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Home / News / Pawlenty, DFL wrangle over how to fund public health care programs
Slightly more than three weeks ago, on March 26, Gov. Tim Pawlenty signed a compromise bill that kept alive the general assistance medical care (GAMC) program.

Pawlenty, DFL wrangle over how to fund public health care programs

Rep. Tom Huntley is hearing “bad rumors” about  the timing of Medicaid funding. (File photo)

Rep. Tom Huntley is hearing “bad rumors” about the timing of Medicaid funding. (File photo)

Slightly more than three weeks ago, on March 26, Gov. Tim Pawlenty signed a compromise bill that kept alive the general assistance medical care (GAMC) program.

The Republican governor’s deal with DFL legislators seemed to preserve a program for the state’s poorest and sickest residents that had been on the brink of extinction. In 2009, Pawlenty line-item vetoed funding for GAMC and later cut its funding as part of his budget deficit-solving $2.7 billion in unallotments.

Hospitals now have the option to set up, by June 1, so-called coordinated care delivery systems to manage the often significant health problems of people on GAMC’s rolls. There about 30,000 people receiving health coverage from GAMC in any given month.

While the deal was celebrated at the Capitol, a staggering representation from Minnesota hospitals told a state House panel last week that they’re going to pass on the deal.

Essentia Health, which includes St. Marys Hospital in Duluth and the Mayo Clinic in Rochester, were among the health care providers who said the deal doesn’t reimburse enough of the cost of providing care. In the Twin Cities, Allina Hospitals and Clinics, three of whose 10 hospitals are eligible to opt into the coordinated care program, says it won’t participate.

“The risk is uncontrollable and unrealistic,” said Michael Mahoney, a lobbyist for Essentia.

Jerry Crest, chief operating officer for Immanuel St. Joseph’s Hospital in Mankato, which is part of the Mayo Clinic system, said the hospital would rather join an uncompensated care pool than participate in the GAMC reform program.

Crest urged state lawmakers to consider an alternative: Take advantage of an opportunity offered by lawmakers in Washington, D.C., to expand Medicaid.

Minnesota is one of 11 states that the federal government allows to expand Medicaid and receive a 50 percent match for the costs. The offer would allow Minnesota to start reaping the benefits of the recently passed health care reform bill six months earlier than expected.

“We would urge you to find a way to make that possible,” Crest said.

Rep. Larry Hosch, DFL-St. Joseph, a co-author of the GAMC bill, acknowledged that it’s difficult to turn away from the GAMC deal, which was the product of strenuous negotiations. But he said lawmakers need to hatch a solution that places a smaller financial burden on health care providers.

“I hope we can recognize this isn’t working,” Hosch said.

Key House DFLers on health care issues announced a proposal last week to take advantage of the federal government’s Medicaid expansion offer, which requires a match by the state. Under the proposal, House DFLers would move adults without children with incomes up to 75 percent of the federal poverty guideline to Medical Assistance — the state’s Medicaid program — from GAMC and MinnesotaCare, a program for low-income working adults.

The move will allow the state to get a 50 percent match from the federal government.

“We can’t let the match go,” said Rep. Tom Huntley, DFL-Duluth, chair of the House Health Care and Human Services Finance Division.

But Pawlenty’s administration and some DFL lawmakers don’t like how the House DFL proposes to pay for the program by taking money from the health care access fund (HCAF). The HCAF is built up by a tax on health care providers and is used to pay for the MinnesotaCare program.

Brian McClung, Pawlenty’s deputy chief of staff, said the HCAF is projected to run into a deficit starting in 2012. The fiscal note for Huntley’s Medicaid expansion pays $469 million out of the HCAF to the general fund in 2012.

“That’s like asking somebody to transfer money from their checking account to their savings account when they’ve already overdrawn on their checking account,” McClung said.

Senate Health and Human Services Budget Division Chair Linda Berglin, DFL-Minneapolis, said she opposes taking money from the HCAF to pay for the Medicaid expansion. She also noted that the state would incur more costs than the 50 percent match.

If Minnesota expands its Medical Assistance program, it will have to find money for federal requirements. For example, the state has asset limits, which federal guidelines don’t include. The federal government also requires retroactive claims, which Minnesota doesn’t have.

“I would like to get a buy-in done,” Berglin said. “The bottom line is we have to pay for it. We can’t rely on savings in the Health Care Access Fund to get it done.”

Rep. Steve Gottwalt, R-St. Cloud, said Medicaid doesn’t pay enough to be the cure-all for hospitals’ costs for providing care for indigent Minnesotans.

“We’re sitting here talking about the lesser of evils,” Gottwalt said.

Health care is perhaps the biggest question mark hanging over the session-long effort to solve the state’s nearly $1 billion budget deficit for the current biennium. (Lawmakers are also awaiting the Minnesota Supreme Court’s ruling on a case that could invalidate Pawlenty’s 2009 unallotments.)

Legislators whittled away at the deficit with the so-called Phase 1 supplemental budget bill of budget cuts. But the health and human services budget and the K-12 education budget still haven’t been addressed by DFL lawmakers.

All eyes are on the federal government, where the U.S. Senate has passed a bill that includes $408 million in Medicaid funding for Minnesota. The money would cut the gap in the state’s budget to $127 million.

But Huntley said he’s hearing “bad rumors” that Washington won’t send the $408 million until after Minnesota’s legislative session ends May 18.

“I’m confident it will come through,” Huntley said. “It’s just a matter of when.”

For state lawmakers, there is a silver lining. In 2014, the federal government will pay for 100 percent of the state’s Medicaid costs, as provided for in the recently passed federal health care reform bill.

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