Tuesday, May 5, 2009

The Future of GAMC: Cutting Costs and the Costs of Cutting Costs

General Assistance Medical Care is a Minnesota Department of Human Services program designed to give some health care access to low-income adults that do not qualify for federal programs. The two main services currently provided under GAMC  are hospitalization coverage which only covers inpatient hospital coverage, and comprehensive coverage which also includes doctor visits, eye exams, prescriptions, and additional health services. 

The future of GAMC is currently in question, as the Governor has proposed a major restructuring  (p. 138b) of the program that would eliminate the hospital only coverage provided by GAMC, focus spending on outpatient benefits and save $171 million over the 2010-11 biennium. The cuts to GAMC are part of a broader plan to make widespread cuts to health care programs, as the Governor argues that these costs will be among the fastest-growing in Minnesota over the next several years. The proposed cuts to health care programs by Governor Pawlenty total nearly $1.7 Billion. 

The State House has countered this proposal with a bill that would reduce cuts to health care programs and leave GAMC as it currently is. This move comes after much criticism of the Governor's plan on grounds that it will have severe consequences for those in greatest need of health care, as well as that removing GAMC hospitalization funding which will place further financial burden on Minnesota's hospitals   that are already threatened by bankruptcy

The State Senate recently proposed $625 Million in State health care cuts, $200 Million more than the House but still well short of the $1.7 Billion in cuts proposed by Gov. Pawlenty.

Minnesota is certainly not the only state considering drastic cuts to the funding of health care during the current recession. These cuts are re-opening the age old debate of tax hikes vs service cuts in times of recession. One popular argument advocated by Nobel-Prize winning economist Joseph Stiglitz and current White House OMB Director Peter Orszag states that tax hikes on high-income earners are less harmful to the overall economy than cuts to human services.  Unfortunately, this budget situation appears dire enough that the politically and socially unpopular outcome of a combination of tax hikes and health care cuts will be the likely outcome across the country and in our state.

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