State-Level Health Care Assistance

With all of the recent discussion regarding the new federal health care bill, I thought it would be interesting to write about health care assistance already provided by the government at the state level. Among the most interesting aspects are the impacts of these programs on certain hospitals, and the policy decision of whether any of the expenses of childless, low-income adults should be covered.

The Minnesota Department of Human Services provides health care coverage for low-income Minnesotans through publicly subsidized programs. Nearly 750,000 Minnesotans have coverage through state programs. The largest and most significant are Medical Assistance, MinnesotaCare, and General Assistance Medical Care (GAMC). Medical Assistance is the largest of the government funded health care programs. It is Minnesota’s version of the Medicaid program, and is jointly funded with state and federal funds. The program provides coverage for more than 500,000 people each month—more than half of which are children and families. The remaining recipients are elderly or disabled. In fiscal year 2008, the total state and federal expenditure for Medical Assistance was $6.265 billion. MinnesotaCare is a state program for Minnesota residents who do not have access to affordable health care. The program is funded by a state tax on hospitals and health care providers, federal matching funds, and enrollee premiums. MinnesotaCare provides services to over 100,000 individuals each month. In fiscal year 2008, total MinnesotaCare expenditures were $463 million. Sixty-six percent was paid by the state, 27 percent by the federal government, and 7 percent by enrollee premium payments. GAMC is a state-funded health care program for low-income adults between 21 and 64, with no dependent children.

In total, Minnesota spent $8.8 billion (35 percent of the total state budget) on health care programs in 2009. This equals roughly $1,660 per capita. In comparison, Wisconsin spent approximately $6.6 billion (27 percent of the total state budget). This equals roughly $1160 per capita. These figures show that, in general, Minnesota’s state health care programs are substantially more generous.

In May 2009, Minnesota Governor Tim Pawlenty line-item vetoed GAMC, eliminating $381 million in expenditures from the 2010-11 biennial state budget. This was one of the Governors most significant, and controversial, steps to close the biennium’s $2.7 billion deficit. The governor proceeded to unallot an additional $16 million of GAMC funding for fiscal year 2010. With his veto and unallotment, the governor intended to transition about 21,000 of the 30,000 to 38,000 GAMC participants into MinnesotaCare. The governor’s actions were strongly opposed by DFL members in the legislature.

Besides its affects on current and future GAMC recipients, this veto strongly impacted hospitals and other medical facilities that treat low-income patients. Hennepin County Medical Center in downtown Minneapolis estimated that it would lose $43 million to $109 because of the cuts. In addition, Regions Hospital in St. Paul estimated loses of $46 million, 10 percent of its gross revenue. These hospitals are required by law to provide emergency services to low-income individuals. If GAMC is cut with no comparable replacement, the hospitals will lose all compensation they receive for treating those individuals formerly covered by the program.

DFL lawmakers and Governor Pawlenty reached a compromise on GAMC funding. GAMC would be temporarily extended through May 2010 using $28 million from Minnesota’s health care access fund. Beginning June 1, 2010, a new hospital-based, coordinated care delivery system will be created in partnership with county agencies.

While Medicaid and health care assistance for families is typical in most states, assistance for childless adults (like GAMC) is not. Twenty-nine states do not provide any health care assistance to adults without children. Compared to the states that do, the GAMC program in Minnesota is relatively generous. One reason that these programs are less common is because they lack federal funding or federal guidelines. When states are short on funding, these programs are more administratively and politically easy to cut. The result is that low-income childless adults will be particularly vulnerable during tough economic times.