Minnesota losing ground on poverty, income and the number of uninsured

It seems oddly appropriate (and a little inconvenient) that I was out of town at a conference on the day the U.S. Census Bureau released the latest statistics on poverty, income and health insurance coverage in the United States. It reminded me that for many years, fellow policy wonks from other states have looked at Minnesota with envy as a place that consistently ranks high on almost all of the good stuff, and ranks low on almost all of the bad stuff (although it’s important to acknowledge that these rankings overlook the deep racial inequities that have long plagued our state.)

But Minnesota is starting to lose its great reputation. With the release of the U.S. Census Current Population Survey (CPS) on Tuesday, we can look back and see that 2000-2010 represents a decade of decline for Minnesota. The CPS offers a preliminary look at state-level trends. Our poverty rate and level of uninsured may still be below the national average, and our median income remains above the national average, but we are headed in the wrong direction.

Poverty in Minnesota is on the rise. Over the last decade, the percentage of Minnesotans living in poverty has risen from 6.5 percent to 10.8 percent, according to preliminary statistics from the U.S. Census Bureau. That means one out of every ten Minnesotans is living below the poverty line (a stunning $22,113 for a family of four). With the threshold so low, it’s not surprising that families with incomes above the poverty line still struggle to meet their basic needs. Sadly, many are living with that reality: one out of four Minnesotans is surviving on an income below 200 percent of the poverty line ($44,226 for a family of four).

We are also seeing a dramatic drop in median income in the state. The preliminary data released by the U.S. Census Bureau shows that over the last decade, Minnesota’s median income fell from $65,120 to $54,785, after adjusting for inflation. That’s a drop of more than $10,000. Only Michigan experienced a larger decline in median income over the decade. More definitive state-level data on income will be released September 22 as part of the American Community Survey.

To complete the trifecta, the share of Minnesotans without health insurance has increased 2.1 percentage points over the last decade, hitting 10.2 percent in 2009-2010. How people are getting health coverage is also changing. The share of Minnesotans receiving employer-sponsored health care has fallen by nearly nine percentage points over the last decade. Public health insurance – like Medical Assistance - has picked up much of that slack, thereby preventing an even sharper increase in the number of uninsured Minnesotans.

You might think that times have been very tough, and surely every state is facing the same bad outcomes over the last decade. That’s not the case. Many states have managed to hold their ground in the face of two recessions, and a few states have even managed to show improvement (North Dakota and West Virginia saw an increase in median income, and Massachusetts reduced its percentage of uninsured). 

The economic turmoil that has contributed to the increase in poverty and fall in median income may be beyond our ability to influence, but Minnesota’s policymakers can make better choices to reduce poverty, build the middle class and improve the state’s economic future.

-Christina Wessel

Health and human services budget asks vulnerable Minnesotans to pay a price

Many of Minnesota’s most vulnerable populations, including the elderly, those with disabilities, and low-income families with children, are being asked to help balance the state’s budget through $1 billion in cuts to health and human services in the final budget approved by Governor Dayton and the Legislature. This is an eight percent cut in FY 2012-13 compared to base funding, which means a reduction from current levels of service.

While some of the most troubling proposals, including those that would have caused more than 100,000 Minnesotans to lose their current health care coverage, did not make it into the final legislation, the health and human services bill still contains provisions that will increase barriers for low-income families trying to work, for the elderly and people with disabilities who want to stay in their homes, and for Minnesotans trying to access health care.

As a result of the final budget, working parents and other low-income Minnesotans will face challenges in building a more secure economic future. For example:

• Access to quality, affordable child care will become more difficult for working parents. In the budget, provider reimbursement rates are reduced, flexibility for families is limited, and grants supporting system improvements and parental information are cut. The budget agreement also captures $5 million in child care assistance funds that were not spent in calendar year 2010 and transfers them back to the general fund. These resources could have been used to help 500 additional families in 2012.
• Low-income individuals will find it more difficult to obtain post-secondary education, purchase a home or start a new business. The decision to eliminate Family Assets for Independent in Minnesota (FAIM) means they will lose both the state and federal match on their savings.
• Funds intended to support families seeking to stabilize their lives, find employment and become self-sufficient are instead used to help balance the state’s budget, including $20 million from the Minnesota Family Investment Program (MFIP) Consolidated Fund and $38 million in federal funds for Temporary Assistance for Needy Families (TANF).

The final budget will also make it harder for people with disabilities and the elderly to access the services they need to remain independent. For example:

• There will be additional limits on the number of individuals who can enroll in waiver programs that enable the elderly and people with disabilities to access community-based care and avoid entering an institution. Cuts to these waiver programs total $64 million in FY 2012-13.
• People with disabilities who rely on a relative to provide their care may find it harder to get the assistance they need. The bill cuts payments to these Personal Care Attendants by 20 percent, creating financial challenges for these families. This cut particularly raises concerns for people with disabilities in rural areas, where relative caregivers are often the only option.
• Some funding cuts do not fall on individuals directly, but will reduce funding for the institutions and community-based providers they rely on. These decisions could hurt the financial stability of these providers, raising concerns about whether some of them will be able to continue to serve their community. For example, there are more than $70 million in cuts to various payment rates for a variety of community-based providers and continuing care facilities that serve the elderly and individuals with disabilities. And, although nursing homes are exempt from most immediate payment rate cuts (a few will even get a small rate increase), the bill eliminates a scheduled $133 million increase in reimbursement rates in FY 2014-15. This planned “rebasing” would have re-evaluated the state’s current reimbursement rate to bring it in line with the cost of providing care.

There is some positive news: the final budget keeps intact Medical Assistance for extremely low-income adults, a health care reform that was approved by Governor Dayton in January. This preserves access to health care for tens of thousands of vulnerable Minnesotans. However, other changes in health care programs will increase the barriers to accessing health care for some individuals. For example:

• Approximately 7,200 adults without children who are between 200 and 250 percent of poverty (that’s an income between $21,780 and $27,225 for a single adult), will lose their health insurance under MinnesotaCare and be given a subsidy to buy coverage in the private market. It remains to be seen whether affordable coverage options exist in the current insurance market. The bill seeks federal permission to expand this Healthy Minnesota Contribution Program to include parents on MinnesotaCare.
• Access to health care, particularly in rural areas, could become more challenging. Hospitals face the loss of an anticipated $106 million increase in reimbursement rates in FY 2012-13 and another $491 million in FY 2014-15. As with nursing homes, the bill cuts a planned re-evaluation of payment rates intended to increase the rate to better represent the cost of providing care.
• Children and adults facing mental health issues will find some funding to counties for mental health services has dried up. The bill cuts Children and Community Services Act grants by 17 percent. The act is renamed the Vulnerable Children and Adults Act and the remaining funds will be used for child protection and to protect vulnerable adults. It will no longer fund mental health services for adults and children.

In some areas, the impact of the budget decisions are harder to predict. For example:

• The agreement eliminates the MinnesotaCare provider tax beginning in 2020. This tax on health care services is one of the major funding sources for the Health Care Access Fund (HCAF), which in turn funds MinnesotaCare and other health-related grants and services. This significant source of health care funding (projected to raise more than $1 billion in revenue in FY 2012-13) would be eliminated without any specific plan for how to continue funding these important public health functions.
• There are about $400 million in general fund savings from managed care reforms, including rate reductions, efforts to reduce hospital admissions/re-admissions and emergency room usage, and competitive bidding. The estimated savings associated with these reforms grows to $540 million in FY 2014-15. Unfortunately, it isn’t clear how these savings goals will be achieved, or what will happen if the actual savings falls short of what is anticipated.

We couldn’t possibly touch on all the important changes included in the health and human services budget in this blog. We will be releasing a more comprehensive analysis of the budget agreement in the coming days.

In the meantime, for more information on how Minnesotans will be impacted by the health and human services budget, check out analysis by the Affirmative Options Coalition, National Alliance on Mental Illness of Minnesota, Child Care WORKS and the Arc of Minnesota. 

-Christina Wessel

Legislature makes a budget offer

On Thursday, the legislature presented an offer to Governor Dayton that withdraws $203 million in tax cuts and slightly backs off of spending cuts in some areas. The major elements of the offer include:

• Withdrawing the $203 million in tax cuts contained in their tax bill, including gradually eliminating the state property tax paid by businesses and cabins, a corporate tax cut and conforming to a number of federal tax changes.
• Increasing funding for K-12 education by $80 million above the conference committee target, including $10 million for early education scholarships. This would match the Governor’s spending target in his March budget proposal. However, the additional funding appears to be contingent on the Governor accepting a number of controversial provisions, including shifting integration aid away from core cities, limiting collective bargaining rights, and instituting a new teacher and principal evaluation system.
• Reducing proposed cuts to higher education by $50 million. The legislature still leaves $361 million in cuts to higher education in FY 2012-13, $190 million more than the Governor.
• Reducing proposed cuts to the environment and energy by $13 million. The budget proposals from the legislature and Governor would still differ by a significant margin.
• Reducing proposed cuts to public safety and the judiciary by $30 million, bringing the legislature closer to the Governor’s proposed increase in base funding for this area.
• Providing $9 million for flood and disaster relief.
• Reducing proposed cuts to tax aids and credits by $20 million, which would not make much of a dent in the $925 million in proposed cuts in aids to cities and counties and property tax refunds for low- and moderate-income renters, which are expected to result in increased property taxes.

The legislature’s offer doesn’t include any changes in the funding targets for health and human services, transit, jobs and economic development, or state government. The offer “expires” at 5:00 p.m. on Monday, June 20.

Governor Dayton expressed disappointment with the offer, suggesting that it didn’t show real movement on the part of the legislature.

-Christina Wessel

What does $1.8 billion in cuts to health and human services look like?

Many have objected – including us – to the hundreds of millions in unsubstantiated savings that was included in the House and Senate health and human services budget bills. We all wondered, what would $1.8 billion in cuts really look like? Now we know.

On Wednesday, both the House and Senate passed the health and human services conference committee agreement detailing $1.8 billion in cuts, $1.6 billion of that in the general fund. To reach this target - a 13 percent cut from base spending for FY 2012-13 – the conference agreement includes proposals that will significantly impact the health and well-being of families in our state. More than 100,000 Minnesotans will lose access to affordable health insurance, hundreds of individuals with disabilities will be forced out of their communities and into institutionalized settings, and working parents will face more obstacles in achieving self-sufficiency. We wanted to look at a few of these proposals in more detail.

The conference agreement repeals health insurance coverage for tens of thousands of extremely low-income adults without children through Medicaid (known as Medical Assistance in Minnesota). One of Governor Dayton’s first actions in office was to take advantage of the opportunity to turn an all state-funded program into a better health care option that receives matching federal funds. Reversing this action cuts general fund spending by $921 million in FY 2012-13, but the state will also lose those federal matching dollars. To provide some minimal level of health care for these individuals, the conference agreement revives a limited state-funded General Assistance Medical Care (GAMC) program, capping spending on care for this population with significant health challenges at just $160 million a year (plus some additional funding for a prescription drug pool). Based on our previous experience with this limited GAMC program, we know that it will be difficult for individuals to access care because health care providers are reluctant to participate, particularly in Greater Minnesota.

The conference agreement creates a Healthy Minnesota Contribution program that takes away health care coverage for adults without children over 125 percent of poverty and parents over 133 percent of poverty on MinnesotaCare. To get perspective, this would impact individuals making less than $13,613 a year or a family of three making less than $24,645 a year. These Minnesotans would be given a subsidy that they could use to help purchase health insurance on the private market, but they are unlikely to find coverage options with a reasonable deductible and copayments at a premium they can afford. The proposal cuts $276 million in spending in the Health Care Access Fund (HCAF) in FY 2012-13: this makes it possible to transfer $116 million from the HCAF into the general fund to help resolve the state’s budget deficit. In contrast to the Senate’s original proposal, the conference agreement focuses on populations where the state is most likely to get permission from the federal government to make this change.

Extremely low-income and vulnerable Minnesotans who are unable to work – many of them elderly or disabled – will face an uncertain future as critical support systems are dramatically restructured. The conference agreement would dismantle a safety-net system for around 20,000 Minnesotans that provides them with a small monthly cash benefit, offers additional assistance for individuals who require a special diet for medical reasons or other special needs, and makes emergency funds available to prevent them from losing their housing or having their utilities turned off if they face a crisis. The conference agreement eliminates General Assistance and other emergency assistance programs and turns them into an optional Adult Assistance block grant to counties, reducing the resources that available to serve these individuals by $20 million in FY 2012-13.

There are also a number of cuts that will directly impact individuals with disabilities and the elderly, causing hundreds of people to receive a reduced level of community-based services and forcing hundreds of others into institutionalized settings. The conference agreement places significant limits on access to home-based Medicaid services, which help individuals remain in their community and avoid entering a more expensive and confining institutional setting. In addition, the agreement will further impact these individuals by reducing funding for the institutions and community-based providers that serve them.

Minnesota families working to move from poverty to self-sufficiency will find it harder to make that transition. For example, the conference agreement increases the barriers for low-income families eligible for the Minnesota Family Investment Program (MFIP) to receive assistance in a timely way, get the training necessary to qualify for higher-paying jobs, and own a reliable car that can get them to and from work. And if there is a severely disabled adult living in their household, the family will see their cash assistance reduced by $50 a month. Child care for working families will be less accessible under the conference agreement. A series of program changes and budget reductions will create barriers, increase costs and reduce the information available to parents.

This is just a brief look at the cuts in this conference agreement that will leave tens of thousands uninsured, force hundreds into institutionalized care and place more roadblocks in front of families struggling to make a living in this slow economic recovery. It is almost certain that Governor Dayton will veto the bill when it reaches his desk.

-Christina Wessel

Cuts-only approach jeopardizes health care coverage for low-income households

Today, Way Seventeen of the 20 Ways in 20 Days Campaign looks at how a cuts-only approach to meeting Minnesota’s needs will jeopardize health care coverage for low-income households.

Proposed Cut: The Health & Human Services Conference Committee proposes repealing health care coverage through Medical Assistance for over 100,000 Minnesotans.

Consequence: One year ago, Rebecca fell at work, hitting her head and suffering massive brain trauma. Following surgery, Rebecca was in a coma for four days. She had to stay in the hospital for two months. Minnesota’s health care assistance for low-income households covered much of the cost of her care and ensured that her out-of-pocket costs were reasonable. Without it, Rebecca would have faced insurmountable medical bills. After months of rehabilitation, Rebecca today lives independently, but still needs medication and frequent visits with a neurologist. As she works to get healthy and cover her medical expenses, support through Medical Assistance is critical. “Just one of my prescriptions would be $1,300 per month without Medical Assistance!” she says. “There’s no way I could pay that… I might end up dying if I didn’t have access to doctors.”

The legislature’s proposal would leave Minnesotans without adequate health care. Under their proposal, health care systems would only receive an estimated $930 per patient per year to provide health care – nowhere near enough to cover the cost of the treatment that saved Rebecca’s life.

The Solution: Let’s protect Minnesota’s communities, residents and quality of life. We cannot afford to take a cuts-only approach to meeting our state’s needs, jeopardizing health care coverage for low-income households. Minnesotans know we need a balanced approach, one that includes raising revenues based on ability to pay, in order to maintain critical state services that support Minnesotans in tough times and invest in our future.

• For more information about cuts that repeal health care coverage for low-income Minnesotans, contact Brian Rusche with the Joint Religious Legislative Coalition at 612-230-3230.
• For more information about the 20 Ways in 20 Days Campaign or Invest in Minnesota, contact Leah Gardner at 651-757-3063.
• Download the PDF version of this story to spread the word about the impact of proposed budget cuts.

- Leah Gardner

Cuts-only approach jeopardizes the well-being of families in crisis

Today, Way Fourteen of the 20 Ways in 20 Days Campaign looks at how a cuts-only approach to meeting Minnesota’s needs will jeopardize the well-being of families in crisis.

Proposed Cut: The legislature has proposed cuts to the State Mental Health Block Grant, jeopardizing services for people facing mental health emergencies.

Consequence: The First Call Crisis Response Team of Itasca County is a 24/7 service that provides support and referrals to people facing mental health emergencies. Team members are available to talk with callers in crisis either in person or by phone, offering support for as long as necessary and connections to community resources including hospitals, medical clinics, mental health providers and law enforcement. A volunteer recently told a staff member, “It is a wonderful thing to be a part of saving a life by dispatching the Crisis Response Team to a mental health emergency situation.”

Over 1,700 calls were handled by the Itasca County Crisis Response Team in 2010. Because of the Crisis Response Team’s involvement, mental health hospital stays were reduced almost 20 percent, saving an average of $15,000 per person. In addition, over half of the contemplated suicides were not attempted. Without this important lifeline, Itasca County residents will bear a devastating cost both monetarily and with lives lost.

The Solution: Let’s protect Minnesota’s communities, residents and quality of life. We cannot afford to take a cuts-only approach to meeting our state’s needs, jeopardizing the wellbeing of families in crisis. Minnesotans know we need a balanced approach, one that includes raising revenues based on ability to pay, in order to maintain critical state services that support Minnesotans in tough times and invest in our future.

• For more information about proposed cuts that would impact First Call services in Itasca County, contact Sheila Hart at 218-326-8565.
• For more information about the 20 Ways in 20 Days Campaign or Invest in Minnesota, contact Leah Gardner at 651-757-3063.
• Download the PDF version of this story to spread the word about the impact of proposed budget cuts.

-Leah Gardner

Cuts-only approach jeopardizes the well-being of children in need of mental health services

Today, Way Eight of the 20 Ways in 20 Days Campaign looks at how a cuts-only approach to meeting Minnesota’s needs will jeopardize the well-being of children in need of mental health services.

Proposed Cut: The legislature has proposed cuts that would eliminate school-linked mental health services.

Consequence: Jim was unable to attend high school last spring due to anxiety. After being hospitalized during a mental health crisis, weekly therapy was recommended. When Jim returned to school he was able to receive weekly therapy with an in-school mental health professional. With both of Jim’s parents working and the nearest mental health provider far from their southwestern Minnesota home, Jim and his parents are grateful for the in-school support. He continues to get better. His parents say that without these services, “There is no way that we would have been able to meet his needs.”

School-linked mental health services were provided to 8,422 children in 63 counties during the last two school years. Nearly half the children had never received services before, and half of those had a serious mental illness. Access to these services means more children receive needed treatment, regardless of their access to health insurance. These services also allow teachers and mental health professionals to collaborate, ensuring students are able to get the support they need to succeed in school.

Solution: Let’s protect Minnesota’s communities, residents and quality of life. We cannot afford to take a cuts-only approach to meeting our state’s needs, jeopardizing the well-being of children in need of mental health services. Minnesotans know we need a balanced approach, one that includes raising revenues based on ability to pay, in order to maintain critical state services that support Minnesotans in tough times and invest in our future.

• For more information about cuts to mental health services, please contact Sue Abderholden with NAMI Minnesota at 651-645-2948.
• For more information about the 20 Ways in 20 Days Campaign or Invest in Minnesota, contact Leah Gardner at 651-757-3063.
• Download the PDF version of this story to spread the word about the impact of proposed budget cuts.

-Leah Gardner

House health and human services bill is a vision, not a final product

On Tuesday, the House presented the health and human services omnibus budget bill, which cuts nearly $1.7 billion in general fund dollars from base spending in FY 2012-13. While presenting the bill, Representative Jim Abeler, chair of the committee, warned the audience that “the world will not be the same” after this session is over for the roughly 800,000 Minnesotans that are touched by the services funded in this bill.

According to Representative Abeler, the House bill presents a philosophy of ”putting people on a path to independence,” recognizing that some people will can never achieve full independence. However, the bill has a long way to go before it is ready for a floor vote. Representative Abeler admitted that many of the proposals in his bill are not final, but are more of a placeholder to provoke discussion on important issues.

The financial backbone of the House bill - close to three-quarters of the cuts - come in the form of four large ticket items that are long on savings, but short on details.

1. The House bill cuts $373 million by ”rolling back” waiver costs. These waiver programs enable individuals with disabilities to access home-based Medicaid services that help them avoid entering a more expensive and confining institutional setting. The House proposal significantly reduces funding for these services, while requiring that there not be a reduction in the number of people served and prohibiting cuts in provider rates. As a result, these cuts are likely to impact the level of services available to these individuals with disabilities, forcing an untold number into institutionalized settings.
2. The House cuts another $300 million by asking the federal government to grant Minnesota a waiver to make significant changes to the state’s Medical Assistance (MA) program. Only the broad goals of the reform are outlined in the bill, including: empowering consumers to make informed and cost-effective choices, promoting competition between health care providers, redesigning purchasing and payment methods, and ensuring adequate access to needed services. The Department of Human Services (DHS) has said that they think it would be unlikely the waiver would be authorized. The bill states that, if the federal government doesn’t grant this waiver, DHS is directed to reduce staff salaries and medical assistance provider rates for a variety of health care providers by the amount necessary to meet this the $300 million goal.
3. The House bill would also cut $348 million by identifying high cost providers in the managed care system and controlling those costs. This cuts equates to a 12 percent reduction in managed care rates.
4. Another $216 million is saved by managing costs in MA fee-for-service payments through methods such as capping expenses, implementing more care coordination and restricting eligibility for MA.

Minnesota Management and Budget has sent Representative Abeler a letter outlining their concerns with these four proposals.

The remainder of the House bill includes other important financial and policy recommendations:

Health care. The House proposes reducing the number of Minnesotans able to access affordable health care, eliminating eligibility for MinnesotaCare for adults without children over 200 percent of poverty ($21,780 for an individual). The Governor initially proposed this change in eligibility, but dropped the proposal after the February forecast. The House would further reduce access to affordable health care by eliminating MinnesotaCare eligibility for adults with children over 200 percent of poverty ($37,060 for a family of three) upon approval by the federal government.

The House proposal also moves MinnesotaCare enrollees – individuals, parents and children – over 133 percent of poverty ($24,645 for a family of three) to a defined contribution plan, where individuals would be given a set amount to purchase health insurance in the private market. These Minnesotans would likely face higher premiums, deductibles and copayments. The House would also increase barriers to participating in MinnesotaCare, including increasing premiums and requiring eligibility reviews every six months instead of every 12 months.

Child care. The House adopts the Governor’s proposals to make some reforms in the child care assistance system and capture $5 million in unspent funds that could have been used to serve 500 additional families in the future. The House also reduces rates for non-licensed family child care providers by 20 percent and sets aside some child care assistance funding to enable mothers to remain at home with their newborns.

Individuals with disabilities and seniors. In addition to the $400 million cut to waivered programs discussed above, the House adopts the Governor’s original proposal to cut emergency assistance for extremely low-income and disabled adults that helps prevent them from losing their housing or having their utilities turned off. The 25 percent reduction in funding will mean approximately 4,500 fewer adults will receive assistance. After the February forecast, the Governor dropped this cut to emergency assistance.

The House also adopts the Governor’s original proposal to reduce congregate living rates, putting financial pressures on group homes that enable individuals with disabilities to live in the community. After the February forecast, the Governor dropped this cut to congregate living facilities.

The House adopts other proposals initially made by the Governor that will impact the aging population, including reducing grants by $7 million, reducing funding for nursing homes by broadening the definition of who qualifies as an individual with the lowest level of need and reducing reimbursement rates for this group, and reducing or eliminating some types of payments to nursing facilities (although the House does not adopt the Governor’s rate reduction for single bed rooms).

Families and children. The House bill makes several changes to the Minnesota Family Investment Program (MFIP) that will increase the challenges for families working their way out of poverty. For example, the House adds a requirement that an individual participating in the Minnesota Family Investment Program would be required to work 20 hours a week before qualifying for postsecondary education or training. This work requirement would make it challenging for parents to get training necessary to qualify for higher-paying jobs.

The House also makes a number of policy changes that will impact these families, including increasing the residency requirement from 30 days to 90 days and restricting how families can utilize their electronic benefits.

There are also some changes that would utilize funds intended to support these families to help balance the state’s budget. For example, the House adopts the Governor’s original proposal to reduce the MFIP consolidated fund by $28 million, or 13 percent, in FY 2012-13. This cut could have several implications, including longer wait times for families trying to access assistance, less support in finding work, and fewer families getting emergency assistance when facing homelessness. The Governor reduced his proposed cut to $10 million in FY 2012-13.

The House also proposes to use $46 million in federal funds for Temporary Assistance for Needy Families (TANF) to free up state dollars to help balance the state’s budget (commonly known as “refinancing”). The Governor proposed using $28 million in TANF funds.

Other issues. The House bill reduces funding for the medical education and research fund by $13 million in FY 2012-13, refocusing the remaining dollars on addressing health disparities. On the positive side, the House proposal does not make any reductions to Children and Community Services Act (CCSA) grants, Community Action grants or Family Assets for Independence in Minnesota (FAIM) grants.

The committee is expecting to complete their omnibus bill on Thursday and pass it along to the House Ways and Means committee.

-Christina Wessel

Senate health and human services omnibus bill will impact tens of thousands

Wednesday morning, the Senate health and human services committee released its omnibus bill which cuts $1.6 billion from general fund base spending for the FY 2012-13 biennium. The bill also makes $268 million in cuts to the Health Care Access Fund and $23 million in cuts to federal funding for Temporary Assistance for Needy Families (TANF). The Senate bill would have a significant impact on tens of thousands of Minnesotans, including working people who would lose access to affordable health care, people with disabilities who would no longer have services that help them live independently, and struggling individuals and families that would see essential safety-net programs disappear.

The Senate proposal includes several sweeping changes to the state’s public health care programs:

• The Senate bill would dramatically restructure public health insurance in Minnesota. All families and children on Medical Assistance (MA) with household income above 75 percent of poverty ($13,898 for a family of three) and all MinnesotaCare enrollees with household income above 133 percent of poverty ($24,645 for a family of three) would lose their health care coverage and would instead be provided with a set amount to purchase coverage in the private market. These low-income individuals would likely face higher out-of-pocket costs for premiums, deductibles and copayments. The proposal saves $269 million in the general fund and $385 million in the Health Care Access Fund in FY 2012-13. In order to make these changes to the MA program, the state would first need approval from the federal government. The Minnesota Department of Human Services believes the state is unlikely to receive that permission, meaning the state may not achieve the expected savings in the general fund.
• One of Governor Dayton’s first actions in office was to take advantage of an opportunity to cover extremely low-income adults without children through MA, turning an all-state funded program into a better health care option receiving matching federal funds. The Senate bill repeals this expansion, cutting state general fund spending by $934 million in FY 2012-13 and losing hundreds of millions in federal matching dollars. The Senate bill bars these individuals from enrolling in MinnesotaCare, instead reviving a limited state-funded General Assistance Medical Care program and capping spending at $225 million per year.
• There are also several other important changes proposed, including eliminating state-funded MA coverage for legal noncitizens ($21 million cut in FY 2012-13) and eliminating coverage for some services for Minnesotans on MA and MinnesotaCare, including chiropractic, podiatry, specialized therapies for adults, eyeglasses and prosthetics.

The Senate bill includes substantial reductions in services that will have a negative impact on the ability of people with disabilities to live independently. The bill includes $103 million in cuts to waiver programs that enable individuals with disabilities to access home-based Medicaid services which help them avoid entering a more expensive and confining institutional setting. The cuts include capping growth in these waiver programs and reducing rates for congregate living facilities. More than 830 Minnesotans with disabilities are expected to end up in an institutional setting – either a nursing home or hospital – as a result of these cuts. (Governor Dayton’s budget also reduces funding for waivered programs, but to a lesser degree.)

The Senate bill also increases the challenges for other vulnerable individuals and families.

• General Assistance (GA) is a safety-net program for extremely low-income adults without children who are unable to work – many of whom are elderly or disabled. GA provides qualifying individuals or couples with a small monthly cash benefit, offers additional assistance for individuals who require a special diet or other special needs, and makes emergency funds available to prevent them from losing their housing or having their utilities turned off if they face a crisis. The Senate bill radically restructures GA by turning it into a block grant to counties and capping funding at $47 million a year (a $20 million reduction in FY 2012-13).
• Under the Senate bill, families participating in the Minnesota Family Investment Program (MFIP) would see their monthly grant reduced by $150 for each severely disabled individual living in their household.
• The Senate bill eliminates the Minnesota Food Assistance Program, which provides food assistance for noncitizens over the age of 50 who are not eligible for the federal food support program. In his budget, Governor Dayton increases funding for this program to cover increased need.

The Senate bill reduces the rates for child care assistance for working families by five percent, saving $14 million in FY 2012-13. The bill also eliminates several grants that improve the child care system by funding training and capacity-building for child care providers, information for parents, and child care for migrant children. The Senate bill also adopts Governor Dayton’s reforms to the child care assistance system that will remove some flexibility for families, saving $7 million in FY 2012-13. Both the Senate and Governor propose capturing $5 million in child care assistance funds that were not spent in calendar year 2010 that would normally be used to help families in the next year, meaning nearly 500 fewer working families would be helped.

The Senate bill also reduces or eliminates a number of grant programs, including:

• A $22 million reduction in FY 2012-13 to Children and Community Services Act (CCSA) grants to counties that fund child protection and child and adult mental health services. This represents a 17 percent reduction in state funding for these services. These cuts would mean many children and adults would not be able to access the same level of in-home services, leading to more out-of-home placements.
• The Senate eliminates Community Action grants that support services to promote economic self-sufficiency in Minnesota communities. Thirty-nine Community Action agencies around the state serve hundreds of thousands of Minnesotans through job training, energy assistance, weatherization, food shelves, Head Start, child care, emergency assistance and crisis nursery services.
• The Senate also eliminates state funding for Family Assets for Independence in Minnesota (FAIM). Participants get their own savings matched with state and federal funds to help obtain post-secondary education, purchase a home or start a new business. FAIM has helped several thousand low-wage workers improve their financial management skills, build assets and avoid predatory lending practices. The loss of $500,000 in state funds in FY 2012-13 will also mean the loss of a $500,000 matching grant from the federal government.
• The Senate bill eliminates many other grant programs, including funding for family planning, tribal public health, health disparities, migrant workers, adult mental health crisis teams, lead abatement, child welfare among American Indians, translation of vital documents, and youth tobacco cessation. There are also reductions in grants for senior nutrition programs and adult mental health initiatives.

The Senate bill transfers $124 million from the Health Care Access Fund (HCAF) to help balance the state’s general fund deficit – these are resources which are intended to ensure working families have access to affordable health care.

There are some other significant issues in the bill worth mentioning, such as phasing out nursing home rate equalization, imposing a 60-day residency requirement for the Minnesota Family Investment program, eliminating the funding for medical education and research (MERC), prohibiting state funds from being used to plan for or implement the federal Affordable Care Act until it has been affirmed by the Supreme Court, banning human cloning, and prohibiting the state from using state funds or accepting federal funds for family planning.

The Senate is meeting on Thursday to discuss amendments to the bill and will be taking public testimony on Friday. Key documents relating to Senate File 760 include the bill language, the bill summary and the spreadsheet.

-Christina Wessel

Governor Dayton revises budget in response to new deficit numbers

Governor Dayton acted quickly on Monday and released preliminary changes to his budget proposal to reflect the newly released February Forecast, which showed the deficit had shrunk to $5.0 billion. His preliminary list of changes takes advantage of the $1.2 billion improvement in the state’s budget situation to reduce tax increases on the wealthiest Minnesotans and restore cuts to services for some of the most vulnerable.

The largest element of his revised budget proposal is to drop the temporary additional three percent tax rate on taxable incomes above $500,000. That proposal would have raised $918 million in total during the three years it would have been in effect (2011 to 2013).

The next most significant element of the Governor’s revised budget is restoring approximately $200 million in funding for health and human services. His changes include:

• Withdrawing proposals that would eliminate funding for Community Action agencies and significantly reduce funding for Emergency General Assistance.
• Withdrawing his proposal to eliminate MinnesotaCare eligibility for adults over 200 percent of the federal poverty guidelines.
• Withdrawing proposals to cut county funding for child support enforcement and cut $12 million from congregate living rates.
• Reducing the level of cuts to the Child and Community Services Act (CCSA), the Minnesota Family Investment Program (MFIP), and nursing homes and home and community-based services.
• Loosening the caps on waiver programs for persons with disabilities.

The Governor’s preliminary list of changes also withdraws $14 million in proposed cuts to transit in the metro area and Greater Minnesota and adds $20 million in various business development incentives.

A complete revised budget proposal will be released by Minnesota Management and Budget in the coming days. In addition to more details on the items included in this preliminary list of changes, the revised budget will also reflect any other changes to the Governor’s budget proposal resulting from new information in the February forecast (often referred to as “repricing”).

-Christina Wessel