Republican plan upends Minnesota health care
Disparate philosophies on how to spend taxpayer money on health care collided at the Minnesota Capitol on Wednesday, as a key Senate Republican unveiled a proposal that challenges the status quo more aggressively than his House counterparts, including refusing to comply with federal health care law.
Meanwhile, DFL Gov. Mark Dayton’s health and finance commissioners criticized the House plan as “untenable,” and Dayton signed an executive order targeting HMOs — a move that Republicans have made rumblings about but so far have avoided.
That all this came on the one-year anniversary of President Barack Obama signing into law the Patient Protection and Affordable Care Act was mostly a coincidence of Minnesota Republicans’ legislative timetable.
But it highlighted starkly contrasting views of how Minnesota should care for its poorest and most vulnerable residents while trying to plug a $5 billion hole in its two-year budget.
“It’s our money. I don’t know why the people in Washington think they know how we need to spend our taxpayers’ money,” said Sen. David Hann, R-Eden Prairie, who on Wednesday introduced his plan that serves as the basis for the Senate’s omnibus health and human services spending bill.
It includes a provision for the state to cease spending on implementing the federal health care law until and unless it is declared constitutional by the U.S. Supreme Court.
Hann chairs the Senate Health and Human Services Committee.
Hann’sbill, which is premised on a waiver from the federal government because it would violate current Medicaid coverage, would cut $1.6 billion over the next two years from the state’s general fund for state-funded programs used by some 800,000 Minnesotans.
That’s twice the level of cuts proposed by Dayton but to some appears to go more than twice as deep.
“Shocked. That’s my reaction,” said Lawrence Massa, president of the Minnesota Hospital Association. “Really, it rolls back coverage for so many Minnesotans and undoes health care policy of the last 50 years that I think has been helpful.”
Hann’s proposal expands on several health care changes and cuts proposed by him and other Republicans.
“It’s an effort to bring some substantial reform to health care in Minnesota,” he said as he prepared to walk committee members through his plan. “And we believe there is a need to question the federal role in health care.”
Hann’s proposal seeks sweeping changes to Medical Assistance, the state’s version of Medicaid, as well as MinnesotaCare, a program that provides medical coverage for residents above the federal poverty line. More than 100,000 residents would be affected.
In a move that Hann said “presumes individual responsibility,” adults without children would be dropped from Medical Assistance in lieu of a new approach. The change, which Hann said would save $934 million over two years, would affect individuals earning $14,484 a year or less. Legal non-U.S. citizens would also be cut off from Medical Assistance, saving some $20.6 million.
Hann’s bill proposes a new program, “Healthy Minnesota,” which forces families earning more than 75 percent of the federal poverty level to be dropped from state-run health care. For a family of four, 75 percent of the federal poverty level is currently $16,763.
For adults without children and families dropped from state-run health care, they would be given a voucher toward the purchase of insurance on the private market, which Hann has said costs less and is more efficient than government-run programs. The amount of the voucher would depend on age and income.
But critics say such people are unlikely to find insurance on the private market without a high deductible, and the end result will be emergency room visits that will never be paid for, resulting in the rest of society paying for their care in the end.
Hann’s restrictions would also eliminate Minnesota’s early participation in a massive Medicaid expansion under the federal health care overhaul. Dayton signed Minnesota onto the expansion with much fanfare on his first day in office, and he has said he would veto any plan that undoes it.
State Reps. Jim Abeler and Steve Gottwalt, who chair the House’s two health and human services committees, had also proposed reducing spending by $1.6 billion from projected levels — the target set by Republican leaders. (Both the House and Senate plans increase spending from current levels but “cut” significantly from what the state has forecast it will need to spend to keep up with inflation and an aging population.)
But Abeler, who introduced the House bill last week, stopped short of attempting to undo the early Medicaid expansion or wade into the tumultuous waters of the federal health care law.
When asked about it last week, both men described such measures as “distractions” to the primary task of providing reliable care amid the state’s budget pressures.
Abeler’s bill took a different tack at trying to cut spending, relying on a number of reforms that don’t trim the numbers of people on public programs but rather freeze or reduce spending on them.
But that hasn’t spared Abeler’s bill from criticism.
On Wednesday, for example, a parade of stakeholders testified on the bill, ranging from the Minneapolis-based Welfare Rights Committee to the Minnesota Medical Association. While some praised portions of the plan, many had strong criticisms.
Like Hann’s plan in the Senate, huge portions of Abeler’s plan presume the federal government would grant a waiver because it seeks to cut funding in ways that aren’t consistent with current Medicaid policy.
Republicans have pointed to a waiver granted to Rhode Island as a model for finding savings with the blessings of the federal government, but a study from a Washington think tank says the claim is “off the mark.”
“Those who tout the Rhode Island waiver as a model for other states have also exaggerated the state savings that Rhode Island secured under the waiver,” according to an article co-authored by Judith Solomon, vice president for health policy at the nonpartisan Center on Budget and Policy Priorities. Extra cash from the federal stimulus plan buoyed Rhode Island’s program, allowing the state to spend less, but not actually reducing taxpayer costs.
On Wednesday, two of Dayton’s commissioners let it be known the administration isn’t on board with seeking a federal waiver and has serious questions about Abeler’s financial assumptions.
“Passing legislation without a real understanding of the fiscal details related to such an enormous portion of spending puts the fiscal stability of our state in serious jeopardy,” wrote Health and Human Services Commissioner Lucinda Jesson and Management and Budget Commissioner James Schowalter in a letter to Abeler.
Abeler defended his proposal’s figures, saying they were based on sound estimates under tight time constraints.
Neither Abeler’s nor Hann’s bill targets something that some Republicans and Democrats have urged going after: health maintenance organizations.
On Wednesday, Dayton went after them on his own.
The nonprofit health plans are paid by the state in no-bid contracts to manage benefits for more than 500,000 Minnesotans in public health insurance programs. While HMOs have reported losses in some years, in 2009 they saw $108.1 million in profits and are currently sitting on $1.36 billion in surplus cash.
Dayton put an end to the no-bid contracts, announcing he would establish proposals in a competitive process. Additionally, he signed an executive order requiring that HMOs provide data to the state for regular financial audits to increase transparency on the roughly $3 billion a year the state spends.
Well aware of the target that’s been hovering around them for months at the Capitol, the HMOs responded with a diplomatic statement that praised Dayton before quietly raising concerns.
“We hope that his order today doesn’t just add another report, but streamlines the process so that the information policy makers and the public should have is in a single place and is understandable,” said Julie Brunner, executive director of the Minnesota Council of Health Plans.