Connecticut may see job losses if Congress does not reauthorize Affordable Care Act (ACA) tax credits for Medicaid, but will still fare better than most states, according to a recent analysis by the Commonwealth Fund. The findings estimate that if the tax credits are not reauthorized, almost 600 people in Connecticut could lose their jobs. Nationwide, the estimated job loss could reach 286,000, affecting health care and other industries.
“Ending the tax credits would not only increase costs for consumers but also create a cascading decline in economic activity,” a summary of the study states. “As insurers receive fewer federal subsidies, they could cut payments to hospitals, doctors’ offices, pharmacies, and other providers. In turn, health care employers would likely reduce jobs and spending, leading to broader projected job losses across industries like retail, real estate, and manufacturing.”
The states that would be hit the hardest are the ones that did not expand Medicaid on their own.
The Commonwealth Fund team identified 15 states that would suffer the most if the tax credits are not renewed, though Connecticut is not on this list. The state has been expanding its Medicaid program for years, despite criticisms that the changes haven’t gone far enough. In 2019, Governor Ned Lamont signed an agreement that guaranteed financial support to hospitals through 2026.
Despite this, hospitals continue to lose money each year, primarily due to low Medicaid reimbursement rates.
Connecticut faces economic uncertainty
This year, the Connecticut Hospital Association (CHA) called Lamont’s proposed budget “devastating to hospitals, their workforce, and their patients.” At the start of the legislative session, State Comptroller Sean Scanlon proposed an increase to rates for health care providers, and many legislators are championing that cause.
Health care professionals often receive significantly lower payments when treating Medicaid patients compared to those with private insurance. In some cases, commercial insurance pays up to 90% more than Medicaid. Many health care associations, including the CHA, are advocating for higher reimbursement rates this legislative session.
The Connecticut Health Policy Project estimates that by 2028, the state will need 5,700 more health care providers in five critical areas. Many providers say they cannot sustain their practices with the current low reimbursement rates, particularly those who primarily treat Medicaid patients. In 2024, more than 830,000 people were covered under a state Medicaid plan, known as HUSKY, or a Children’s Health Insurance Program (CHIP) in the state, according to the Connecticut Department of Social Services (DSS).
Given the potential scale of job losses and financial strain on the health care system, the debate over the reauthorization of ACA tax credits is crucial for the future of health care in Connecticut. Governor Lamont has recommended a $70 million increase in state funding for Medicaid reimbursements over the next three years. However, with ongoing federal policy uncertainties, the future remains precarious.
For now, the state awaits Congress’s decision, hoping to avoid job losses and ensure continued access to health care for its most vulnerable residents.