Health care costs drive budget adjustment

MONTPELIER — Health care costs are are driving a proposed budget adjustment from the Governor’s Office to the tune of $70 million.

The House Appropriations Committee spent Monday reviewing a proposal that would add an additional $88.9 million to the FY 2016 budget, with the lion’s share of the increase due to the state’s expansion of health care. Much of that will be covered by federal funding.

Andy Pallito

Josh O'Gorman / Vermont Press Bureau

Finance Commissioner Andrew Pallito

“Of the 88.9 million, $70 million is for DVHA (Department of Vermont Health Access) or Medicaid,” said Andy Pallito, commissioner of the Department of Finance and Management.

Since 2012, the state has made a concerted effort to provide health care for all Vermont residents. Currently, about 97 percent of Vermonters have some sort of health care coverage. However, about one in three Vermonters are on some form of Medicaid.

The additional money needed for health care costs comes as no surprise, and Pallito said he expects Medicaid spending will drive conversations around the 2017 budget, which will be presented to lawmakers in January.

“This is going to be a repeat in (the) 2017 (budget),” Pallito said. “It will be a Medicaid conversation.”

Rep. Catherine Toll

Rep. Catherine Toll

Rep. Catherine Toll, D-Danville, said lawmakers had little choice but to fund the health care system they had already approved.

“I look at this as, we’re funding our priorities,” Toll said. “Health care is a priority for the legislature and it’s running hotter than we expected, but now we have to fund it.”
House Appropriations Committee Chairwoman Mitzi Johnson, D-South Hero, agreed with Toll.

“The biggest part of the budget adjustment is not something we can say, ‘No, we’re not going pay for it,’” Johnson said. “If you eliminated half of DVHA’s budget pressure, we would be done with this pretty quickly.”

As it is, the committee has set aside three days to review the proposed budget adjustment.

Rep. Mitzi Johnson

Rep. Mitzi Johnson

Of the $88.9 million needed in revenue, $60.4 million will come from the federal government. The state will rely on $21.5 million in so-called “one-time” funds, which includes $7.9 million in excess revenue not spent during the FY 2015 budget and an additional $5 million from 2015 budget revisions.

Health care costs are not the only driver for the proposed budget adjustment. The proposal also includes 3.4 million for the Department for Children and Families, with the money to be used to hire an additional 35 case workers, additional support for foster parents and to review custody cases at least every six months

The number of children in state custody has risen from 982 in September 2013 to 1,373 in September of this year, an increase largely driven by the state’s opioid epidemic.

Pallito told the committee he would have preferred to wait until the FY 2017 budget to pay for the expanded DCF services, but said Gov. Peter Shumlin wants to begin as soon as possible. The expanded staff and services will roll out in April and May 2016.

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