Hospital leaders in Minnesota were left scratching their heads last week when Gov. Tim Pawlenty announced he was unveiling a business-friendly 2010-11 budget proposal that would encourage businesses to create jobs while trimming subsidized healthcare and hospital payments.
Cold shoulder in Minn.
Providers upset by cuts to subsidized insurance
“We were really perplexed by that,” said Lawrence Massa, president and CEO of the Minnesota Hospital Association. “We employ well over 100,000 people in our hospitals. Hospitals have a huge economic impact in every community they’re located in. This (budget) is going to be very troublesome and problematic for that business community.”
Pawlenty, who is widely expected to compete for the Republican presidential nomination in 2012, announced in his proposed state budget that he would close a $1.2 billion budget gap in part by cutting $347 million from the Minnesota human services and health departments. Among the proposed cuts are changes to a subsidized insurance plan called MinnesotaCare that would remove about 21,000 low-income residents from eligibility and shift $48 million in healthcare provider taxes to the state general fund in 2011.
Hospitals have argued that cutting insurance spending without using other reforms would only drive more people to use expensive emergency room care, which they are mandated to provide regardless of the patient’s ability to pay.
Pawlenty spokesman Brian McClung said “recalibrating” subsidized insurance funding is a necessary part of the overall reform effort, and that unlike hospital groups the governor has to judge all state budget priorities.
“Expected and promised spending is far outpacing the state’s ability to pay for it. And subsidized healthcare programs are the fastest-growing parts of the state budget. We have to control these costs,” McClung said. “If you allow these programs to grow at their projected rates, subsidized healthcare will eventually squeeze out your ability to fund other priorities, like K-12 education, public safety or transportation.”
The state’s Democratic-controlled Legislature is in the process of evaluating Pawlenty’s budget proposal. State Sen. Linda Berglin, who chairs the human service finance committee for the Senate, said some parts of the governor’s budget proposal were more difficult to accept than others.
But she agreed with the concerns about the proposed cuts leading to further job losses at hospitals. “Any time you cut investments you make in the area of serving low-income people, it means reducing jobs,” Berglin said. Economic conditions already caused hospitals in Minnesota to cut more than 2,600 jobs in 2008 and 2009, the hospital association said.
Even before the latest budget proposal, the governor and the state’s hospitals were locked in a bitter public feud over Pawlenty’s controversial effort to use an obscure provision in the state constitution that allows the state’s chief executive to “unallot” money from spending programs in the event of an emergency.
Last year Pawlenty amended the legislature’s final budget and then approved it, removing all funding for the $381 million General Assistance Medical Care program that provides subsidized insurance to childless adults earning less than $8,000. At the time, Pawlenty said most of the 35,000 general assistance enrollees could transfer into MinnesotaCare, although that program would now be reduced under his 2010-11 budget. MinnesotaCare currently has 129,000 enrollees.
McClung said the governor viewed the changes as a merger, since Minnesota was virtually alone among states in having two separate programs. And he noted that legislators last year rejected Pawlenty’s initial proposals to trim, rather than eliminate, the general assistance program.
However, the fate of the general assistance program could rest with the state Supreme Court, which is scheduled to hear oral arguments next month from residents who have sued the governor, saying the way Pawlenty used his unallotment power was unconstitutional because it violated the state’s separation of powers. A lower court ruling went against the governor, who was granted an expedited review by the state’s top court.
The Democratic-controlled House of Representatives late last week overwhelmingly approved a measure to restore the general assistance program, although Pawlenty said it still would not fit within a balanced budget.
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