The Health Care Access Fund (HCAF) was created in 1992 to fund MinnesotaCare – a public health insurance program that provides access to affordable health care for working Minnesotans. Funding for the HCAF comes primarily from a tax on health care services (the provider tax) as well as premiums paid by the enrollees. Although the state’s general fund has been running a deficit in recent years, the HCAF has been generating enough revenues to cover the costs of MinnesotaCare.
Not for long, due to recent policy decisions.
In mid-December, the Health Care Access Commission met to discuss the solvency of the HCAF. As things stand right now, the HCAF will start running a deficit in FY 2011. Due to a law that is currently in place, the general fund will help keep the HCAF solvent through the end of FY 2011 (June 30, 2011). However, starting July 1, 2011 (FY 2012), that deal ends and the HCAF is on its own. By the end of FY 2012, the HCAF is projected to face a $371 million deficit. And by the end of the next biennium, the deficit will rise to $839 million.
Why is the HCAF facing a deficit?
Two contributing factors are enrollment increases among adults without dependent children and the rising cost of covering that population. But these changes only account for one-third of the cost increases for this biennium and just one-fourth of the cost increases in the FY 2012-13 biennium.
The big reason is the elimination of General Assistance Medical Care (GAMC) for extremely low-income adults without dependent children. GAMC was paid for out of the state’s general fund, so the Governor’s action to eliminate the program helped solve the state’s general fund deficit. For now, the Department of Human Services (DHS) is opting to automatically transition former GAMC recipients to MinnesotaCare. That means the costs for covering these individuals will now be paid out of the HCAF. This action provides some short-term relief and ensures that many of these very vulnerable individuals maintain coverage. However, this isn’t a permanent solution to the problem because:
- MinnesotaCare isn’t well suited to some of the unique challenges facing the GAMC population (such as homelessness, mental health problems and chemical dependency), and
- The HCAF can’t afford it.
Once the HCAF officially starts running a deficit on July 1, 2011, current law requires DHS to begin removing people from MinnesotaCare. Unless something changes, nearly all childless adults could lose access to health care coverage within a few years. DHS officials estimates that by FY 2013, they will need to disenroll 92,000 adults without dependent children in order to eliminate the HCAF’s deficit – or about 99 percent of all childless adults enrolled in MinnesotaCare (this includes the childless adults that used to be on GAMC, as well as other childless adults on MinnesotaCare).
Is there a way we can keep health care coverage for these vulnerable adults and protect the solvency of the HCAF? We really hope so. Fortunately, there are several proposals under consideration and the House and Senate have already been holding hearings to get the process moving.
-Christina Wessel
