House co-pay bill rejection cannot avoid hard choice

As previously noted, governmental budgeting is a series of choices hopefully based upon some kind of rational making of priorities using full information. But there’s no guarantee that rationality or information will be integrated fully into the process.

A case in point concerns HB 375 by state Rep. Frank Hoffman. It reconfigured to some extent the management of the Early Steps Program, which to date without cost to clients provides assistance to families with children ages 0-3 who display developmental disabilities. The program’s early intervention is designed to prevent later problems in these children integrating into society without more expensive and extensive services provided. It may draw on federal money with state money but is not required to be operated.

Last year, when the House of Representatives proposed deeper spending cuts than budgeted, the Department of Health and Hospitals (which actually runs the program despite its administrative housing current in the Department of Education) maintained that it would have to eliminate the program. However, budget negotiations that reversed most of the cuts saved the program, where about half of its costs are paid through roughly $8 million from the general fund.

This year, DHH proposed that some limited cost sharing occur to forestall more coming cuts to DHH in this year’s budget. DHH’s budget is nearly $40 million lower and the area in it responsible for Early Steps, the Office for Citizens with Developmental Disabilities, is facing an over $30 million reduction. Almost half of families currently receiving services, or those making more than 250 percent of the Federal Poverty Line in income (for example, almost $56,000 for a family of four), would pay no more than $1,500 annually to access services, the per incident or hour costs of which are much higher in value. Under this, about 10 percent of existing clients are forecasted to drop out, although some significant portion is expected to access these services using private insurance, and others who make the co-pay will use insurance to pay for it.

After this year (when the co-pays are phased in), the co-pay regime was estimated to raise over $2 million annually. A number of other states also employ a similar arrangement. OCDD officials noted that without this additional revenue, the entire program could be at risk.

Despite this, yesterday the House failed to advance the bill. A majority voted for it, but because this required imposition of a fee, this requires a two-thirds majority to pass, which ended up 20 votes short (and would not have passed even without this supermajority requirement, being three votes short of that absolute majority of the seated members requirement). The main concerns seemed to be about straining family finances and those withdrawing from the program – even though the proposed scale to be established was based on ability to pay for an optional program that would require at most less than 2.7 percent of income and that many could get insurance to pay either in or out of the program.

But if that was the goal of opponents, to make sure participation remained the same, they may have cut their noses off despite their faces or imposed that cost elsewhere. The budget did not include as part of expenditures the extra revenue to be gathered this way (because of the Constitutional prohibition on contingency expenditures), but in operating the program now OCDD will have to adhere to the budgeted amount which cannot sustain current operations. Assuming the whole program isn’t axed in favor of less drastic, possible solutions, there are just two alternatives.

One would be restricting eligibility; for example, cutting off participation at 400 percent FPL. This could result in some families not receiving services at all. The other would be cutting other programs, such as the Flexible Family Fund run by OCDD, budgeted at $1.4 million. This provides monthly stipends to families needing to offset large expenses related to caring for children with severe disabilities. Thus, these families suffer.

With passage of the bill, one way or the other – through insurance or out of pocket – it seems that these services would have continued at their present level without cutting services from other programs. After all, if a child with a caring family can benefit from these services, these families, who, contrary to statements made by rookie state Rep. Julie Stokes, are not the “working poor” nor close to poverty, will sacrifice to make the co-pays or out-of-pocket expenditures, or would choose not to if the services aren’t that helpful. Failing to pass it means services for some will be cut, either in this program or another.

Unless, now having made this latter choice, the House makes cuts elsewhere, thereby reducing potentially other services, or in finding efficiencies. If these are part of the policy mix, no indication has been given as such, negating these as options. So, effectively by their action on this bill, enough representatives actually have reduced services one way or the other, which they asserted they were avoiding by turning it down, and/or passed the cost off onto other recipients elsewhere. That seems neither rational nor informed.

But that’s the price that gets paid in a democracy. It does not guarantee that emotional input or special interests won’t carry the day as opposed to a more measured approach with broader interests in mind. You can't avoid hard choices, legislators must realize. Pay now, or pay later.