Federal Aid and MinnesotaCare

In FY2012, the U.S. Department of Health and Human Services accounted for 55.3% (or $348.2 billion) of federal aid to state and local governments.  While the percentage of federal aid distributed to states has remained stable over the last ten years, the actual dollar amount has almost doubled. The majority of this money goes to fund federal social safety net programs such as Medicaid programs administered by individual state governments. Minnesota receives a larger portion of this money than many other states, due to the increased amount of money the state government has put into its own state health programs. Last year, roughly 862,000 people benefited from federal aid in Minnesota through health programs.

In 1992, a bi-partisan reform was made to Minnesota’s health care system. MinnesotaCare was created as a publicly subsidized program to bridge the gap between those who do not qualify for Medicaid and those who do not receive employer-provided insurance. The program offers recipients different options of health insurances plans (from companies such as BlueCross, Medica, Health Partners, etc.) at a reduced premium, which are based on a sliding-fee scale based on gross income and family size. The average monthly enrollment in 2012 for the program was 129,000.

Source: Minnesota Management and Budget

                                         

The MinnesotaCare program receives federal matching money. While Minnesota’s Medicaid program receives 1:1 matching funds, the federal share for MinnesotaCare last year was about 44% of its $549 million in expenditures. About 8% of the cost is paid through monthly premiums from recipients, and the remaining portion is paid by a tax on hospitals and health providers in the state of Minnesota. The average monthly premium for recipients in 2012 was $30 and the average medical payment per enrollee was $356 per month. While some doctors have opposed the state tax, the general consensus is that the tax is much cheaper than having to care for patients that can't pay their bills.

Source: Minnesota Management and Budget

                                      

MinnesotaCare created a model of health care for other states in the country. I looked around to our neighboring states to find out how much they receive in federal dollars and if there are similar programs to MinnesotaCare that receive federal aid. From “Federal Aid to States FY2010”, the amounts paid in grants and payments by HHS to states and local governments:

Wisconsin: $6,121,358
Minnesota: $6,022,587
Iowa: $3,121,472
South Dakota: $844,686
North Dakota: $723,468

While these 5 states have different populations with different needs, the amount given to North and South Dakota is shockingly low, they actually have higher per capita spending. 

Wisconsin and Iowa also have extensions of Medicaid that receive federal aid, BadgerCare and IowaCare, respectively. The scope of the programs don’t seem to be as large as MinnesotaCare; IowaCare offers limited health services to recipients at select clinics around the state and BadgerCare is a reimbursement program, not an insurer.

The future of MinnesotaCare will look different come January 1 of next year. While the program will still exist with federal aid, it may look different in the Health Insurance Exchange. DHS Commissioner Lucinda Jesson recently stressed the importance of continuing the program, even though there is deep political divide over what the program will look like in the Exchange.