House health and human services bill is a vision, not a final product

On Tuesday, the House presented the health and human services omnibus budget bill, which cuts nearly $1.7 billion in general fund dollars from base spending in FY 2012-13. While presenting the bill, Representative Jim Abeler, chair of the committee, warned the audience that “the world will not be the same” after this session is over for the roughly 800,000 Minnesotans that are touched by the services funded in this bill.

According to Representative Abeler, the House bill presents a philosophy of ”putting people on a path to independence,” recognizing that some people will can never achieve full independence. However, the bill has a long way to go before it is ready for a floor vote. Representative Abeler admitted that many of the proposals in his bill are not final, but are more of a placeholder to provoke discussion on important issues.

The financial backbone of the House bill - close to three-quarters of the cuts - come in the form of four large ticket items that are long on savings, but short on details.

1. The House bill cuts $373 million by ”rolling back” waiver costs. These waiver programs enable individuals with disabilities to access home-based Medicaid services that help them avoid entering a more expensive and confining institutional setting. The House proposal significantly reduces funding for these services, while requiring that there not be a reduction in the number of people served and prohibiting cuts in provider rates. As a result, these cuts are likely to impact the level of services available to these individuals with disabilities, forcing an untold number into institutionalized settings.
2. The House cuts another $300 million by asking the federal government to grant Minnesota a waiver to make significant changes to the state’s Medical Assistance (MA) program. Only the broad goals of the reform are outlined in the bill, including: empowering consumers to make informed and cost-effective choices, promoting competition between health care providers, redesigning purchasing and payment methods, and ensuring adequate access to needed services. The Department of Human Services (DHS) has said that they think it would be unlikely the waiver would be authorized. The bill states that, if the federal government doesn’t grant this waiver, DHS is directed to reduce staff salaries and medical assistance provider rates for a variety of health care providers by the amount necessary to meet this the $300 million goal.
3. The House bill would also cut $348 million by identifying high cost providers in the managed care system and controlling those costs. This cuts equates to a 12 percent reduction in managed care rates.
4. Another $216 million is saved by managing costs in MA fee-for-service payments through methods such as capping expenses, implementing more care coordination and restricting eligibility for MA.

Minnesota Management and Budget has sent Representative Abeler a letter outlining their concerns with these four proposals.

The remainder of the House bill includes other important financial and policy recommendations:

Health care. The House proposes reducing the number of Minnesotans able to access affordable health care, eliminating eligibility for MinnesotaCare for adults without children over 200 percent of poverty ($21,780 for an individual). The Governor initially proposed this change in eligibility, but dropped the proposal after the February forecast. The House would further reduce access to affordable health care by eliminating MinnesotaCare eligibility for adults with children over 200 percent of poverty ($37,060 for a family of three) upon approval by the federal government.

The House proposal also moves MinnesotaCare enrollees – individuals, parents and children – over 133 percent of poverty ($24,645 for a family of three) to a defined contribution plan, where individuals would be given a set amount to purchase health insurance in the private market. These Minnesotans would likely face higher premiums, deductibles and copayments. The House would also increase barriers to participating in MinnesotaCare, including increasing premiums and requiring eligibility reviews every six months instead of every 12 months.

Child care. The House adopts the Governor’s proposals to make some reforms in the child care assistance system and capture $5 million in unspent funds that could have been used to serve 500 additional families in the future. The House also reduces rates for non-licensed family child care providers by 20 percent and sets aside some child care assistance funding to enable mothers to remain at home with their newborns.

Individuals with disabilities and seniors. In addition to the $400 million cut to waivered programs discussed above, the House adopts the Governor’s original proposal to cut emergency assistance for extremely low-income and disabled adults that helps prevent them from losing their housing or having their utilities turned off. The 25 percent reduction in funding will mean approximately 4,500 fewer adults will receive assistance. After the February forecast, the Governor dropped this cut to emergency assistance.

The House also adopts the Governor’s original proposal to reduce congregate living rates, putting financial pressures on group homes that enable individuals with disabilities to live in the community. After the February forecast, the Governor dropped this cut to congregate living facilities.

The House adopts other proposals initially made by the Governor that will impact the aging population, including reducing grants by $7 million, reducing funding for nursing homes by broadening the definition of who qualifies as an individual with the lowest level of need and reducing reimbursement rates for this group, and reducing or eliminating some types of payments to nursing facilities (although the House does not adopt the Governor’s rate reduction for single bed rooms).

Families and children. The House bill makes several changes to the Minnesota Family Investment Program (MFIP) that will increase the challenges for families working their way out of poverty. For example, the House adds a requirement that an individual participating in the Minnesota Family Investment Program would be required to work 20 hours a week before qualifying for postsecondary education or training. This work requirement would make it challenging for parents to get training necessary to qualify for higher-paying jobs.

The House also makes a number of policy changes that will impact these families, including increasing the residency requirement from 30 days to 90 days and restricting how families can utilize their electronic benefits.

There are also some changes that would utilize funds intended to support these families to help balance the state’s budget. For example, the House adopts the Governor’s original proposal to reduce the MFIP consolidated fund by $28 million, or 13 percent, in FY 2012-13. This cut could have several implications, including longer wait times for families trying to access assistance, less support in finding work, and fewer families getting emergency assistance when facing homelessness. The Governor reduced his proposed cut to $10 million in FY 2012-13.

The House also proposes to use $46 million in federal funds for Temporary Assistance for Needy Families (TANF) to free up state dollars to help balance the state’s budget (commonly known as “refinancing”). The Governor proposed using $28 million in TANF funds.

Other issues. The House bill reduces funding for the medical education and research fund by $13 million in FY 2012-13, refocusing the remaining dollars on addressing health disparities. On the positive side, the House proposal does not make any reductions to Children and Community Services Act (CCSA) grants, Community Action grants or Family Assets for Independence in Minnesota (FAIM) grants.

The committee is expecting to complete their omnibus bill on Thursday and pass it along to the House Ways and Means committee.

-Christina Wessel