In Minnesota, health care, farmers may feel budget squeeze

  • Article by: KEVIN DIAZ and JIM SPENCER , Star Tribune staff writers
  • Updated: February 13, 2012 - 10:14 PM

Budget proposals would reach all walks of life.

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Sen. Jeff Sessions (R-Ala.) and Sen. John Barrasso (R-Wyo.) look at a copy of the 2013 budget.

Photo: Luke Sharrett, New York Times

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WASHINGTON - President Obama's 2013 budget aims to shrink the deficit by $4 trillion during the next 10 years in ways that will be felt by Minnesotans in all walks of life, from farmers and doctors to low-income residents who get help with heating bills.

Even as Republicans criticized Monday's budget for raising taxes and spending, the new White House blueprint would cut farm payments by more than $30 billion in the next decade, shrinking the federal largesse that supports one-fifth of Minnesota's economy.

Drug companies and hospitals that treat Medicare patients also are looking at some $267 billion in total cuts during the next decade, part of a broader initiative to squeeze efficiencies out of the national health care system for seniors that was pioneered in Minnesota.

Amid other domestic initiatives, the government's low-income energy assistance program is slated for $452 million in cuts in the next year alone, a hit that is expected to further reduce grants that were reduced last year in Minnesota by an average of $100 per family.

"They're easy targets because they [the poor] have no influence," said Catherine Fair, director of the energy assistance program at the Community Action Partnership of Ramsey and Washington Counties.

But even the well-heeled and influential farm lobby is expected to share in the belt-tightening -- a partial recognition of strong commodity prices and a relatively healthy farm economy in recent years.

"Farm payments made to people getting good prices for crops is a hard sell," said Doug Peterson, president of the Minnesota Farmers Union. "We want support and a safety net for bad times."

The president's proposed savings in health care raised a chorus of concerns from hospitals that treat the elderly and those that train children's doctors.

Roughly $155 billion comes from making pharmaceutical companies give prescription discounts to Medicare recipients the way they now give discounts to people on Medicaid, the government's health insurance for the poor.

The other $112 billion primarily targets hospitals, not doctors. The savings aim to promote efficiency and to get rid of payments that the government says exceed the actual cost of patient care.

Hospitals may suffer

Hospitals in Minnesota stand to take a big hit if Congress agrees to the budget proposal.

"In Minnesota, we're already paid below our costs for Medicare and Medicaid patients," said Lawrence Massa, president and CEO of the Minnesota Hospital Association. "These across-the-board cuts could be devastating."

At Children's Hospitals and Clinics of Minnesota, the mood was equally sour because of a proposal to cut two-thirds of a program used to train pediatricians and pediatric specialists, such as heart doctors and surgeons. Obama proposes to trim annual funding from $265 million to $88 million nationally.

"We currently get $2.9 million a year," said Children's President and CEO Dr. Alan Goldbloom. "It looks like we'll be down to $800,000. We will have to cut the number of pediatricians we train.

"The long-term issue here is for the nation's children and who is going to treat them."

But as with any presidential budget, the document Obama released Monday is widely viewed as a negotiating position in an election-year battle over taxes, spending and the national debt.

"It's just a first step," said Kevin Paap, president of the Minnesota Farm Bureau Federation. "It gives us some numbers for everybody to talk about."

For example, the budget includes a six-year, $476 billion transportation proposal with money for rail and public transit programs, laying down a marker for local activists in a partisan fight in the U.S. House over how to fund mass transit. Among the projects the administration has considered is a high-speed rail line from Chicago to the Twin Cities.

Airport aid could end

In another transportation initiative that could be broadly felt, the White House is proposing to end grants-in-aid for large and medium hub airports such as Minneapolis-St. Paul International. While saving the government nearly $1 billion in a decade, the plan would allow airports to increase passenger facility charges to make improvements on the ground.

"We don't feel like we're getting our money's worth as it is," said Brandon Macsata of the Association for Airline Passenger Rights, which opposes the move. "To look for the customer once again is not going to be productive."

White House officials portrayed the budget as a balance between spending cuts and tax increases on the wealthy, mainly by ending the Bush-era tax cuts for those who make more than $250,000.

Minnesota Republicans in Congress pounced on the proposal, calling it a $1.9 trillion tax increase.

"Minnesotans continue to tell me they are fed up with Washington spending money it doesn't have on programs that don't work," said U.S. Rep. John Kline.

Rep. Erik Paulsen, a member of the House Ways and Means Committee that will review the budget on Wednesday, called it a plan full of "gimmicks and broken promises."

Minnesota Democrats remained largely silent on the proposal, although Rep. Keith Ellison joined in a letter recently with more than 100 other House members asking Obama to continue funding for recipients of low-income heating assistance, including 128,000 in Minnesota.

Rep. Collin Peterson, the ranking Democrat on the House Agriculture Committee, also cast a jaundiced eye on the proposed farm cuts, which were expected.

"Everybody wants to talk about creating jobs and improving the economy," he said. "Well, the only part of the economy that's working is agriculture, and the amount we spend is a pittance. Nobody knows what's going to happen if we do this."

Kevin Diaz is a correspondent in the Star Tribune Washington Bureau.

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