November 20, 2008
A few weeks ago I attended the second-to-last meeting of the Minnesota Budget Trends Study Commission. To recap, this commission, established by the state legislature (not to be confused with the Governor’s 21st Century Tax Reform Commission), is made up of state budget experts and is tasked with recommending how we can minimize volatility in our state budget and tax system and prepare for the fiscal impact of demographic changes.
The commission discussed some of their draft findings (no draft report was handed out). We’ll get their final word in December. From what they discussed, here’s what you need to know:
- Inflation in the forecast matters. There was near unanimous agreement (with two or three notable exceptions) that the current practice of including inflation in the economic forecast for revenues and not expenditures creates a false picture of the budget.
- The need to limit growth in health care spending will be a major finding of the report. It’s not clear how the the commission will recommend we resolve this very sticky issue. I very much hope the commission recognizes that health care costs have been rising in both the public and private sectors. And in fact, private health care spending rose faster than public health care spending in 2005 (see this Minnesota Department of Health report). This is not a “big government” problem.
There are two meetings of this commission left. Next meeting is scheduled for Tuesday, November 25th at 9 am in the Centennial Office Building (could be changed since it’s close to Thanksgiving).
-Katherine Blauvelt
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Budget Process, Health Care, Taxes | Tagged: budget trends, commission, Health Care, inflation | 
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Posted by Katherine Blauvelt
August 26, 2008
The U.S. Census Bureau released statistics today on poverty, health insurance coverage and median income for 2007. Minnesota showed basically no statistically significant change from 2006 on any of these measures. We held our own. However, the news is none to good when we consider that we were wrapping up a six-year ”economic recovery” last year (and have been sliding into a downturn in 2008). If we look at how Minnesota fared between 2001 and 2007, we find that we are actually worse off.
Poverty is higher: Poverty in Minnesota rose to 9.5% in 2007, up from 7.8% in 2001. Child poverty in 2007 reached 11.6%. Although this didn’t represent a significant change from 2001, it is significantly higher than 2000 (when childhood poverty was at 8.6%).
More uninsured: Nearly 9% of Minnesotans were without health insurance in 2006-07 (a two year average). This was significantly higher than the 7.5% without insurance in 2000-01. At the national level, the Census Bureau reports that the number of uninsured actually declined between 2006 and 2007; that was almost entirely because there was an increase in the number of people covered by government health insurance. Makes you wonder what would have happened in Minnesota if we hadn’t cut public health care programs this decade…
Household income fell too: The median household income in Minnesota fell from $58,363 in 2001 to $55,802 in 2007 (adjusted for inflation).
This is not good. Consider that 2008 represents the beginning of a new economic downturn and the state is expecting to face significant budget deficits when the legislature convenes next January. It seems almost certain that the trend will continue downwards over the next few years.
Here are a few more interesting resources on the Census release if you are so inclined:
-Christina Wessel
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Economy, General Information, Health Care, Poverty | Tagged: health insurance, median income, Poverty | 
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Posted by Christina Wessel
May 6, 2008
Yesterday morning, the omnibus budget conference committee released the HHS agreement between the House and the Senate. The agreement includes $147 million in general fund reductions to HHS services for the current biennium (compared to the original $526 million by the Governor, $131 million by the House and $147 million by the Senate).
Some of the major components:
- There is about $92 million in reserves available in the Temporary Assistance for Needy Families (TANF) account. The House/Senate agreement ”refinances” about $63 million in TANF dollars to free up general fund resources. They also use another $8.2 million to improve services for low-income families, including increasing work support grants for counties, repealing the family cap for families on MFIP and providing funds for long-term homelessness services.
- No funds are transferred from the Health Care Access Fund
- Transfers $9 million in unspent funds for the Basic Sliding Fee child care program to the general fund…funds which could have been used to reduce the 3,700 families currently on the waiting list.
- There are significant reductions in funding for hospitals and some for pharmacies.
- Nursing home facilities get a cost of living adjustment.
- All grants from the Dept. of Human Services and Dept. of Health are reduced by 1.7%
- The agreement also adopts reductions in services for individuals with disabilities
Of course, these are just a few of the change items in the agreement. I’ve scanned in a copy of my spreadsheet so you can look for any issues that are of particular interest to you. Be warned, the original was dark, so the scanned version is even darker - but the column containing the conference committee numbers is legible. The spreadsheet comes in two parts thanks to technical limitations. Part 1 (pages 1-7). Part 2 (pages 8-12).
However, some of this could change…the committee hasn’t adopted all the components yet and they still have to consider amendments.
Ever helpful, the legislative fiscal staff is also starting to get updated spreadsheets up on the web. While HHS isn’t up as of this morning, most other budget areas are. Visit the Senate Fiscal Analysis and look for spreadsheets with a May date next to them. Of course, you can also visit House Fiscal Analysis, but it’s harder to identify which spreadsheets have been updated recently.
-Christina Wessel
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Budget Process, Health Care | 
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Posted by Christina Wessel
April 24, 2008
The Governor released a surprisingly mean-spirited offer this morning, targeting Minnesota’s most vulnerable for additional budget cuts.
On Monday, the Governor made an offer to take only $125 million from the Health Care Access Fund (instead of $250 million in his original budget proposal), in exchange for $125 million in other budget reductions. This morning, the Governor released a new shot across the bow, suggesting that if he makes the choice, the additional $125 million would come from cuts to health and human service programs.
He listed the following options specifically:
- “Reductions in General Assistance Medical Care (GAMC) eligibility. This is a worthwhile safety net program, but is duplicated in part by MinnesotaCare.”
- “Reductions in benefits or eligibility in Medical Assistance programs. This is a difficult option but the large rates of growth in these programs limit investments in other priorities.”
- “Other reductions in health and human services grants and programs.”
These recommendations target populations that should only be harmed as a last resort. For example, GAMC is a safety net for very low-income people with disabilities, as well as uninsured individuals with catastrophic medical needs. If the Governor intends to target growth in Medical Assistance, that would most likely impact long term care and services for people with disabilities. This offer could be an unfortunate setback in negotiations.
-Christina Wessel
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Posted by Christina Wessel
April 24, 2008
Earlier this week I attended the monthly Budget Trends Commission meeting, a group set up by the legislature to examine instability in the state’s finances. Most of the meeting was spent learning about trends in health care spending and trends in health insurance (or lack thereof) in Minnesota. I assume the Commission is learning about this topic because rising health care costs have, and will in the future, put pressures on the state budget.
Here’s my take away from the meeting: If you don’t already have the Minnesota Department of Health Health Economics Program (say that five times fast) on your radarscreen as the best place to get statistics on the topic of health care in Minnesota - you should. Their Health Access Surveys provide the most accurate state-level data on health insurance rates, who is uninsured, etc. They’ve also done a ton of analysis on health care costs, with easy-to-read graphs too.
Subscribe to their e-mail list to get a heads-up on new publications (click on the link on their homepage), but don’t neglect their past publications either.
The next Budget Trends Commission meeting is right after Memorial day, but that won’t keep me away. It’s Tuesday, May 27th at 8:30 am, at the Centennial Office Building (658 Cedar, St. Paul). The scheduled topics (set back in January, so it’s subject to change) are revenue volatility and a review of the state education funding system & Local Government Aid.
-Katherine Blauvelt
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Posted by Katherine Blauvelt
April 23, 2008
Minnesota has a strong backbone of nonprofit research and advocacy organizations that do a tremendous amount of important work. Many have published helpful information on the budget proposals from the Governor, House and Senate. Here are a couple that I know about –
- Conservation Minnesota (formerly the League of Conservation Voters Minnesota) just published an analysis of the Governor’s proposals that effect Minnesota’s lakes, rivers and land. Also check out their series of end of session analyses, going to back to 2003.
- Affirmative Options, an anti-poverty coalition, has a short & sweet background on health and human services spending trends. This is essential reading in order to understand the current debate over issues like the Health Care Access Fund dollars (there’s a link to ”Budget reality vs rhetoric” on the right-hand side of their homepage).
This is not a comprehensive list! Please use the comment function of this blog to post other analyses that you know of. And, of course, the Minnesota Budget Project will soon release its own analysis, comparing the Governor-House-Senate proposals on E-12 education, economic development, health and human services, taxes, and other issue areas.
Happy reading!
-Katherine Blauvelt
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Posted by Katherine Blauvelt
March 14, 2008
The Health Care Access Fund (HCAF) collects money through health care provider taxes and premiums from MinnesotaCare enrollees. Created in 1992, the HCAF was intended to provide low-cost health care for working Minnesotans, so use of these funds for other purposes is controversial. However, the HCAF is a popular place to look for additional resources whenever the state faces a budget deficit.
This year is no exception. The Governor’s supplemental budget draws $250 million outright from the HCAF and transfers it to the general fund to help fill our $935 million budget hole for this biennium. That part is obvious.
However, the Governor’s budget draws an additional $48 million in this biennium (and another $101 million in the FY 2010-11 biennium) from the HCAF by doing some “refinancing.” Around the State Capitol, “refinancing” means you change which fund pays for a particular program. In this case, we are talking about transitional health insurance for adults without children (for you health care geeks - this is Transitional MinnesotaCare for those moving from GAMC to MinnesotaCare). This program has been funded from the general fund since it was implemented during the 2005 Legislative Session - and the Governor proposes paying for it from the HCAF instead.
Many will object to this change since the Governor reduces resources available in the HCAF by $149 million over the next three years (and more on into the future) without making any improvements in access to health care for working families.
So, between the $250 million transfer and the $149 million refinance - the HCAF is contributing $399 million over the next three years to help solve our budget deficit. Want to see for yourself? Then take a look at the information from the Department of Finance.
-Christina Wessel
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Posted by Christina Wessel
March 12, 2008
The Governor and his staff have been claiming that his supplemental budget won’t cause anyone to lose eligibility for public health insurance that currently has it. I guess that all depends on how you look at it.
It’s true that the Governor doesn’t make any cuts to public health insurance eligibility as it is at this moment. Instead, his budget finds savings by eliminating some improvements that were carefully negotiated in the 2007 Legislative Session.
For example:
- Last session, changes were made to assure children a smoother transition from Medical Assistance to MinnesotaCare as their parents’ income increases. The Governor would repeal this additional coverage, meaning 20,000 children would lose their health insurance.
- Policymakers also approved a significant investment in outreach grants to ensure that people who are eligible for public health care programs are actually getting enrolled. The Governor would eliminate this outreach program, meaning an estimated 10,000 people will go uninsured.
- The final agreement last session also expanded eligibility for MinnesotaCare for adults without children from 200% of the federal poverty guidelines (FPG) to 215% of FPG. The Governor repeals this expansion, leaving an estimated 990 adults without health insurance.
According to the latest U.S. Census figures, 439,000 Minnesotans lack health insurance. The Governor’s proposal certainly won’t help us chip away at that number - especially when he uses most of the revenues in the Health Care Access Fund ($250 million) to plug the deficit hole instead of providing affordable health insurance for working families.
-Christina Wessel
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Posted by Christina Wessel
March 6, 2008
Medicaid rules promulgated by the Centers for Medicare and Medicaid Services (CMS) are not the most gripping topic, and yet this week I’d put them in the category of ”breaking and important news,” thanks to a new report by a U.S. House Committee on Oversight and Government Reform (and reported by Congressional Quarterly). The report found that over the next five years, the new rules would reduce federal medicaid payments to Minnesota by an estimated $758 million (close to $50 billion nationwide). The rules would restrict how Medicaid pays states for things like outpatient services, school-based health services, graduate medical education and case management services.
To get these estimates, the Committee asked each state Medicaid Director how much it would cost them to implement the new rules. Forty-three states responded, which the House Committee says represents 95% of total Medicaid spending. They also helpfully posted the full response from the Minnesota Department of Human Services. It’s worth a read, as it gives some insight into the potential impact on Minnesota. Here’s an excerpt:
“We have significant concerns with all the rules you have highlighted in your request. A common frustration with the proposed regulatory changes is the unneccessarily disruptive effect they will have on our beneficiaries and our health care programs.”
The Bush Administration projects a much lower cost figure for the new rules - $15 billion over five years - than the estimates found by the House Committee report. $50 billion or $15 billion - either way, the new costs certainly couldn’t have come at a worse time for our state.
-Katherine Blauvelt
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Posted by Katherine Blauvelt
February 13, 2008
I was part of a packed House hearing on Monday (listen to audio from the February 11th hearing) where the Legislative Auditor introduced a new evalution of the financial management of health care programs. The majority of Minnesotans who receive health care through state programs are served through “managed care,” with the state paying a health plan a set amount for services to enrollees. The costs of administering state health care programs topped $300 million last year - with $200 million of that going to HMOs (the rest to DHS). The question is - are HMOs and the state doing everything they can to keep administrative costs low? The Legislative Auditor’s answer: Not really.
The Auditor found that there’s not enough oversight of administrative spending - the state needs more carrots and sticks. For example, the health plans are not required to report why they have exceeded administrative cost targets set by the Department of Human Services (as they have in the past three years). The departments do not even have a standard for a “reasonable” level of administrative spending. And past efforts to contain costs have had mixed success.
Overall, however, the report concludes that while Minnesota should enhance its efforts to contain medical and administrative spending, the practice of relying on managed care to serve enrollees is worth sticking with.
There’s no smoking gun here, but the Auditor’s recommendations are sure to provoke a debate.
-Katherine Blauvelt
No Comments » | Health Care | Tagged: auditor, DHS, Health Care, HMO, managed care | Permalink
Posted by Katherine Blauvelt
