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

September 16, 2011

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

July 22, 2011

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

June 16, 2011

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?

May 19, 2011

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

May 17, 2011

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

May 12, 2011

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

May 4, 2011

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.

-Leah Gardner

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