The Pawlenty administration confirmed Monday that moving thousands of people from a health program for the indigent to MinnesotaCare next year would result in funding problems for MinnesotaCare as early as 2011.

An influx of enrollees would cause the state's Health Care Access Fund, which funds MinnesotaCare, to be in deficit by July 2011, said Cal Ludeman, commissioner of the Minnesota Department of Human Services.

Ludeman testified at a House committee hearing Monday, along with hospital executives and safety-net groups working to find a solution to the proposed termination on March 1 of General Assistance Medical Care (GAMC).

GAMC covers 36,000 childless Minnesota adults who earn less than $7,800 a year. Many are mentally ill or chemically dependent. In his effort to balance the state budget, Gov. Tim Pawlenty ended funding for the program with a line-item veto last spring, and later proposed moving most enrollees into MinnesotaCare, a state-subsidized program for the working class.

But safety-net hospitals have warned that many patients would fall through the cracks and end up in the emergency room, leaving unpaid bills. DFLers have warned the shift would only deepen the funding problems facing MinnesotaCare.

DFLers introduced a plan last week to restore $292 million of GAMC's $396 million budget using federal and county money, a surcharge on hospitals, and savings from reduced reimbursements to clinics and hospitals. They hope to extend GAMC until beneficiaries become eligible for expanded coverage proposed in health care legislation now before Congress.

Another proposal, by Rep. Matt Dean, R-Dellwood, would modify MinnesotaCare coverage to include some sort of county-based "medical home'' model.

On Monday, at the first hearing on the proposals, hospitals and other groups discussed how those plans would work in practical terms. Many wore red and white stickers saying "Save GAMC."

David Godfrey, public policy program manager at Hennepin County Medical Center, said the state's biggest safety-net hospital is willing to work on health management strategies for GAMC enrollees to keep them out of the hospital, a model alternately known as the medical home or an accountable care organization.

Monica Nilsson, president of the Minnesota Coalition for the Homeless, urged lawmakers to incorporate street outreach in any new program, because many GAMC recipients are homeless and hard to reach.

Advocates hope to have a bill approved soon after the Legislature convenes in early February.

Chen May Yee • 612-673-7434