Paul Bass Photo
Seeking Conn.-grown solutions: Comptroller Scanlon pictured Tuesday during a stop at New Haven's Louis' Lunch.
Connecticut needs to pay doctors and hospitals more for Medicaid care. We also need to find a way to pay for it.
Sean Scanlon says he has an idea.
He plans to bring it to lawmakers in coming months. He hopes it will provide a breakthrough in 2025 in addressing a decades-long challenge.
Scanlon, who as state comptroller serves as government’s CFO and fiscal watchdog, discussed the idea this week during an interview on WNHH FM’s “Dateline New Haven” program.
In the just-concluded legislative session, Scanlon pushed for an increase in state Medicaid reimbursements, which haven’t changed since 2003. Medicaid provides health insurance for low-income people.
“They’re getting 45 cents on the dollar for every dollar they spend on each person,” Scanlon said of hospitals and doctors treating Medicaid patients. When government is giving you less than it costs to care for a person, you have to make it up somewhere — by charging more for people who have private insurance.
“We can’t keep ignoring these Medicaid rates. The single most important thing we can do for health care in Connecticut is to raise those rates.”
Scanlon had no trouble convincing lawmakers in both parties of that argument, he said. The problem: How to pay for it. The estimated cost for the suggested reimbursement rise was $400 million. The legislature decided not to reopen the two-year budget in its second year, so no money was available.
Scanlon said he plans to try again next year — with a plan for how to pay for it.
It would involve tinkering with — but not fundamentally changing — the legislature’s “fiscal guardrails.”
"Both Right"
Left-leaning Democrats argued this year that the guardrails are too strict, preventing the state from addressing important needs.
The Lamont administration and other legislators credit the guardrails for imposing needed fiscal discipline and predictability, transforming state government from a state of permanent crisis to stability.
“They’re both right,” Scanlon said.
The guardrails stem from a bipartisan 2017 compromise renewed in 2023. The compromise created a “volatility cap” on how much money lawmakers can spend from especially unpredictable revenues — revenues the state collects from wealthy (often financial industry) filers who pay income taxes quarterly.
Those revenues swing wildly depending on short-term trends in financial markets. As a result, the state often swung from having lots of money coming in to suddenly staring at crater-like budget holes.
Under the guardrail compromise, lawmakers are limited to $3.78 billion a year in how much they can spend from those revenues. The rest of the money must go toward paying down pension debt or shoring up the “rainy day fund” for emergency situations like recessions.
As a result of the guardrails, the state has filled the rainy day fund to its $3 billion limit, offering future protection for hard times. It has paid down $8 billion of pension debt, drastically lowering annual interest payments (by an estimated $650 million this year, for instance).
That’s been a game changer, and Connecticut should continue with that system, Scanlon said: “We’ve found a good balance. We have righted the wrongs from the past.”
But we can tinker with it, he argued. No one projected the state would bring in so much money due to the volatility cap rules: around $1 billion a year over the next two years, compared to an original estimate of $450 million a year.
“My friends from the progressive side are also right. There are needs out there right now that are not able to be met because of the system of the guardrails. They are working better than anybody thought they would,” Scanlon said.
So he proposes allowing a small percentage of the receipts from quarterly returns to go toward needs like raising Medicaid reimbursements — while the vast majority continue to be protected by guardrails and the rainy day fund remain fully funded.
Scanlon said his team is working on the final contours of such a proposal; they don’t yet have a specific percentage figure, for instance. He said he expects to release the proposal in coming months, then work on selling it for next year’s legislative session.
Click on the video to watch the full discussion with State Comptroller Sean Scanlon on WNHH FM’s “Dateline New Haven.” Click here to subscribe or here to listen to other episodes of Dateline New Haven.