Budget talks hold up plans to replenish Medicaid as Wednesday deadline looms 

The state is facing a Wednesday deadline to fix a roughly $300 million Medicaid deficit or payments won’t be made to providers.  

While lawmakers and Gov. Ned Lamont agree on the urgency of the situation, talks over a solution have been slowed because they’ve been lumped in with negotiations over next year’s budget.  

“It's hard to explain to people but how you resolve this is the key,” Rep. Matt Ritter (D-Speaker) said before Thursday’s House session. “The whole budget is on the Medicaid deficiency.”  

Democratic lawmakers have tried to find a way to allow for more spending in the current year, while Gov. Ned Lamont (D-Connecticut) has said no plan should violate the fiscal guardrails.  

The Office of Policy and Management projected in April that the state was on pace for a $284 million deficit in its Medicaid funding, citing both increased medical costs and higher-than-expected demand for help.  

Ritter said Thursday that number is now more than $300 million. He expects the House to vote on a bill Monday to close that gap, with or without an agreement with the governor.  

The hold up: how to close that deficit.  

Ritter said Democrats want to tap into surplus funds, including more than $2 billion in the current budget and $340 million in interest earned on American Rescue Plan Act fund that wasn’t disclosed until January.  

If lawmakers created an off-budget account to cover the deficit, that also would allow them to recalculate the spending cap at a higher number for next year.  

Democrats have presented a $55.7 billion two-year budget that exceeds the spending, as currently calculated, by $130 million.  

Lamont has maintained he doesn’t want to violate that cap or any other fiscal guardrail.  

Ritter said closing the Medicaid deficit this way is necessary to fund priorities in the next budget.  

“I don’t know how it all gets paid for, unless you go to all the mayors and say we’re cutting your ECS [Education Cost Sharing] and we’re cutting your PILOT [Payment In Lieu of Taxes],” Ritter said. “That's probably what you’re looking at.” 

Lamont proposed a deficit mitigation plan for the current budget that relies on savings and cuts.  

After an event in Danbury, he said he was open to discussions and admitted it may be hard to close the entire deficit with just those savings and cuts.  

But he also indicated he wanted his original proposal to be the basis of talks.  

“My budget, that was pretty good,” he said. “We paid for all the Medicaid and all with a balance budget, keeping to our fiscal discipline.”  

Rep. Vincent Candelora (R-Minority Leader) also agreed the state needed to plug the deficit but said it shouldn’t be done in a way that changes or violates the guardrails.  

“I think we need to try to get to an agreement, but I'm very aligned with the governor that we have to make sure our guardrails are kept in tact in the process.” he said.  

Ritter pushed back on those arguments.  

“All that success, eight years, goes back to that room – it was actually right here in this room they were written,” he said. “So don’t tell me about them. I know about them.”  

Medical care providers, meanwhile, nervously await to see what happens.  

Gian-Carl Casa, president and CEO of The Alliance, said some nonprofit service providers may be able to continue caring for clients while they wait for a solution, but others won’t be able to pay their staff without Medicaid payments.  

“Nonprofits have to make decisions just like any business and the uncertainty is very difficult to deal with,” he said.  

A settlement between the state and Connecticut's hospitals — over a dispute on the hospital tax — requires payments continue to hospitals, but it's not clear how that would happen without funding.

Ritter said the House will vote on a bill Monday. Democrats have a veto-proof majority but would need almost all of their members if they decided to go around Lamont.