Rethink the 2016 NJ Budget: Reinvest Health Savings to Meet New Jersey’s Growing Human Service Needs

06 May 2015 12:00 PM | Anonymous

The state budget proposal for the coming year contains precious few increases to respond to the continued increases in poverty faced by New Jersey’s most vulnerable residents. One apparent exception to this trend is the 11 percent increase in funding for the Department of Human Services (DHS), the department of the executive branch that oversees most of the social service programs that funded by or through the State – programs for healthcare, mental health, and disability services, as well as the income assistance programs and supplemental nutrition assistance that serve the poorest of the poor.

But don’t be fooled: This increase is not so much the result of more state investment, but the increasing reliance on federal dollars to meet New Jersey’s needs. In other words, The money that comes through DHS has increased, but the state itself has not increased its budget commitment to meet the growing need. In fact, the increased federal dollars are not even going as far as they could, because some of those resources have been diverted to plug other spending gaps.

Here are the numbers. 

  • Since 2013, state funding for human services has increased by just 4 percent, or $240 million.
  • In the same period federal funding has jumped by 62 percent, or $4.2 billion.
  • The main source of additional federal funds for DHS is for the Medicaid expansion under the Affordable Care Act, an enormous success that has so far allowed 420,000 New Jerseyans to obtain health coverage.
  • The expansion also allowed the state to replace some of the state money going to NJ FamilyCare, which generated about $400 million in state savings this year – a number that will continue to grow.

These freed-up dollars, unfortunately, haven’t been used to assist New Jerseyans, but were instead used to balance the budget. Even worse is that if these dollars had been used to meet New Jerseyans’ needs, they would have brought in even more federal dollars, which could have made vital services even better. What is so shocking about this lack of state support to leverage federal investments is fact that this has occurred at a time when the state had the biggest increase in poverty in the nation.

And then there is access.  All of the major assistance programs whose funding comes through DHS (including Medicaid, cash assistance, and Supplemental Nutrition Assistance Program - formerly Food Stamps) are accessed on the county level through County Welfare Agencies (CWAs). The agencies are seeing substantial increases in the number of people needing their help, but they have not received the staff increases they need to handle this crisis. The predictable impact has been delays and problems with access to benefits. The state and counties have done what they can to address these problems, but without the workers to process cases, people in need fall through the cracks.

We have the chance to do more. New Jersey has another opportunity in the 2016 budget to generate even more savings from the Medicaid expansion. According to the governor’s budget, New Jersey is saving $74 million on charity care to hospitals, since more residents have insurance and don’t have to rely on care they can’t pay for. The Governor’s plan would reinvest $15 million of these savings to increase payment rates to doctors who treat Medicaid patients – a step that will encourage more doctors to provide this treatment, and also leverage $30 million in federal dollars. However, the rate increase will only restore about half the cut from expired provisions of the ACA, and a large share of the remaining savings are being redirected to the general budget.

Given that the state is receiving a windfall of about $500 million a year from reduced charity costs and the Medicaid expansion, it should reinvest more of those dollars to meet New Jerseyans’ growing needs. Put the money where it should be!

By Raymond Castro, Senior Policy Analyst for New Jersey Policy Perspective

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