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A giant battle over Medicaid is brewing in Minnesota
As legislators look for ways to ease budget cuts the governor will propose today, many say the budget cannot be balanced without cutting Medical Assistance.
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As Gov. Tim Pawlenty tackles the state's epic budget deficit this year, he faces the huge dilemma known as Medicaid.
The federal-state health insurance program for the poor, elderly and disabled is growing at a frightening pace in every state. But cutting it could end up costing the state more in lost federal revenue. Moreover, Pawlenty is up against DFLers in the Legislature who want to expand health care coverage for the poor.
Tuesday in Minnesota, the state government's $3 billion half of the Medicaid bill represents about one-fifth of its annual budget. That's expected to rise by 12 percent in each of the next two years, a total of about $8.4 billion.
Pawlenty, who will deliver his budget message today, can hardly make much headway against a projected $4.8 billion deficit without cutting public health programs such as Medicaid, known as Medical Assistance in Minnesota.
Yet paring Medical Assistance in the midst of a deep recession would sever a central strand of the government's safety net exactly when vulnerable residents need it most.
Moreover, the state loses a dollar for every dollar it cuts from Medical Assistance because the federal government matches the state outlay. State officials are hoping for help from Congress. It is now debating an economic stimulus bill that could give Minnesota about $3 billion, one-third of which might go to Medical Assistance. Even with federal help, "this is going to be the worst thing to hit us since the 1930s in terms of the economy," said Rep. Tom Huntley, DFL-Duluth.
He leads the House Health Care and Human Services Finance Division, which watches over one-third of the state budget.
He said that the state deficit actually might be $7 billion or $8 billion, which would require a 20 percent budget cut, "and you can't do that without causing a lot of pain to people and institutions."
Battle about to begin
Pawlenty's proposal today will be the opening salvo in what many predict will be a protracted battle between the GOP governor and the DFL-controlled Legislature. Like a battleship moving into position, Sen. Linda Berglin -- Huntley's counterpart in the Senate -- proposed legislation Monday to increase access to MinnesotaCare, the state's health plan for working low-income people and for children whose parents can't afford insurance.
The Minneapolis DFLer said she will try to draw a line to protect low-income people from health care cuts.
"We'll have to look at budget cuts, but that's not our only tool, despite what the governor seems to think," she said. "We do not have to cut Medical Assistance."
Doing so would be financially shortsighted, she said. If there are cuts in a similar program, General Assistance Medical Care for very low-income people, "40 percent of them have mental illnesses and they'll end up in emergency rooms or in jails."
She is working on bills to improve health care efficiency, including cheaper, non-emergency ambulance service and birthing clinics that she said would offer care at one-third of traditional costs.
Preparing for bad news
Across Minnesota, local governments and health care agencies are watching the budget drama with dread.
"There will be damage. We just don't know yet how bad it will be," said Patricia Coldwell, a health and human services policy analyst at the Association of Minnesota Counties. "The demand for help already is rising with every layoff."
Huntley said that all state programs should face budget cuts.
"If others don't share the pain, we will permanently damage hospitals, clinics and nursing homes," he said.
"We can't get by without cuts. The best we can do is minimize the damage."
Warren Wolfe • 612-673-7253
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Current state office holders
Governor: Tim Pawlenty
One of only a few prominent Republicans to win a competitive re-election contest in the Democratic sweep of 2006, Tim Pawlenty is widely seen as politically shrewd and naturally likable.
- Lt. Governor: Carol Molnau
- Secretary of State: Mark Ritchie
- Attorney General: Lori Swanson
- State Auditor: Rebecca Otto
Minnesota's political giants: Learn more about the men and women who have shaped Minnesota's political history.
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