestic violence situation, and who are not headed by a young parent, would be denied emergency shelter even though, by definition under EA rules, they have no safe place to stay.

• The proposal also omits language requiring that families who appear to be eligible for shelter be placed while they collect verifications of eligibility.
• Omits language requiring that families be placed within 20 miles of their home communities if possible.
• The budget also proposes to bar families from receiving additional services for 2 full years after their initial assistance from either item ends – without regard to why they become homeless again or the level of risk their children are facing. (Currently families in certain circumstances may be barred for 1 year.)
• “ Massachusetts Short Term Housing Transition Program” - Instead of shelter, the Administration would offer some, but not all, of these homeless families a limited and declining short-term subsidy with which to look for housing. It would also provide some assistance with costs associated with moving into new housing. This new program would be funded at $38.56 million. The proposed new account would provide short-term assistance to help families who are imminently at risk of homelessness, but not yet homeless. The assistance could be in the form of rent and utility arrears, a modest and declining rental subsidy for a limited time, and extraordinary medical expenses. Families who are already homeless would be eligible for these same benefits but, as discussed above, would be denied access to emergency shelter while looking for an apartment to rent. Total assistance per family would be capped at $8,000 for the first year, decline by 5% in any subsequent year, and could extend for no more than 36 months. Administration officials concede that these limitations will not allow families  in higher cost areas of the state, including the 112 communities in the Boston metro area, to benefit from the rental subsidy aspect of the proposed program.

Homeless Individuals

• The Governor’s FY 2012 budget proposes level funding for the homeless individuals account at $37.3 million and the home and healthy for good program $1.2 million. While this is the same amount provided to programs that provide shelter and services to homeless individuals in FY 2011, it may be less what is needed to provide the same level of services in FY 2012.
• The Governor’s FY 2012 budget proposes increasing funding for the Massachusetts Rental Voucher Program (MRVP) by $1.6 million above the FY 2011 current budget to $35.9 million.
• The Governor’s FY 2012 budget proposes level funding for subsidies to public housing authorities at $62.5 million. While this is the same amount provided to public housing authorities in FY 2011, it may be less than these authorities may need to provide the same level of services in FY 2012.

For More Information:

• “The Governor’s FY 2012 Budget Proposal: Preliminary Analysis of Selected Housing, Cash Assistance, Elder, Health, Child Welfare, Child Care and Related Items”, Mass. Law Reform Institute, January 27, 2011.
• “DTA’s FY 2012 Budget”, DTA Transitions, January 2011.

-Adapted from “Preliminary Analysis: The Governor's Fiscal Year 2012 Budget ”, MassBudget.org, January 26, 2011 , http://www.massbudget.org/documentsearch/findDocument?doc_id=774&dse_id=1440, retrieved 1/27/11; “The Governor’s FY 2012 Budget Proposal: Preliminary Analysis of Selected Housing, Cash Assistance, Elder, Health, Child Welfare, Child Care and Related Items”, Mass. Law Reform Institute, January 27, 2011; DTA Transitions, DTA’s FY 2012 Budget, January 2011; “ Oral Health Advocacy Taskforce - Bill Cosponsors and Governor's FY12 Budget Reccomendations” Courtney Chelo, Oral Health Advocacy Task Force, Health Care For All, January 27, 2011; “ Steep cuts in Patrick’s budget plan, Seeks health care, prison changes; human services, higher ed take hit” b y Michael Levenson, Globe Staff , The Boston Globe, January 27, 2011, http://www.boston.com/news/local/massachusetts/articles/2011/01/27/steep_cuts_in_patricks_budget_plan/, retrieved 1/17/11; and “Hospitals, poor patients face new costs” b y Kay Lazar and Stephen Smith, Globe Staff , The Boston Globe, January 27, 2011, http://www.boston.com/lifestyle/health/articles/2011/01/27/hospitals_poor_patients_face_new_costs/, retrieved 1/27/11.

 

 

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