Proposed Cuts to Minnesota’s Health Care Programs: At What Cost?

According to a recent survey conducted by the University of Minnesota, the number of Americans living without health insurance increased by 9.3 percent between 1994 and 2007. In Minnesota, the number of uninsured grew by 8.4 percent during the same time period. Even more troublesome, the number of uninsured children in Minnesota grew by 6.2 percent -- whereas the number of uninsured children nationwide decreased during the same time period.

Both the Minneapolis Foundation and Minnesota 2020 attributed recent cuts to Minnesota Care program and declines in employer-sponsored insurance to the rise in uninsured children and households in Minnesota.

Now, Minnesota and other states will most likely face additional increases in the number people living without health insurance. According to the University of Minnesota’s State Health Access Data Assistance Center, dramatic increases in Minnesota’s unemployment in the late 2008 and early 2009 coupled with additional increases in health care costs will contribute to even higher numbers of uninsured individuals and families.

Facing a $4.6 billion budget deficit, Minnesota lawmakers are faced with tough decisions to reach a balanced budget. As a result, reductions in funding to many state programs, including public health care programs, are on the table. While federal stimulus funds for Medicaid programs require states to maintain current eligibility thresholds for state-run public health programs, Governor Pawlenty’s recent budget revisions propose some dramatic cuts including the following:

• Eliminate access to public health insurance programs to adults without children -- an estimated 60,000 people would lose access to health care;
• Restructure General Assistance Medical Care to reduce available services to adults;
• including eliminating coverage for hospital stays and outpatient services;
• Delaying changes to eligibility requirements for state health plans to 2011 – changes that would result “in at least 84,000 people from government-subsidized health care.

Governor Pawlenty’s proposal reflects an attempt to balance the budget during a particularly difficult time. But at what cost?

First, a 2005 study by the Minnesota Department of Health reported that for every dollar spent on increasing access to health care, there is a return on investment to the state of between $3 to $6. This return is the direct result of decreased use of hospital emergency care and admissions as well as increased earnings of enrollees due to primary care access.

Second, hospitals expect reductions in access to public health care programs to dramatically increase the demand for emergency room charity care: “The health system, which operates the University of Minnesota Medical Center and six other hospitals, predicts a loss of $100 million in revenue over the next two years under Pawlenty's budget cuts.”

The result would be a health care system under stress with limited ability to provide care and services to the entire community of patients.

While the Governor’s revised proposal helps address the budget deficit in the short-term, reductions in access to health care could contribute to heightened costs in the long-term.