House Republicans released details Thursday of their spending plan for health and human services programs, which as expected would terminate MinnesotaCare, a public health insurance program that provides coverage for some 90,000 people.
The GOP majority has targeted health and assistance programs for some of the steepest spending cuts over the next two years, as they seek to free up resources for their proposed $2 billion in tax cuts.
But their plans face a united front in Gov. Mark Dayton and the Senate's DFL majority, where support for MinnesotaCare is deep, and opposition is strong to public assistance cuts in the face of a nearly $2 billion budget surplus.
The GOP plan does make a priority of several spending areas, including $138 million in increased state reimbursements for nursing homes. It also changes the way those dollars are distributed, which the plan's sponsors said would increase the flow of such dollars to nursing homes in outstate Minnesota.
The legislation provides a one-time five-percent cost-of-living adjustment for home and community-based care worker. It includes more funding aimed at increasing the number of state psychiatric beds.
"This bill will continue providing critical services to those who need it most, and works to bend the cost curve to ensure health care costs don't grow exponentially faster than the budgets of the families who fund it," said Rep. Tara Mack, R-Apple Valley, chairwoman of the Health and Human Services Reform Committee.
Democrats, including Dayton, blasted the proposal as outrageous in a time of budget surplus. "It's not serious budgeting, it's the wrong priorities for Minnesota's future, and it shows the Republicans are not ready to govern," said House Minority Leader Paul Thissen, DFL-Minneapolis.
Republicans proposed to replace MinnesotaCare with an approach they are calling "Minnesota Care II," which would require MinnesotaCare enrollees to purchase insurance on MNsure, the state's health insurance exchange. Republicans have said they would provide some sort of subsidy for that, but have not yet detailed that plan.
The full GOP health and human services budget proposal can be found here.
A bipartisan group of state lawmakers want to cut state taxes on premium cigars, as small retailers that sell the high-end products complain that the 2013 hike in tobacco taxes has cut deeply into their profits.
"This would not be rolling back taxes on all smoking by any stretch," said Rich Lewis, who has owned and operated Lewis Pipe & Tobacco in downtown Minneapolis for 40 years. "It would give us a chance to get our business going again."
Anti-smoking advocates have started mobilizing against the measure, as they draw links between evidence that smoking rates have fallen in Minnesota since the 2013 tobacco tax increase, which amounted to about $1.60 additional on a pack of cigarettes.
"Minnesota has a history of being hard on tobacco," said Michelle Morris, manager of tobacco prevention programs at the state chapter of the American Lung Association. "We should be celebrating these policies, not undoing them."
Still, the cigar tax cut proposal has high-powered support at the Capitol. Senate Majority Leader Tom Bakk, DFL-Cook, is a co-sponsor of the Senate bill. The Senate Taxes Committee reviewed the proposal Wednesday, and flagged it for possible inclusion in a broader omnibus tax bill.
Molly Moilanen, chief lobbyist for the anti-smoking coalition ClearWay Minnesota, said she thinks the cigar tax cut is likely to be included in the House's omnibus tax bill, making it a possible candidate for inclusion in the final tax bill that's sent to Gov. Mark Dayton. The House version of the bill is sponsored by nearly a dozen members of the Republican majority.
"They're going to decide if they want a tax break for tobacco companies and merchants at a time when they're proposing cuts to health care programs," Moilanen said of House Republicans. Preliminary estimates say it would cost the state about $1 million a year in lost tax proceeds if the cigar tax is reduced.
Sen. Dave Senjem, the chief Senate sponsor, said it's not a debate about the health implications of smoking. "That's a foregone conclusion," Senjem said. But as a matter of tax policy, Senjem said high-end cigars are taxed unfairly.
Every premium cigar, which is defined in state law as one that has been hand-rolled rather than machine-cut, is subject to a state tax that's 95 percent of its wholesale cost. That's capped at $3.50 per cigar, meaning every cigar that costs more than about $10 costs an additional $3.50 in taxes.
"So if you're trying to sell a box of 20 ten-dollar cigars, your customer is going to be paying $200 plus an additional $70 in taxes," Lewis said. Under the House and Senate bills, the cap would drop from $3.50 per cigar to 50 cents.
Increasingly, he said, customers have other options: they can go to cigar shops in Hudson, Wis., which already caps its per-cigar tax at 50 cents; or they can buy boxes of cigars online, where similarly low tax rates can be found.
"As it is now people just don't buy boxes of cigars anymore," Lewis said. He estimated his profits fell by about a quarter after the 2013 tobacco tax increase.
U.S. Sen. Al Franken said opponents of the Affordable Care Act (ACA) raised a "ridiculous" argument at the Supreme Court Wednesday when they told the justices that the nation's health care reform law does not allow premium-lowering tax credits in 34 states where the federal government runs insurance exchanges.
"I was actually there when the law was written and passed," Franken told a press conference after the oral arguments. "I know what our intention was."
It was not, the Minnesota Democrat said, to exclude millions of Americans from health insurance coverage by denying them subsidies needed to afford policies. Franken accused ACA opponents of seizing on a few words in a 2,200-page bill to "reverse engineer" an argument that would kill the entire law.
The health law does say that premium subsidies are available to state-run exchanges. But it also says that the federal government will operate exchanges in states that refuse to form them. Subsidies, mandatory participation and coverage of pre-existing conditions are the three-legs of the legislative stool that support health reform. Getting rid of any of them will undermine the rest, most experts agree.
Joining Franken at the press conference were Democratic Sen. Chris Murphy of Connecticut and premium tax credit beneficiaries Bonita Johnson of Detroit and Terry Donald of St. Petersburg, Fla. Johnson and Donald receive premium subsidies from federally run exchanges. Johnson said her health insurance would cost four times as much without subsidies and no longer be affordable. Donald, whose wife has cancer, said his insurance would be six times as much and he would have to drop coverage.
"This was not anyone's thinking" when the health care law passed in 2010, Franken said.
Just a few months after voting to unionize, home health care workers announced Thursday they have agreed on a contract that would raise their pay floor to $11 an hour, provide funding for training and offer pay protections, SEIU Healthcare Minnesota said.
The contract is now heading for a ratification vote by members and still needs approval by the Legislature, which in 2013 pushed through legislation allowing the union certification vote. The contract would affect 27,000 newly-unionized members.
Union leaders said the contract would also provide for five days of paid time off for full-time employees.
"No one should have to choose between caring for their sick children and paying the bills," said Summer Spika, a home health care worker who was part of the bargaining negotiations, according to a statement. "This part of the contract is an important step towards fixing one of the many injustices facing the workers like me who care for seniors and people with disabilities across our state.”
The path to a union vote last summer and now a newly-formed contract was rocky. Republicans and other groups vociferously opposed the unionization effort and it overcame legal challenges.
Photo: Home health care workers cheered when announcing last August a decision to unionize. (Brian Peterson/Star Tribune)
State Rep. Greg Davids has asked Attorney General Lori Swanson to review details of a 2011 contract between MNsure and Dr. Jonathan Gruber, a consultant whose work related to the federal Affordable Care Act has become the subject of controversy.
"In light of troubling remarks by Dr. Gruber and MNsure, I believe that a review of Dr. Gruber's work, and payments made to him, is necessary," Davids, R-Preston, wrote Monday in a letter to Swanson. Davids is a veteran lawmaker and in January is set to resume chairmanship of the powerful House Taxes Committee.
Gruber, a Massachusetts Institute of Technology health economist, worked with Minnesota officials in 2011 and 2012 in assessing options for the venture, then in planning stages, that later became MNsure. He earned $340,000 from the contract.
Gruber also advised President Obama during development of the Affordable Care Act. He came under new fire earlier this month when comments he made at a 2013 conference resurfaced, in which he suggested that "the stupidity of the American voter" made it possible for Congress to approve the law. He has since apologized for what he called an off-the-cuff remark.
Davids suggested Swanson should look further into why Gruber's report to the state of Minnesota was delivered later than initially promised. Some of Gruber's enrollment projections for MNsure have since fallen short, and Davids said he also wants to know whether MNsure still considers Gruber's enrollment predictions for future years valid.
A spokesman for Swanson had no immediate comment on David's letter.
(This post has been updated.)
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