Health and human services omnibus bills make good investments using wrong resources

When the House and Senate released their committee targets in March, we were surprised that the health and human services budget division was required to cut $150 million in the House and $153 million in the Senate. After years of reductions to critical services for Minnesota’s most vulnerable, including $1 billion in cuts in the 2011 Legislative Session, we believed this year would offer an opportunity to start making up lost ground investing in our state’s health and well-being.
Policymakers have made some important strides in health care this session, expanding health insurance for very low-income Minnesotans and creating MNsure, a state health insurance exchange. And we are relieved that the House (House File 1233) and Senate (Senate File 1034) health and human services omnibus bills do a surprisingly good job of making some new investments and avoiding harmful cuts in the face of these difficult targets.
Unfortunately, the secret to this success is the controversial decision to tap hospitals and HMOs for additional resources; and even more troubling, use hundreds of millions of dollars from the Health Care Access Fund. These actions generate significant savings or bring in additional revenue for health and human services:
• The House raises $105 million through a hospital surcharge and another $5 million through a surcharge on Intermediate Care Facilities for the Developmentally Disabled (ICF/DD). Health care providers will get most of the surcharge back through federal reimbursements, although not all providers will break even.
• The House and Senate also look to HMOs and managed care organizations for additional revenue. The House caps HMO reserves, saving the state $48 million in FY 2014-15. The Senate raises $80 million from an HMO surcharge. Both reduce state costs in managed care contracts, with the House saving $21 million in FY 2014-15, and the Senate saving $54 million.
• However, the real money comes from moving Medical Assistance expenses currently paid from the general fund into the Health Care Access Fund (HCAF). The HCAF is funded by the provider tax, and pays for health care for low- and moderate-income working families. In FY 2014-15, the House shifts $406 million of general fund spending into the HCAF, and the Senate shifts $428 million. We have blogged on how shifting spending into this fund puts essential health care services at risk since the provider tax ends in 2019.
The House and Senate use these resources to meet their negative targets and make some important investments in the health and well-being of Minnesotans. Here are a few of the highlights from the proposals.
Health care.
• Both the House and Senate preserve affordable health insurance through MinnesotaCare for families with incomes up to 200 percent of poverty, with the Senate proposal reducing premiums and improving benefits.
• Both expand health care coverage through Medical Assistance to children and pregnant women with incomes up to 275 percent of the federal poverty line, and eliminate a number of barriers that prevent people from enrolling or staying enrolled.
• Both continue to provide cancer and dialysis coverage through Emergency Medical Assistance. The Senate also includes grants to help assist people who could be eligible for other health insurance options.
• Both include increases in payments to some Medical Assistance health care providers, including dental providers.
• The House includes funding for intensive services for children with autism.
Mental health. The House takes a number of positive steps to improve mental health outcomes for Minnesotans, including helping children get better mental health care by investing in more school-linked mental health services and adding mobile mental health teams to respond to crises. The Senate does not include school-linked mental health grants, but does invest in mobile mental health teams, as well as a number of other improvements in mental health coverage.
Child care. The House and Senate both increase the number of excused absent days for families using child care assistance from 10 to 25 (the House also allows additional excused days for children with medical conditions). This will give parents needed flexibility to deal with family schedules without jeopardizing their child care assistance. The Senate includes a 2 percent increase in child care provider reimbursement rates in FY 2014.
Long-term care and waivered services.
• The House and Senate both include additional funding for nursing homes. The Senate updates, or rebases, how nursing home payment rates are calculated, increasing funding by $20 million in FY 2014-15. The House increases payment rates by 3 percent in FY 2014, or $21 million in additional resources for nursing homes in FY 2014-15.
• Providers of home and community-based services also get an increase in both bills. The House proposes a 2 percent increase, or $65 million over the biennium. The Senate increases rates by 1 percent beginning on January 1, 2015, an additional $7 million.
• Both cancel a scheduled 1.67 percent rate reduction for long-term care providers.
There are many other highlights in the bills, including:
• The House and Senate both repeal the family cap in the Minnesota Family Investment Program that prevents families from receiving additional assistance when another child is born (the Senate delays implementation until July 1, 2014).
• The Senate includes funding to support youth facing challenging circumstances, including $4 million for runaway youth, homeless youth and youth at risk of homelessness; and another $4 million for youth who have been the victims of sexual exploitation.
• Both reinstate state funding for FAIM, or Family Assets for Independence in Minnesota, which matches savings by low-income participants who are seeking to obtain post-secondary education, purchase a home or start a new business.
• The Statewide Health Improvement Program, which supports local efforts at improving community health through prevention, gets increased funding. Both bills use the Health Care Access Fund to increase funding. The House allocates $45 million in FY 2014-15 and the Senate $15 million.
• Both increase funding for Medical Education Research Costs (MERC) to provide grants to health care providers who train medical students, the Senate by $6 million and the House by $15 million.
As the House and Senate begin to work out their differences in conference committee, we ask them to reconsider the decision to reduce general fund spending in this area of the budget. Although the bills include many positive investments, they do so only by using controversial surcharges and the Health Care Access Fund to bring in additional revenues. These investments are critical to the health and well-being of hundreds of thousands of Minnesotans and should be funded in a sustainable way.