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Home / Guest Commentary / Martin: The debate over reinstating GAMC
When GOP Gov. Tim Pawlenty erased the $381 million for GAMC through "unallotment" and a line-item veto in order to cover the shortfall in the state budget, his pitch was that most of the people on GAMC could be shifted to other state programs, such as MNCare, or federal programs, like Medicaid.

Martin: The debate over reinstating GAMC

Who pays: When, where and how – not whether

Margaret Martin

Margaret Martin

Last week, state House and Senate DFLers held a press conference announcing a stopgap proposal to extend General Assistance Medical Care (GAMC).

When GOP Gov. Tim Pawlenty erased the $381 million for GAMC through “unallotment” and a line-item veto in order to cover the shortfall in the state budget, his pitch was that most of the people on GAMC could be shifted to other state programs, such as MNCare, or federal programs, like Medicaid.

Now that the end is near (GAMC’s funding will run dry in March), current recipients of GAMC – who number about 36,000 – are being moved to MNCare and, in a few cases, federal programs.

The announcement of the DFL plan came from Sen. Linda Berglin, of Minneapolis, who chairs the Senate Health and Human Services Budget Division, and Rep. Tom Huntley, of Duluth, who chairs the House Health Care and Human Services Finance Division. According to their plan, about three-quarters of the funding for GAMC would be restored through a combination of county funds and participation, increased provider taxes on hospitals and health maintenance organizations, as well as cuts in provider reimbursement rates for services.

Rep. Matt Dean, R-Dellwood, the lead Republican on the Health Care and Human Services Finance Division, announced his own set of recommendations that include doing a “census” of the GAMC group to better understand their health care usage and modifying MNCare so there’s less delay in the hospital-claim-to-reimbursement process.

Both the DFL legislators and Dean are proposing some version of creating a county-based “medical care home model,” where counties would get the MNCare premiums and determine how to provide patient care.

In theory, this would reduce the hospital-based nature of GAMC recipient care, saving money and adding the possibility of better ongoing treatment for chronic conditions like mental illness and substance abuse.

While the principals chew over these proposals, it’s worth pointing out a few things. First, rather than dwelling on the potential dislocation of some people, it’s important to stay focused on the general characteristics of the GAMC recipients.

We now know that they comprise at least two different groups. The first group is the working poor. MNCare was originally designed for this group. Some proportion of GAMC recipients can afford the sliding-scale premiums and co-pays under MNCare. This group will see an increase in their health care costs, but unless they incur significant inpatient hospital expenses, they are unlikely to be negatively affected by the change from GAMC to MNCare.

The second group of GAMC recipients is the one that presents a more complicated set of problems for health care delivery.

Recently, TPT2’s Mary Lahammer profiled a few cases of people on GAMC: A homeless man, a college student who suffers from depression and had moved out of state and then moved back, and then an ex-con in rehab.

Lahammer quotes an estimate that about 70 percent of the GAMC recipient group suffers from mental illness or is chemically dependent – and 30 percent is homeless.

Until now, GAMC has been tapped when an injured or ill homeless/mentally ill/mentally incompetent person is picked up, generally by law enforcement or ambulances, and taken to an emergency room.

Since GAMC applies retroactively and no premium is required, hospitals knew they’d be paid from the moment the indigent patient hit the door. In contrast, MNCare must be applied for and claims are only eligible for payment after the patient’s application has been approved, leaving the hospital to pay for anything prior to that point.

When people from this second group seek care, somebody will pay – and since they have no resources, it won’t be them. If they are not signed up for MNCare when they get treatment and hospitalization, the frontline health care system of hospitals and you and I, the taxpayers of Minnesota, will pay. To manage the health care (and in some instances, the behavior) of this smaller group of often self-destructive people, it is pay now or pay later.

Thus, GAMC is best seen as a subsidy, not to Joe Homeless Guy or Jane “You-wouldn’t-Like-Me-Off-My Meds” (as a GAMC protester’s sign read last week), but to hospitals and other primary medical providers.

In Minnesota – and in the Twin Cities in particular – we are blessed by having many fine hospitals. One of the things that has kept them in good shape until now is that costs are met through the premiums paid by the insured (the sign of a vibrant economy) and by adequate reimbursement for costs incurred by the non-paying users.

GAMC was a key part of making sure that those costs were covered. If that system is about to end, hospitals can’t collect until somebody qualifies for MNCare; even then, hospitals are unlikely to receive payment for some co-pays, which means they’ll end up bearing the full cost.

This situation endangers the hospitals’ financial well-being and drives up hospital costs for everyone else.

The DFLers’ plan looks at first glance to be a middle position. By spreading out the cost among a larger number of health care groups and providers, including doctors, the full impact is removed from hospitals.

However, the costs will be passed along and as long as health care costs continue to escalate, the problem will continue to build, spreading negative effects all along the health care delivery system.

Matching payments to costs is one of the biggest challenges when governments pay for health care. GAMC’s unlimited hospital benefit is far greater than the vast majority of private insurance plans available or MNCare – and that’s clearly not sustainable.

A better application of outpatient care in the county-based “health care home” concept could also bring down costs by moving away from a hospital-based system.

The best approach is not to focus on “saving” GAMC but to find a way to solve the twin problems we face: first, of how to get payment from patients who can afford to pay and, second, how to pay for patients who really can’t pay. For the second group, we already know that it will be difficult to change these patients’ behavior.

But once you have decided that the people who were receiving GAMC must be taken care of and that it’s the government’s responsibility to make sure that happens, then it’s simply a matter of deciding which pocket the money should be taken from.

[Bio] Margaret Martin has a Ph.D. in political science from the University of Michigan and an M.A. from the London School of Economics. She is co-host of the Saturday morning radio program “The David Strom Show” on AM-1280. She blogs at and

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