December 21, 2018

Funding challenges, political uncertainty muddy '19 healthcare crystal ball

Hartford HealthCare CEO Elliot Joseph.
Amy Cunningham
Karen Siegel

Since federal and state government both pay for and regulate many aspects of health care, big policy changes from either can portend shifts in how health care is delivered and funded in Connecticut.

A year ago, Republicans on the federal level gutted Affordable Care Act (Obamacare) tax penalties for those who don't buy health insurance. Heading into 2019, Democrats have won back control of the House, which could fend off further attempts to erode Obamacare rules.

At the state level, Connecticut has its first new governor since 2011. Gov.-elect Ned Lamont, a Democrat who has said he supports some of the same progressive healthcare policies as outgoing Gov. Dannel P. Malloy, will also contend with sizable budget deficits.

Indeed, health care's inherent federalism, combined with ongoing industry consolidation and budget woes, promise further uncertainty in the year ahead.

Three local experts shared their industry outlooks for the year ahead. They include Amy Cunningham, executive director of the Connecticut Health Council; Elliot Joseph, CEO of Hartford HealthCare; and Karen Siegel, public health policy fellow at Connecticut Voices for Children.

Here are their top issues to watch:

Consolidation wave to continue

The biggest healthcare deal to watch next year will be CVS Health's $69 billion purchase of Hartford-based Aetna, which promises to shake up the insurance and pharmacy-benefits market across the country.

On the provider side, control of Connecticut's healthcare landscape continues to concentrate, mainly among two key systems — Hartford HealthCare (HHC) and Yale New Haven Health (YNNH).

HHC this year, just months after winning state approval to acquire its sixth hospital, Charlotte Hungerford Hospital, announced its intent to establish a Fairfield County foothold through the acquisition of St. Vincent's Medical Center in Bridgeport.

Meanwhile, YNHH has filed for approval to purchase the independent Milford Hospital for $66 million.

At the same time, the state-owned John Dempsey Hospital in Farmington is seeking financial partners to bolster its competitive profile.

HHC's Joseph said consolidation continues to be driven by hospitals' needs and desires to invest in advanced technology and systems, from electronic medical records to tools that use artificial intelligence to analyze medical tests — all things that "don't come cheap."

"In order to make the needed technology investments and, at the same time, reduce the cost of care, it's necessary to build scale," Joseph said. "The new technologies are expensive at the outset, but they hold the promise of helping to reduce healthcare costs over the long term."

Access to care faces threat

2019 will be the first year in which Obamacare penalties are eased for those who don't buy health insurance, which some predict will shrink the number of insureds in Connecticut and across the country.

If that happens, it could also lead to higher costs for hospitals since fewer patients will have coverage to pay for their care.

Voices' Siegel notes recent federal data showing that Connecticut experienced an increase in uninsured residents in 2017, which she believes was fueled by state policy that shrank Medicaid eligibility.

Funding policy battles to come

Lamont will contend with a projected $3 billion-plus deficit in his first two-year budget cycle.

While Democratic control of both state legislative chambers and a healthier-than-usual Rainy Day Fund could bolster the new governor in his efforts to balance the budget and make good on his campaign promise of modest tax relief, Siegel worries about Medicaid funding.

"Given the state fiscal crisis, Medicaid is likely to be targeted again," she said.

On the policy front, Lamont has said he supports paid family medical leave, which promises to be controversial among the business lobby.

Another policy initiative that might make headway in a Democratic legislature is stricter rules governing prescription drug price hikes.

Industry wants to play a role

Members of the health council, which is part of the MetroHartford Alliance, met with gubernatorial candidates this election season to gauge where they stand on the industry's financial challenges and efforts to improve healthcare outcomes, said Cunningham.

Most importantly, she said, the council "wants to make sure the newly elected state government leadership understands that the industry wants to partner and help solve some of the pressing issues in our state."

She said the council's providers and insurers are piloting a value-based care program for diabetes, which they want to scale across the state. In the hopes of improving hospice care in Connecticut, council members are also exploring the creation of an advanced-directive registry that would track patients' end-of-life wishes.

Return to HBJ's 2019 economic forecast landing page

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