In February of 2010 the Governor of Minnesota, Tim Pawlenty, submitted a supplementary budget proposal to the state legislature that, amongst other things, cut higher education spending by $47 million dollars. Faced with a $994 million budget deficitfor the current budget biennium , and massive $5.8 billion dollar projected deficit for the 2012-13 biennium, the Governor used his budgetary authority to take steps to solve the budget crisis. These budget cuts will result in tuition increases, layoffs of college and university employees, and even the discontinuation of some programs by a few institutions across the state. Cuts to higher education can be considered short-sighted when considering the already rising cost of tuition, which puts at risk both the competitiveness of Minnesota’s workforce in the coming years, as well as the state’s reputation as a leader in education.
Standing by his pledge to not raise taxes Pawlenty instead made cuts to higher education which were was shared between the University of Minnesota system that incurred a $36 million dollar cut, and the Minnesota State Colleges and Universities system (MnSCU) which had $10.5 million slashed from the budget. A year earlier Pawlenty cut $63 million dollars for higher ed., and also used the now unconstitutional power of unallotment to cut it further. Just a month after Pawlenty’s announcement, Minnesota State Mankato announced that 28 programs and 13 percent of the full-time faculty would be cut. St. Cloud State University also reacted by cutting 23 programs because “the state has limited the school's ability to raise tuition while at the same time cut money for higher education.” The University of Minnesota has been forced to respond with yet another tuition increase. These funding cuts and tuition increases come at a time that has already seen a historic rise in the cost of college tuition. The increase in tuition costs rose by 439 percent from 1982 to 2007 for a four year public institution. Meanwhile, state grants are close to running dry and unless more money is found “students who received an average of $1,700 last year will see a roughly $300 cut when they return to class this fall”.
All of these factors converge toward an uncomfortable, but seemingly unavoidable reality – college is becoming too expensive for everyone to have the opportunity to go. This hurts Minnesota both from an equity standpoint and also has long-term economic consequences as well. Minnesota has always valued educational opportunity for everyone that wants to go, and this has pushed Minnesota to become of the most economically developed states in the country. In a global economy, the demand for highly skilled, highly educated workers is higher than ever. Competing in the global market place requires a skill set for workers that is attractive for investment, and also one that increases the entrepreneurial capacity of the populace.
One possible solution would be to introduce a flexible tuition system, which alters tuition cost depending on the field of study. The proposed reform would seek to expand enrollment in programs – like math, engineering, finance and the sciences - that produced higher economic outputs by reducing tuition costs for these programs. The effects would be two-fold; first it would make college affordable for groups of socioeconomic classes have been increasingly excluded, and would also provide a pathway to success in a high demand field. Second, reform would expand future economic opportunity by training a new generation of highly skilled workers. Investing in human capital with a higher potential for long-term economic payout would improve MN budget outlook and increase entrepreneurial activity in the state.
Showing posts with label Pawlenty. Show all posts
Showing posts with label Pawlenty. Show all posts
Tuesday, May 11, 2010
Friday, May 7, 2010
Health Care Reform: Unfunded Mandate?
One of the frequently stated criticisms of the federal health care legislation passed in March is that it is an unfunded mandate. The assumption is that states, already struggling to meet funding obligations under current Medicaid eligibility criteria, will unable to afford the Medicaid expansions called for under the new bill. There are two significant problems with this assumption. Number one, the vast majority of the legislation's tab is picked up by the federal government (making the unfunded part of unfunded mandate criticism difficult to fathom). Number two, state health care spending was projected to increase dramatically with or without federal health care reform. Although it is very possible that under the new health care system states will be unable to meet health care spending obligations, for many states the federal health care reform has made that scenario less likely, not more.
The most important element of the federal health care reform legislation is that it expands Medicaid eligibility to include all legal residents making under 133% of federal poverty guideline. This includes childless adults who are currently ineligible for Medicaid. The Congressional Budget Office (CBO) estimates that 16 million people will become eligible for Medicaid over the next decade under the legislation (there are currently 58.7 million -- 20% of total population -- enrolled in Medicare.) (CBO, Final Cost Estimate) The 16 million person expansion is projected to cost $454 billion between 2010 - 2019, with the federal government bearing $434 billion, or 96% of the burden. Under this projection, the states pick up the remaining $20 billion, or 4%. (CBO, Final Cost Estimate) To put this in perspective, with or without reform, the states were projected to spend $1.6 trillion to cover Medicaid eligible individuals during that 10 year time period. (Center for Government and Politics) The additional $20 billion represents a 1.25% increase in state Medicaid related expenses.
Admittedly, the state/federal breakdown of financial burden is not the source of much of the criticism of the Medicaid expansion. Rather, the criticism is motivated primarily by a sense of misplaced federal priories -- the idea that more should have been done to cut government costs rather than expand coverage. Although federal health care reform reduces the deficit by raising more revenue than it spends, the legislation authorizes an additional $794 billion in total federal health care expenditures 2010-2019. (CBO, Final Cost Estimate) Since Medicaid spending is normally distributed on a 57% federal / 43% state match basis, increased federal health care spending potentially puts pressure on states to follow suit, raising additional revenue to match additional federal funding available. This pressure is not reflected in the 10-year state additional expenditure estimate cited above due to the 96% federal / 4% state match on newly eligible enrollees, but this ratio is likely to change after 2019, resulting in some federal to state cost shifting.
That said, the potential of increased Medicaid costs for states in ten years must be weighed against the immediate crisis that is facing state run health care programs across the country. According to the Kaiser Foundation, 46.3 million Americans (15.4% of the population) were uninsured in 2008. (Kaiser Foundation) This is a .2 percentage point increase from 2007, which means that the ranks of the uninsured grew by over 600,000 in one year. With health care costs increasing rapidly (nearly 7% a year from 1991 to 2004), unemployment high, and wages stagnant or falling, most states will be forced to deal with growing uninsured populations in the near future. Under the old Medicaid eligibility criteria, states would be forced to provide programs funded solely with state revenues or suffer the consequences of having large uninsured populations. Minnesota is one of many states that in the past has decided to raise revenue in order to ensure broader access to health care but has recently considered eliminating or significantly downsizing health care programs in order to save money.
More than anything, the federal health care legislation provides states a short reprieve from the very difficult decisions surrounding what to do about the uninsured. Starting in 2014 (when the expanded Medicare eligibility criteria goes into effect) and continuing until 2019, the federal government will essentially take care of it. This provides states with an important opportunity to do the thing that critics accuse the federal government of avoiding -- namely, find a way to provide health care more cheaply. If past trends continue unabated, then by 2020 state health care programs would be in serious trouble no matter what the federal government did with Medicaid eligibility. As Governor Pawlenty is learning, even now cut-only approaches to health spending generate extremely high levels of political opposition. This is likely to be even more true in 10 years when there are millions of additional working Americans who have been priced out of the insurance market.
The most important element of the federal health care reform legislation is that it expands Medicaid eligibility to include all legal residents making under 133% of federal poverty guideline. This includes childless adults who are currently ineligible for Medicaid. The Congressional Budget Office (CBO) estimates that 16 million people will become eligible for Medicaid over the next decade under the legislation (there are currently 58.7 million -- 20% of total population -- enrolled in Medicare.) (CBO, Final Cost Estimate) The 16 million person expansion is projected to cost $454 billion between 2010 - 2019, with the federal government bearing $434 billion, or 96% of the burden. Under this projection, the states pick up the remaining $20 billion, or 4%. (CBO, Final Cost Estimate) To put this in perspective, with or without reform, the states were projected to spend $1.6 trillion to cover Medicaid eligible individuals during that 10 year time period. (Center for Government and Politics) The additional $20 billion represents a 1.25% increase in state Medicaid related expenses.
Admittedly, the state/federal breakdown of financial burden is not the source of much of the criticism of the Medicaid expansion. Rather, the criticism is motivated primarily by a sense of misplaced federal priories -- the idea that more should have been done to cut government costs rather than expand coverage. Although federal health care reform reduces the deficit by raising more revenue than it spends, the legislation authorizes an additional $794 billion in total federal health care expenditures 2010-2019. (CBO, Final Cost Estimate) Since Medicaid spending is normally distributed on a 57% federal / 43% state match basis, increased federal health care spending potentially puts pressure on states to follow suit, raising additional revenue to match additional federal funding available. This pressure is not reflected in the 10-year state additional expenditure estimate cited above due to the 96% federal / 4% state match on newly eligible enrollees, but this ratio is likely to change after 2019, resulting in some federal to state cost shifting.
That said, the potential of increased Medicaid costs for states in ten years must be weighed against the immediate crisis that is facing state run health care programs across the country. According to the Kaiser Foundation, 46.3 million Americans (15.4% of the population) were uninsured in 2008. (Kaiser Foundation) This is a .2 percentage point increase from 2007, which means that the ranks of the uninsured grew by over 600,000 in one year. With health care costs increasing rapidly (nearly 7% a year from 1991 to 2004), unemployment high, and wages stagnant or falling, most states will be forced to deal with growing uninsured populations in the near future. Under the old Medicaid eligibility criteria, states would be forced to provide programs funded solely with state revenues or suffer the consequences of having large uninsured populations. Minnesota is one of many states that in the past has decided to raise revenue in order to ensure broader access to health care but has recently considered eliminating or significantly downsizing health care programs in order to save money.
More than anything, the federal health care legislation provides states a short reprieve from the very difficult decisions surrounding what to do about the uninsured. Starting in 2014 (when the expanded Medicare eligibility criteria goes into effect) and continuing until 2019, the federal government will essentially take care of it. This provides states with an important opportunity to do the thing that critics accuse the federal government of avoiding -- namely, find a way to provide health care more cheaply. If past trends continue unabated, then by 2020 state health care programs would be in serious trouble no matter what the federal government did with Medicaid eligibility. As Governor Pawlenty is learning, even now cut-only approaches to health spending generate extremely high levels of political opposition. This is likely to be even more true in 10 years when there are millions of additional working Americans who have been priced out of the insurance market.
Sunday, May 2, 2010
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.
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.
Subscribe to:
Posts (Atom)