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Minnesota Legislature

First Reading: Complex problem, complex solution

Published (4/3/2009)
By Patty Ostberg
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People who end up in emergency rooms many times are uninsured. This cost is covered by the hospital. Health care reform advocates say cost efficiencies would be achieved by providing coverage that would keep people out of emergency facilities. (Photo by Tom Olmscheid)Sleep has become a struggle for Rep. Thomas Huntley.

The Legislature is facing the difficult decision of how to cut funds from health and human services programs, while maximizing the $1.8 billion federal stimulus money coming to the state.

Knowing that service cuts will hurt somebody, the Duluth DFLer said the thought keeps him up some nights. “Some people think raising taxes will help, if we had a Democratic governor we could not raise enough taxes to fix our problem.”

Between funding formulas for hospitals, qualifying federal factors and how the state pays providers for medical care, the choices on how to shift or cut costs can be daunting. “It’s one of the most complex things we’ll ever deal with,” said Huntley, chairman of the House Health Care and Human Services Finance Division.

“Obviously there’s going to be cuts to the health and human services area, it’s 30 percent of the state’s budget. About 75 percent of that money is for Medical Assistance,” explained Huntley. The other 25 percent is used mostly by counties for mental health and chemical dependency.

Tough decisions

At the root of the cuts are some of Minnesota’s most vulnerable people, like elderly in nursing homes and the disabled. According to the Human Services Department, the state funds three public health care programs: Medical Assistance, MinnesotaCare and General Assistance Medical Care. The programs provide coverage for about 666,000 Minnesotans with about half of the enrollees being children under age 21.

Two ways to make reductions are removing specific benefits provided in public programs and reducing provider reimbursements from the state.

The governor’s most recent proposal eliminates basic care benefits for public programs, such as dental services, physical therapy, occupational therapy and podiatry. Huntley doesn’t like this at all and calls the services “an integral part of medical care.”

Huntley said the governor’s January proposal dropped 113,000 adults from health care coverage. “The people don’t go away, and in many cases if they have a chronic illness, in three months their chronic illness is out of control and they end up in a long-term care facility.”

That leaves the second option of cutting reimbursement rates to providers, which doesn’t violate any federal strings, he said.

But, if the uninsured end up in the emergency room they get treated and the hospital loses money because that person can’t pay their bills. What should be a state cost gets shifted to hospitals, he said.

Hospitals used to be able to raise their rates, but they are having a hard time doing that with the recession. “There will be hospitals that go under if we make the cuts in the governor’s proposal,” Huntley said. Cuts have to be made, but “the question is how big they are.”

Rep. Thomas Huntley chairs the House Health Care and Human Services Finance Division. (Photo by Andrew VonBank)Cost of total care

The House proposal will be worked on over the next few weeks in the finance division. “My goal is to protect institutions that might collapse during this two- or three-year period,” Huntley said.

Many of those are clinics and hospitals that have a high percentage of low-income people using the facilities. “We are going to have to cut what providers get paid — and that’s doctors, physical therapists, nursing home workers — and we’ll have to put some limits on services,” he said.

Part of the difficulty is figuring out how the state programs qualify within the federal guidelines for the stimulus money. The guidelines were released March 25.

Jayne Rankin, budget director of the Human Services Department, told the finance division March 30 that the state would begin drawing down the stimulus money in the next month. Part of the qualifications include that the state can’t change eligibility for programs, the funds can’t be deposited into a reserve account and the state can’t increase local shares of program costs, she said.

There are many strings attached to the $1.8 billion in federal funds, and most of it is required to go toward caring for patients on Medical Assistance, including the elderly and those in nursing homes; hospital payments; and health care for people with disabilities, Huntley said.

Part of the problem is Minnesota manages its health care better than most states; but those efficiencies result in less federal money. “We need to be rewarded for being good,” Huntley said.

Health care reform laws passed in 2008 changed how the state handles managed care for those on public assistance, resulting in about a 12 percent savings. The initial proposal that wasn’t signed by the governor would have saved 20 percent, Huntley said, adding the proposal is likely to be offered again this year.

Those additional savings could come from a “total cost of care” approach, where hospitals and clinics coordinate an integrated delivery system. Providers would be given a fixed amount of money to care for patients with certain diseases and they could determine how to provide care according to that amount.

Huntley said the health reform changes from last session put the state well on its way to national health care reform.

“The only thing that keeps me going is the national health care reform I think is gonna happen,” Huntley said. Although it won’t happen in time to fix our budget this year, he added.

Cost control is the biggest step, and that is exactly where the state has been heading with health care reform. You have to pay for value and reward providers for keeping people healthy and out of the hospital. Currently our health care system rewards for treating people who are very sick, he said.

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