State Capitol deal reached to continue health care for poor

  • Article by: WARREN WOLFE and BAIRD HELGESON , Star Tribune s taff w riters
  • Updated: March 5, 2010 - 9:24 PM

DFL legislators and Gov. Pawlenty came to an agreement on General Assistance Medical Care. It won't end April 1, but coverage will be cut back.

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Gov. Tim Pawlenty and legislators on Friday announced their deal at the State Capitol. From left: Rep. Matt Dean, Sen. Linda Berglin, House Speaker Margaret Anderson Kelliher (behind); and Reps. Erin Murphy and Tom Huntley.

Photo: Jim Gehrz, Star Tribune

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Gov. Tim Pawlenty and DFL legislators, who have clashed for eight months over health care for indigent Minnesotans, reached agreement Friday on a plan to continue broad state-funded coverage for the state's poorest residents.

General Assistance Medical Care (GAMC), which was to end April 1 after two vetoes by Pawlenty, will continue unchanged through May, then shift into a scaled-back program centered in Minnesota hospitals.

The agreement, announced at the Capitol by Pawlenty and a bipartisan group of lawmakers, followed a month of intense lobbying by hospital executives, poverty advocates and Minnesota's Roman Catholic bishops. It resolved, with surprising speed, an emotional argument over the state's obligation to maintain a social safety net in the face of huge budget deficits.

Several Republican lawmakers, who voted last month to extend the program but then upheld Pawlenty's veto of a DFL bill, spent hours in closed-door negotiations with DFL leaders trying to craft a compromise.

"The work today is a demonstration that we can actually achieve our goals," said Rep. Erin Murphy, DFL-St. Paul, a lead negotiator for House Democrats.

Pawlenty said the agreement "keeps coverage for those who need coverage [and] represents significant cost savings in the current biennium and in the next biennium. It also represents a very significant step forward in health care reform.''

Under the program, hospitals will form Coordinating Care Organizations that, in cooperation with counties, will manage and provide medical care for about 32,000 single adults. The measure must be approved by the Legislature and signed by Pawlenty.

However, hospitals will be paid a lump sum to cover all GAMC patients, so may have incentives to control costs. All care they provide beyond the single payment must be covered by the hospitals.

"The providers are going to see less reimbursement under this program,'' said Sen. Linda Berglin, DFL-Minneapolis, an architect of several plans to save GAMC. "But we believe it will be better, that losses will be less than they would have been if we had seen the GAMC population lose their coverage.''

Pawlenty has been harshly critical of GAMC. He argued that the program, which cost $288 million last year, was too expensive for a state battling budget problems, and was a benefit few other states offered.

The new program will cost $164 million in the current budget biennium, with money coming from the general fund and the Health Care Access Fund, and then $214 million in the following biennium, all from the general fund.

Under the agreement, hospitals will receive $71 million from the state's general fund for the year starting July 1 and $131 million the following year.

About 12 to 15 hospitals likely can start serving patients in the new program on June 1. For others not yet ready, $20 million will be set aside to pay for uncompensated care for six months.

The breakthrough was announced just hours after a Ramsey County judge denied a request by Legal Aid to stop the April 1 shutdown of GAMC. Judge Kathleen Gearin said granting a court order would have interfered with negotiations between Pawlenty and legislators.

Pawlenty vetoed funding for GAMC last year, then vetoed a bill two weeks ago that would have preserved the program.

Instead, he had ordered that about 32,000 Minnesotans on GAMC be transferred to MinnsotaCare, a health program developed to help low-income working people.

Advocates argued that the shift would hurt those on GAMC, many of them homeless or mentally ill, who could not afford the copays and reduced benefit offered by MinnesotaCare.

DFL legislators have been working on various scaled-back versions of GAMC ever since the governor vetoed funding for the program last year.

"We are going to be interested to see how this works,'' Berglin said. "We hope all the hospitals will participate.''

Baird Helgeson • 651-222-1288 Warren Wolfe • 612-673-7253

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