Medicaid’s 50th birthday celebrates a diverse group of Minnesotans

Medicaid turns 50 today, and if it were a person, the people showing up to its birthday party would come from all walks of life. Known as Medical Assistance here in Minnesota, Medicaid offers affordable health care options for infants, the elderly, people with disabilities and workers whose employers don’t offer health insurance.

Of course, Medicaid won’t actually have a party. That means it is incumbent on all of us to celebrate that more than one million Minnesotans have the health care they need thanks to Medical Assistance, including:

  • 1 in 3 children in Minnesota. Research shows that children who get health care through Medicaid are more likely to succeed in school and earn more as adults.
  • 15 percent of Minnesota’s seniors. Through Medical Assistance, almost 100,000 seniors receive health care services that often help them live at home, or receive the care they need in nursing homes. Such long-term services are not covered by Medicare, which is also turning 50 today.
  • 1 in 4 of the state’s adults with disabilities. Medical Assistance makes it easier to live independently by covering supports like personal care assistants.
  • Nearly half of the newborns in our state. Medical Assistance covers mothers (and their children). That’s good news for babies, who are more likely to grow up healthy when they are covered by insurance even before they are born.
  • Lots of working adults. In 2013, about 237,000 working Minnesotans age 18 to 64 received health insurance through Medical Assistance or another means-tested form of public coverage.

Birthdays offer mile markers in time that allow us to reflect both on where we’ve been and where we are going. The numbers above show that Medical Assistance has plenty to celebrate on Medicaid’s 50th birthday. These statistics also remind us of the crucial role it plays in providing affordable health care to many of our neighbors. Without Medical Assistance, the young, the elderly, adults with disabilities and many working families would lack stable access to affordable health care.

-Ben Horowitz

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Nine reasons to celebrate Saturday’s new $9.00 minimum wage

Minnesota’s minimum wage increases to $9.00 Saturday for large employers (and $7.25 for youths and small employers) thanks to legislation passed in April 2014. Next year, the wage will increase again, to $9.50 for large employers and $7.75 for small employers and youth. This eventual climb up to $9.50 is predicted to cause roughly 325,000 Minnesotans to see their income improve. It’s good news for everyone else, too, because it will also strengthen our economy. We came up with a reason to celebrate the minimum wage increase for every dollar.

  1. A minimum wage increase is important for the Minnesotans who are more likely to be paid at or near the minimum wage, like women…
  2. …people of color…
  3. …people with disabilities…
  4. … and Greater Minnesotans. Raising the minimum wage will help address the fact that employers likely pay less for the jobs disproportionately filled by women, people of color, adults with disabilities and in Greater Minnesota.
  5. A higher minimum wage is linked to higher earnings. This sounds redundant, but is worth pointing out. Low-income workers in states with minimum wage increases saw their earnings grow by 1.6 percent in 2014, compared to just 0.3 percent in states that did not increase their minimum wage.
  6. The minimum wage needs to increase to ensure that more families can make ends meet. Minnesota’s Department of Employment and Economic Development studies the cost of a basic needs budget in every county in Minnesota. Depending on their age and where they live, a single adult working full time with no children would need to earn between $9.56 (Pennington County) and $13.07 (Isanti County) just to put a roof over their head and food in their fridge. This increase brings us one step closer to ensuring that a full day’s work at the very least covers a full day’s needs.
  7. The increase will help wages catch up with inflation. Because of increases in the cost of living, the federal minimum wage currently buys less than it did in 1968.
  8. The increase will help lots of children, too. According to a report by the JOBS NOW Coalition, roughly one out of every ten children in Minnesota had a parent who would be helped by the minimum wage increase.
  9. Minnesotans earning higher wages will spend more in our local economies. The JOBS NOW study also estimated that a similar minimum wage proposal to the one that passed would generate a $472 million increase in Minnesotans’ spending power.

Beginning in 2018, the minimum wage will be automatically increased to keep up with inflation. Combined with the increases from last year, this year, and next year, our higher minimum wage will improve the lives of hundreds of thousands of Minnesotans who struggle to meet their basic needs despite working.

-Ben Horowitz

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Legislative session meant many opportunities missed, some taken

With an almost $2 billion projected surplus to work with in setting the next two-year budget, policymakers had opportunities to make targeted new investments after more than a decade of flat or declining funding in many public services. However, there was also a threat that policymakers would pass large tax cuts that would crowd out such investments, and harm the state’s ability to sustainably fund our needs.

We’ve taken a closer look at this session’s tax and budget decisions in our latest issue brief, Opportunities Missed and Taken in the 2015 Legislative Session. In particular, we measured how well the final budget meets the goals of increasing opportunity and economic well-being for all Minnesotans and ensuring a fair and sustainable tax system.

With a divided government, policymakers offered very different views of how to best serve Minnesotans, and it took a special session before they reached agreement on all parts of the budget. The final budget agreement allocated 23 percent of the surplus for supplemental spending in the 2015 fiscal year, and 31 percent for additional spending in the FY 2016-17 budget cycle. That left $865 million unallocated, which will contribute to the resources available in the 2016 Legislative Session.
End of 2015 Session surplus allocation-01In the final budget agreements, policymakers made some important progress toward shared economic prosperity, like increasing access to affordable child care and keeping down the cost of higher education.

However, there were also serious lost opportunities, such as the failure to expand earned sick time to more Minnesota workers; to allow all Minnesotans to have the economic opportunities that come with a driver’s license regardless of their immigration status; or to expand tax credits for working families, such as the Child and Dependent Care Tax Credit and the Working Family Credit. And some Minnesota families will face higher costs for health care because of severe cuts to MinnesotaCare.

Policymakers also did not pass a tax bill or fund significant new investments in transportation, despite much attention and debate on these issues. Importantly, the dangerously large tax cuts that were proposed are likely to be debated among policymakers again next year.

The substantial amount of the surplus left unallocated, combined with recent positive news about state revenues, makes it highly likely that Minnesota will have another surplus when the 2016 Legislative Session starts next March. Key priorities should be continuing the state’s progress toward a sustainable and equitable tax system, opening windows of economic opportunity to more Minnesotans, and ensuring that Minnesotans who hit a rough patch have the support they need.

For more on the 2015 Legislative Session, check out our brief.

-Clark Biegler

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Minnesota’s revenues beat expectations

Minnesota ended the recent budget year much stronger than expected, according to preliminary analysis from Minnesota Management & Budget (MMB).

MMB’s July Revenue and Economic Update finds that state revenues have come in above expectations. The state’s 2015 fiscal year ended on June 30, and revenues for the year came in $555 million, or 2.8 percent, higher than projected in the February Forecast. This is mostly due to higher income tax collections from capital gains and other non-wage income. The Update notes that these are preliminary figures that could change when they are finalized in August.

While the revenue picture in Minnesota shows good news, the story for the national economy is a little different. Economic growth got off to a slow start this year, due to several temporary factors including harsh winter weather. Now, the national economy is picking up as indicated by a tightening labor market and higher consumer confidence, but overall growth for 2015 is now expected to be lower than projected in the February Forecast. Looking to 2016 and 2017, the economy is expected to pick up, growing annually by 3.1 and 2.7 percent, respectively.

The economic forecasters are fairly confident in their projections, and assign a 70 percent probability to their baseline economic forecast. They give a 15 percent chance for a more pessimistic scenario in which economic growth stalls; and a 15 percent chance that the economy will be even stronger than the baseline predictions, due to better than anticipated productivity and foreign growth later this year.

The forecast also notes the effect of global prices and the rising value of the U.S. dollar on Minnesota’s Iron Range. A strong dollar makes foreign steel less expensive, which has encouraged imports. As a result, there has been a slowdown in Minnesota’s taconite mining industry, affecting more than 1,000 workers directly in recent months, or about a quarter of the state’s mining jobs. It also affects jobs in many supporting industries.

The 2015 Legislative Session recently ended with $865 million of the state’s projected $1.9 billion FY 2016-17 surplus unspent. We’ll get an update on that available balance, taking into account both state revenues and expenditures, when the state’s November economic forecast comes out. If the current trend of higher than expected revenues continues, that available balance would likely grow. However, the predictions of slower economic growth could exert some downward pressure. One-third of any positive balance for FY 2016-17 measured in the November Forecast will go into the state’s budget reserve, further building up this important resource so that the state will be able to meet the needs of Minnesotans during the next economic downturn.

Today’s good budget news indicates that the next legislative session will likely provide another opportunity to ensure more Minnesotans benefit from the improving economy.

-Clark Biegler

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Summer reading: new reports show that policy choices build ladders to economic opportunity

With the legislative session over, we’ve had the opportunity to pick up some of our ideal beach reads: the latest and greatest research demonstrating that policy choices can knock down barriers on the road to economic opportunity. They make a strong case for investing in proven ways to help all boats rise as the economy continues to recover.

When families can afford to live in lower-poverty neighborhoods, their kids succeed. Researchers at Harvard re-visited a policy experiment from the mid-1990s that provided housing assistance to families living in areas of concentrated poverty so that they could move to lower-poverty neighborhoods. They found that the children who relocated grew up to earn significantly more and were more likely to attend college. Their research shows that kids up to age 13 saw a benefit from living in lower-poverty neighborhoods, with each additional year spent in a new, lower-poverty neighborhood leading to higher predicted earnings.

A summary of child care research reveals that mothers receiving child care assistance are more likely to work, and their employment leads to increased levels of social and emotional well-being for their children. Parents with child care assistance also worked more hours, and were more likely to have more stable jobs. This research demonstrates the economic and other benefits from child care assistance, such as Minnesota’s Basic Sliding Fee Child Care Assistance. Basic Sliding Fee brings down the cost of child care for parents with children up to age 12. It allows children to thrive in stable environments while parents go to school or work. This session, policymakers reversed a long-term trend of disinvestment by increasing funding for Basic Sliding Fee. It was a great step in the right direction, but thousands of Minnesota families still remain on a waiting list.

The federal Earned Income Tax Credit (EITC) is a powerful tool for reducing poverty and increasing employment. The nonpartisan Congressional Research Service found that the federal EITC reduces the national poverty rate by 14 to 29 percent for families with children, depending on their household chacteristics. In his 2015 budget proposal, Governor Mark Dayton proposed improvements to the state’s version of the EITC, the Working Family Tax Credit. Both the federal and state government could strengthen this policy even further by ensuring these credits make work pay for all kinds of families.

Policies like the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) and the EITC cut poverty in Minnesota in half in 2012. These policies would have an even greater impact if they reached a higher percentage of eligible families. An overview of participation rates for nutrition assistance shows that Minnesota and the nation are getting better at ensuring eligible families receive the assistance they qualify for – but we still have a way to go. For example, Minnesota’s SNAP participation rate increased from 65 percent in 2000 to 86 percent in 2012.

This research used a diverse array of statistical techniques and comes from the spheres of government, academia and nonprofits. They all point to the same general conclusion: policy choices make a difference. Child care assistance, access to affordable housing, the EITC and SNAP make it easier for struggling Minnesotans to make ends meet.

-Ben Horowitz

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Budget bills passed during special session avert shutdown

By the early hours of June 13, Minnesota’s House and Senate passed the budget bills responsible for education, jobs and energy, and environment and agriculture in a special session. This prevented a shutdown of those portions of state government when the state’s next two-year budget cycle begins on July 1. Legislators also passed a bonding bill authorizing infrastructure projects around the state and a Legacy bill allocating dedicated funds for the arts and environment.

The education bill spells out $526 million in new general fund resources for FY 2016-17, including $346 million to increase funding for school districts on the general education formula by 2 percent in both FY 2016 and FY 2017. Though the education bill does not include the statewide universal pre-kindergarten initiative that was a priority for Governor Mark Dayton, it does devote $96 million to increase funding for initiatives focused on young children, including:

  • $48 million for early learning scholarships;
  • $3.5 million for the state’s early learning and child care rating system;
  • $31 million for School Readiness;
  • $2.8 million for Early Childhood Family Education; and
  • $10 million for Head Start.

The bill also includes $5 million for the Northside Achievement Zone, St. Paul Promise Neighborhood and new education partnership pilots that help children succeed by coordinating support for families at school and in their communities.

Along with the increased funding for Basic Sliding Fee Child Assistance in the health and human services budget, these important investments mean that more Minnesota children will thrive in stable, nurturing care, and fewer parents will need to pass up on jobs or opportunities to go back to school because they can’t afford child care.

The jobs and energy omnibus budget bill increases general fund spending by $33 million. The final version includes an additional $2.5 million to support employment for persons with disabilities or mental illness, and $2.5 million for housing for people with serious mental illnesses.

Combined, the omnibus bills for environment and agriculture result in a $26 million decrease in general fund spending. That includes a $64 million cut from the environmental portion and a $39 million increase in agricultural spending.

Along with the bills already passed and signed by Dayton, these budget bills will leave $865 million unallocated from the state’s projected FY 2016-17 surplus.

-Ben Horowitz

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Report contains good practices for addressing health care eligibility issues

With thoughtful reforms, the State of Minnesota can better target our resources without decreasing eligible families’ access to vital services. Dorothy Rosenbaum at the Center for Budget and Policy Priorities cites several states’ successes doing so in Lessons Churned: Measuring the Impact of Churn in Health and Human Services Programs on Participants and State and Local Agencies. Minnesota should apply these valuable lessons to a new data-matching initiative passed in the Health and Human Services budget.

In the wonk’s dictionary, “churn” describes participants dropping in and out of public supports like Medical Assistance within short periods of time. Oftentimes, this happens even when nothing occurred in a person’s life that would change their eligibility. Examples of such “procedural churn” include when the state fails to provide clear instructions on how to re-apply, or when a person does not respond with requested information before a renewal deadline.

Regardless of whether this occurs due to an error by the state or a family, eligible people lose their health care or other services that are important for them to meet their most basic needs. Meanwhile, the state pays for the unnecessary work of closing, then re-opening, these cases.

Depending how it’s implemented, a proposal in the Health and Human Services budget could increase the potential for churn. While it differs in important ways from the eligibility audit in the House’s Health and Human Services omnibus bill, it could still echo the bad precedent from Illinois upon which the House based its version. Illinois lawmakers hired a third-party vendor to assist the state’s effort to verify people’s eligibility for public health insurance. Recent reports show that 84 percent of cancelled health insurance cases in 2014 occurred simply because participants did not respond to requests for personal information from this unfamiliar vendor, and that 89 percent of these non-respondents were “likely eligible.”

This was textbook churn, and it could happen in Minnesota if the state isn’t careful. Fortunately, the Health and Human Services omnibus bill instructs the Department of Human Services (DHS) to perform its own data-matching rather than engaging a third-party vendor. That’s especially good because in Illinois the vendor didn’t bring significant new information to the table. The legislation also provides Minnesotans 30 days to respond to the state’s request for information, as compared to a limit of 10 business days in Illinois. However, those extra days won’t make a difference if an eligible person simply misses or misunderstands the request. DHS must take care to ensure that the effort doesn’t cause eligible Minnesotans to lose their health care, as happened in Illinois.

Rosenbaum’s paper supplies many potential strategies for churn reduction that can benefit the budget without harming the people. Successful states typically begin with data collection and analysis. One state, Louisiana, found that in 22 percent of their health insurance renewal cases people lost their coverage for procedural reasons. After identifying the problem, Louisiana was able to reduce this rate to 1 percent in a matter of years by improving the renewal process. For example, the state increased telephone contact with participants, and used existing data to renew eligibility when possible. Because of these reforms, fewer eligible families lost their health care and the state wasted fewer resources on unnecessary cancellations and re-enrollments.

Cycling in and out of health care coverage is ultimately harmful to families and adds unnecessary costs to state agencies. If not implemented carefully, the Health and Human Services re-verification initiative could simply exacerbate this problem. Instead, Minnesota should use it as an opportunity to more efficiently serve families by addressing procedural churn.

-Ben Horowitz

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Health and Human Services budget combines some good investments with harmful changes

The Health and Human Services budget (Senate File 1458) provides more families with options for affordable child care, more resources to protect the young and care for the elderly, and better access to health care for people with disabilities and mental illnesses. Unfortunately, the final agreement also contains several disappointments like $65 million in cuts to MinnesotaCare and a potentially inefficient re-verification proposal. It also fails to include a proposal that would have better supported Minnesota’s most struggling families in the Minnesota Family Investment Program (MFIP).

A $10 million increase in FY 2016-17 for Basic Sliding Fee Child Care Assistance will help about 350 more families afford child care in an average month, and takes an important step in addressing a waiting list that is more than 4,000 families long. With Basic Sliding Fee, parents can afford to go to school or work while their children thrive in consistent care environments and employers can more easily find reliable employees.

At the same time, the Health and Human Services budget also reduces Basic Sliding Fee’s resources by $3 million in FY 2016. These are unspent funds from FY 2015 — however, these funds are held up due to procedural issues, not due to a lack of demand. The Department of Human Services testified that this $3 million would otherwise go towards serving more families.

The E-12 education bill also includes $62 million for young children through Early Learning Scholarships and school readiness efforts. However, Governor Mark Dayton vetoed this bill because it does not include funding for some of his other education-related priorities. While all of these programs can work together for families with young children, Basic Sliding Fee is the only tool that serves kids from infancy through age 12 and covers the amount of hours and range of times parents need to work.

The Health and Human Services investments targeted to children and the young total $78 million, and include:

  • $52 million for child protection reforms,
  • $7.9 million to increase resources for some of Minnesota’s most struggling families by changing the way child support payments are handled in MFIP, and
  • $2 million for the Homeless Youth Act and $3 million for Safe Harbor for Sexually Exploited Youth.

The Health and Human Services budget also includes proposals to make health care more affordable for seniors and adults with disabilities. It provides $4.8 million to reduce Medical Assistance premiums for employed Minnesotans with disabilities. The agreement also contains $3.4 million to reduce the cost of Medical Assistance for working seniors and people with disabilities who also have high medical costs.

Cuts to MinnesotaCare in the Health and Human Services budget will also make it harder for some Minnesotans to afford health care. The $65 million in reduced funding will raise premiums and triple out-of-pocket costs for working Minnesotans. MinnesotaCare offers affordable health insurance for households earning 133 to 200 percent of the federal poverty guideline ($15,654 to $23,540 for an individual). These cuts are unnecessary because both the general fund and the main funding source for MinnesotaCare have projected surpluses in the FY 2016-17 biennium. Because the changes result in higher costs that add up with each visit to the doctor, chronically ill Minnesotans will be hit the hardest.

The Health and Human Services agreement contains an eligibility re-verification proposal that could create a procedural barrier for families eligible for health care. The House Health and Human Services omnibus bill (House File 1638) contained a similar version that would have hired a third-party vendor to re-verify the eligibility of participants in services for families. The Health and Human Services budget will instead have the Department of Human Services perform a similar task within slightly different parameters. We were glad the conference committee moved away from Illinois’ harmful approach. However, the state must be sure that its audit focuses on Minnesota’s ability to determine eligibility rather than creating a new layer of red tape that causes eligible families to lose their health care.

The Health and Human Services conference committee did not include a proposal from the Senate and Dayton that would have raised the cash grant in MFIP for the first time in 29 years. Since 1986, a very low-income family of three participating in MFIP has received $532 per month. That amount does not cover a family’s basic needs. A strong body of research connects increased family resources to better outcomes for kids. Policymakers missed an opportunity to help thousands of Minnesota children take a step away from living in deep poverty.

Other significant Health and Human Services expenditures include:

  • $138 million for higher payments to nursing homes,
  • $76 million for mental health and chemical dependency, including efforts to expand access, build new facilities, and provide innovative services, and
  • $3.3 million to increase access to dental services through higher payments to dental providers.

The Health and Human Services budget contains praiseworthy investments in Minnesota’s children, seniors and people with disabilities or mental illnesses. However, real damage will be done by cuts to MinnesotaCare, and the state’s eligibility audit could install a new barrier to affordable health care. This “some steps forward, some steps back” approach was not necessary in a year with a nearly $2 billion surplus.

-Ben Horowitz

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Policymakers put budget together, but it’s not a done deal

Legislators ended this session with a flurry of late-night conference committees and marathon floor sessions. “Global targets” were established just a few days before session ended, so legislators raced against the clock Monday night to pass budget bills for FY 2016-17. However, policymakers are expected to come back for a special session.

That’s because Governor Mark Dayton has said he will veto the E-12 Education bill, as he believes it does not provide adequate funding for several of his priorities. As a result, a special session is needed to set the education budget before the new budget cycle starts on July 1.

The House, Senate and governor were unable to come to an agreement on two major budget bills, tax and transportation, which resulted in no tax bill and a small, relatively status quo transportation bill. The status of these bills will not trigger a special session.

FY 2016-17 General Fund Budget Priorities
 Budget Bill Governor House Senate Conference Agreement
E-12 Education $695 million $158 million $365 million $400 million
Higher Education $283 million $57 million $205 million $166 million
Health and Human Services $341 million -$1.2 billion $340 million -$302 million
Jobs and Economic Development $53 million -$11 million $66 million  $30 million
Environment and Agriculture $29 million $8.8 million -$9.4 million -$23 million
State Government and Veterans $50 million -$67 million $40 million $11 million
Transportation and Public Safety $30 million -$108 million $30 million $30 million 
Judiciary and Public Safety $149 million $82 million $117 million $111 million
Tax Cuts and Aids to Local Governments $136 million $2.3 billion $461 million $0 

The final budget bills include some provisions to expand prosperity to more Minnesotans by making higher education more affordable and increasing access to affordable child care. However, there were also many lost opportunities. For example, policymakers failed to expand earned sick time to more Minnesota workers, to allow all Minnesotans to have the economic opportunities that come with a driver’s license regardless of their immigration status, or to expand the Child and Dependent Care Tax Credit or the Working Family Credit.

The E-12 Education bill increases funding for schools through the basic student formula by 1.5 percent in FY 2016 and 2.0 percent in FY 2017, an increase of $87 and $118 per student each year. It also includes $31 million for early learning scholarships and $31 million for school readiness. As mentioned above, Dayton plans to veto this bill.

In Higher Education, policymakers agreed to keep the cost of tuition down at the University of Minnesota and Minnesota State Colleges and Universities, but the funding is not enough to fully freeze tuition. The final bill also improves financial aid through the Minnesota State Grant program and reduces the waiting list for American Indian scholarships.

In the Health and Human Services budget, policymakers cut general fund appropriations by $302 million, despite the state’s projected $1.9 billion surplus. The budget rejects the House proposal to eliminate MinnesotaCare, which provides health insurance for about 100,000 working Minnesotans, but it does raise health care costs for MinnesotaCare participants. Policymakers included $10 million for more families to have affordable child care through Basic Sliding Fee Child Care Assistance, which had a waiting list of 4,400 families as of March. The bill also includes a number of investments in mental health, nursing homes, and services for children and youth.

An Economic Development and Housing budget bill passed minutes before the end of session largely includes only base funding for affordable housing and economic development. It does not include a harmful “local interference” measure proposed by the House, which would have prevented local governments from setting higher wage and job quality standards than state law.

The governor, House and Senate had all proposed substantial new money for Transportation, but could not bridge their differences about how to pay for them – by increasing existing dedicated funding sources (such as the gas tax) or using current general resources. A Senate proposal to expand access to driver’s licenses for Minnesotans regardless of immigration status was not included. Having a driver’s license can open a door to greater economic opportunity for immigrants, which also has a positive ripple effect on the state’s economy and ensures the state’s roads are safer by requiring everyone to take a driving test before they’re behind the wheel.

The lack of a Tax bill means that policymakers did not move forward the House’s proposal for more than $2 billion in tax cuts, several of which grew larger over time, such as eliminating the statewide property tax paid by businesses and cabins, fully exempting Social Security income and deeply cutting the estate tax. Several of the House tax proposals also would have reversed the state’s recent progress in making the tax system more equitable, so it’s a good thing they were not enacted into law. The flip side is that the state also did not move forward with more positive tax proposals focused on the needs of lower- and middle-income Minnesotans, such as expanding the Child and Dependent Care Tax Credit or the Working Family Credit. Policymakers linked the tax and transportation issues together in end-of-session negotiations, and these issues may well remain intertwined into the future.

The Legacy budget bill, which is an important funding source for arts and cultural heritage and environmental organizations, was not passed as well. However, the governor has said he would like to address this in a special session.

With a projected $1.9 billion surplus for FY 2016-17, policymakers had substantial opportunity to invest in more Minnesotans sharing in our state’s economic success. Policymakers made some progress in making education more affordable and increasing access to affordable child care. However, they also missed many opportunities to invest in Minnesotans, such as failing to expand access to driver’s licenses or the Child and Dependent Care Tax Credit or Working Family Credit.

-Clark Biegler

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Budget deal on MinnesotaCare triples out-of-pocket costs, raises premiums for working Minnesotans

The Health and Human Services budget passed by Minnesota’s Senate and House of Representatives will increase health care costs for the working Minnesotans covered by MinnesotaCare. The Health and Human Services budget (Senate File 1458) stops well short of the House’s attempt to repeal MinnesotaCare, but it raises out-of-pocket costs and premiums. Lawmakers made these changes to a time-tested, proven tool for affordable health care despite a projected surplus in the fund that pays for it.

MinnesotaCare is a path to affordable health insurance for households earning 133 to 200 percent of the federal poverty guidelines, or $15,654 to $23,540 per year for an individual. It also covers certain Minnesotans earning less. Eligible individuals and families pay income-based sliding scale premiums. MinnesotaCare reaches people like entrepreneurs, farmers and others who would otherwise lack access to quality, affordable health insurance coverage through their work.

The cuts to MinnesotaCare amount to $65 million in FY 2016-17 and $96 million in FY 2018-19. Coverage through MinnesotaCare will have higher premiums, and the maximum out-of-pocket costs will be three times as high. While some important details are left to be determined, the average impact would be around $370 per adult in 2016. That’s more than a week’s paycheck for many Minnesotans participating in MinnesotaCare. Individual experiences will vary based on a person’s income and use of medical care.

The changes will be hardest on Minnesotans who are dealing with chronic illnesses. That’s because the higher out-of-pocket costs will add up each time Minnesotans use their health insurance coverage. For example, someone who needs to see the doctor regularly to treat diabetes or mental health issues will see their already-tight budgets stretched even further. Increased out-of-pocket costs could also discourage sick people from seeking care.

Raising health care costs for working Minnesotans is unnecessary given the state’s current resources. MinnesotaCare is primarily funded by the Health Care Access Fund. This year’s February forecast projected that the fund will remain balanced through FY 2019. That’s in addition to the projected $1.9 billion surplus in the general fund.

MinnesotaCare has provided affordable health insurance to working Minnesotans for two decades. The Health and Human Services budget undercuts this critical gateway to affordable health care for people who can ill afford it.

-Ben Horowitz

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