MONTPELIER — Outgoing Democratic Gov. Peter Shumlin is not ruling out the possibility of raising new revenue to pay for the state’s Medicaid program when he delivers his annual budget address on Thursday.
Shumlin, in an interview with the Rutland Herald and the Barre-Montpelier Times Argus Monday, promised to deliver a balanced budget for the 2017 fiscal year on Thursday. That means he must close a projected gap of $58.5 million that is largely driven by the Medicaid program.
The Medicaid deficit in the upcoming fiscal year is projected to be about $53 million. That’s because the state expanded the program under the federal Affordable Care Act. About one-third of all Vermonters are now benefiting in some way from the state-federal program. Utilization is also up, likely because new enrollees are seeking health services for the first time in years.
“We’re in this mess because we keep signing more and more folks up for Medicaid, which is the right thing to do, but we refuse to pay for it,” Shumlin said. “It’s a great program but if you don’t pay for it through some dedicated revenue source we’re going to have to keep robbing all the other state agencies in government to pay for it.”
Shumlin said his budget plan will close the gap.
“Yes, but not as thoroughly as I wish,” he said. “What we will do is solve it on a one-year basis, again. I’m convinced that it isn’t the smartest way to keep solving this problem.”
Closing the gap will require skimming resources from other state departments and agencies, according to Shumlin. But he would not rule out proposing some new revenue in the effort to balance the budget.
“I didn’t say that,” the governor said when asked if his budget would avoid new revenue. “It depends what you call a tax.”
He declined to provide more details about his plan ahead of Thursday’s address.
“You’ve got to come to my speech,” Shumlin said.
He noted that the state has patched its budget and the Medicaid program for the past nine years by cutting back in other areas.
“What I’m going to say this year is, ‘We can’t do that. We don’t have the capacity to continue to do that,’ but I recognize … that I will not get a payroll tax through the Legislature this year so I’ve got to find another way.”
Shumlin, in his 2015 budget address, proposed a 0.7 percent payroll tax to help boost payments to Medicaid providers and to create a sustainable revenue source for the program. Lawmakers rejected the idea, however. A similar plan, which he called “radical” and “pretty big-thinking stuff,” will not be proposed again, he said.
Shumlin rejected the prevailing wisdom in the State House that he didn’t do enough to sell his plan to skeptical lawmakers. He said he spent lots of time lobbying individual lawmakers to support his proposal, but they were not interested.
“You’ll never find a governor who’s done that as much as I have. I did talk to the speaker at length about the payroll tax. I spoke with the President Pro Tem about it. When legislators say that, ‘This is a good idea but they didn’t do a good enough job selling it to us,’ I’d be a little skeptical. I sat in that office every day last winter bringing in all of my Democratic friends and many Republican friends, independents and Progressives, trying to sell them on this idea and they were absolutely not going to do it,” he said. “It wasn’t for a lack of effort on our part to sell the plan, and it was not because we waited too long to start. That thing was dead no matter when we started because they simply were not willing.”
The governor also rejected the idea of auditing the Medicaid program, as Republican gubernatorial candidate Bruce Lisman has called for. He acknowledged the state was not checking eligibility last year because of the technological issues with its online health insurance marketplace, Vermont Health Connect. But the state has resumed checking eligibility and widespread fraud is not likely to be uncovered, he said.
“It is no secret that for the full year, that we were doing workarounds in Vermont Health Connect. We could not check — as adequately as we wished — eligibility for the program because we were trying to make sure that no one got interrupted coverage,” Shumlin said. “Right now we’re checking about 9,000 cases a month … and we are literally going through and checking eligibility for every single Vermonter who is on the system. It’s going to take us the better part of the winter to do that.”
Calls for an audit won’t help the state address the ongoing funding issues with the program, Shumlin said.
“This is a distraction from the challenge that we faced,” he said. “We got a waiver from the federal government, as did other states. We’re now complying. We’re checking the eligibility as we go. You can send an auditor in to say, “Are they checking properly,’ I suppose.”
“We will invariably find a small percentage of Vermonters who aren’t telling the truth and shouldn’t be there. But the notion that this is going to solve our Medicaid budget problems, that’s La La Land. You might find some,” he added.