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

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Court rules some social services should be funded during the shutdown

July 13, 2011

On Wednesday, Judge Kathleen Gearin accepted recommendations from Special Master Kathleen Blatz that a number of social services be funded during the state government shutdown. Here is a rundown of Wednesday’s rulings.

Child care. Judge Gearin originally ruled that only federally-funded child care assistance should continue during the state government shutdown. On Wednesday, she amended the order to include all child care assistance, including Basic Sliding Fee child care assistance, because it is “a functional impossibility” to separate federal and state funding for these services (see pages 8 to 10 of the order). Although this is positive news for many Minnesota families, Judge Gearin did deny funding for migrant child care and migrant day care because funding for these services is separate.

Employment support services. Judge Gearin clarified that employment support services for participants in the Minnesota Family Investment Program (MFIP) and Diversionary Work Program (DWP) should be funded because job skills training and job-search assistance are an essential component of MFIP as a “welfare to work” program (see pages 5 to 6).

Food assistance. Judge Gearin clarified that while the Minnesota Food Assistance Program has explicitly been funded since the initial order, other food support programs should also be listed as critical core functions, including food shelf grants, senior nutrition programs and home-delivered nutrition services (see page 7 for a complete list of grants).

Child protection and adoption. Judge Gearin clarified that funding for a number of child protection and adoption assistance services should continue during a state government shutdown (see pages 10 to 12 for a complete list of grants). However, the court denied funding for parent support outreach grants, saying  “while the services and programs provided by these grants are very important to the long-term prevention of child abuse and neglect,” they are not an immediate critical core function.

Homeless programs and transitional housing. Judge Gearin clarified that grants that “involve the provision of shelters, transitional housing, and support services to homeless individuals and families, including homeless youth,” should be funded during the shutdown (see page 13 for a complete list of grants). In a separate order issued last Thursday, Judge Gearin ruled that other housing access services for individuals eligible for Medical Assistance home care or Medicaid waiver services should not be funded during the shutdown.

Services for refugees. Judge Gearin clarified that administrative grants needed to provide cash assistance for refugees should be funded, as should medical assistance for refugees. However, Judge Gearin denied funding for the Refugee Social Services grant, which provides employment support and English-language assistance (see pages 14 to 16).

Services for seniors. Judge Gearin clarified that grants providing seniors with nursing services, transportation, caregiver/respite services, home health aide visits and home-delivered meals should be funded during the shutdown (see page 16).

Deaf and hard of hearing services. Judge Gearin clarified that grants that provide services and equipment to deaf, deafblind and hard of hearing Minnesotans should be funded, as should services that help parents learn to communicate with their deaf or hard of hearing children (see page 17).

HIV/AIDS medical services. Judge Gearin clarified that funding for medical and case management services for citizens with HIV/AIDS should be funded during a shutdown (see pages 17 to 18).

Mental health grants. Judge Gearin clarified that providing services to individuals with serious and persistent mental illness should continue to be funded during the shutdown, noting that a coverage gap would affect their health (see pages 18 to 19 for a complete list of grants).

Chemical dependency treatment. Judge Gearin clarified that treatment services for individuals suffering from chemical dependency should be funded during the shutdown (see pages 20 to 21 for a complete list of grants). In a separate order issued on Monday, Judge Gearin ruled that other programs that help those recovering after receiving chemical dependency treatment, “may be critical to the long-term health and sobriety of participants,” but should not be funded during the shutdown.

-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 access to affordable, high quality child care

April 28, 2011

Today, Way Four of the 20 Ways in 20 Days Campaign looks at how a cuts-only approach to meeting Minnesota’s needs will jeopardize access to affordable, high quality child care.

Proposed Cut: The Legislature has proposed over $50 million in cuts that threaten the supply of affordable, high quality child care.

Consequence: Amy runs a preschool program in Cottage Grove and has seen rising numbers of scholarship applications as more families struggle to afford the high quality pre-school experience she provides to meet their needs. Amy knows that the cost of quality child care is out of reach for many. She asks, “Parents need to work, but how can they when they can’t afford child care for their children?” Many providers do their best to make child care affordable, but as business owners, they also need to take into account their costs of doing business when they set their prices.

The proposed cuts in state reimbursement rates for child care providers will make it harder for working Minnesotans to find affordable, quality child care for their children. Child care providers will be faced with painful choices, including sacrificing the quality of care they provide to children, pricing their services out of many parents’ reach, or even closing their doors. Juggling work and parenting is a reality of today’s economy. We’ll all pay the price if children are less prepared for a successful school experience or their moms and dads can’t keep their jobs.

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 access to affordable, high quality child care. 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 the impact of proposed cuts to child care services, contact Mary Nienow with Child Care Works at 612-455-1055 ext. 11.
  • 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


New website tracks long-term trends in the well-being of Minnesota families

August 2, 2010

The Minnesota Budget Project, along with some amazing research partners, are pleased to announce the launch of Minnesota Data Trends, a website that tracks key indicators of family well-being around the state. The site looks at long-term trends in income, housing costs, transportation costs, access to health insurance, employment and other important measures.

Much has been written in the past year about the struggles of average Minnesotans during the Great Recession. Often lost in the immediate focus on the latest unemployment report or foreclosure data are the longer-term trends showing that low- and moderate-income Minnesota have faced challenges for years and conditions are worsening over time.

For example, the recent Great Recession cannot explain all the job loss in Minnesota. The state gained an average of about 36,000 jobs per year between 1981 and 2000,  but only 1,000 jobs annually between 2001 and 2009. And as jobs become scarcer, housing costs are rising. For nearly two decades (from 1980 until 2000), only eight percent of Minnesota households were paying more than half their income for housing. By 2008, however, nearly 13 percent of households had this level of cost burden.

The goal of Minnesota Data Trends is to provide reliable, baseline information on issues affecting low-and moderate-income Minnesotans. We hope to focus attention on how multiple trends can together place a severe strain on a family’s budget. Any number of factors could put a family with little financial margin into chaos: reduced hours at work, an unexpected car repair or health care bill, or the loss of child care.

The website also acts as a directory of experts on these important issues. In addition to the Minnesota Budget Project, the collaboration has involved the Affirmative Options Coalition, Children’s Defense Fund – Minnesota, JOBS NOW Coalition, Minnesota Community Action Partnership and the Minnesota Housing Partnership.

On the website you will find graphs showing long-term trends that anyone can download and reprint for free. The website also includes the data source for the graph, a brief paragraph summarizing the trend and contact information for further details.

But this is only a beginning – we’ll keep the website updated as new data becomes available.

-Scott Russell & Christina Wessel

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Health and human services conference committee wraps up

May 12, 2010

Late Tuesday night, the House and Senate conference committee came to an agreement on $114 million in reductions to health and human services for the FY 2010-11 biennium. The conference report (HF 2614) takes positive steps to provide health care to very low-income Minnesotans and rejects some of the most painful cuts that were on the table. However, there still are cuts in services that will have a negative impact on struggling families, people with mental illness and other Minnesotans with disabilities.

One of the most positive provisions in the bill provides health care coverage for very low-income adults without children under Medicaid. Health care providers have balked at participating in the recently-passed General Assistance Medical Care agreement – which was intended to provide health care for this population – because of the low payments and high risk to health care providers. Covering these individuals under Medicaid is a better solution, as it provides participants with a clearly defined set of benefits and providers with a higher level of reimbursements than under the GAMC agreement. In addition, the federal government would cover half the costs until 2013, and 100 percent of the costs in 2014. The final agreement pays for the state’s share of the costs, mostly through a surcharge on hospitals, HMOs and facilities for individuals with disabilities. This surcharge allows the state to access additional federal funding. The agreement drops a Senate-proposed surcharge on nursing homes.

For low-income families struggling in this economy, the conference agreement includes some good news: it preserves a job creation initiative that provides short-term skill-building work opportunities, and there is some permanent additional funding for food shelves. The bill does not include House proposals to cut benefits for families working their way out of poverty or a Senate proposal to reduce funding for child care assistance.

However, there are cuts that will impact these families. The agreement eliminates a cash bonus for individuals who successfully leave welfare for work (this bonus helps the state meet federal performance requirements). The agreement also cuts unspent child care funds that could have been used to serve qualified families who are waiting for help. In addition, the agreement redirects $28 million in federal welfare-to-work funds that came to Minnesota under the federal Recovery Act and are intended to prevent cuts to services for very poor children during the recession.

Minnesotans with disabilities struggling to live independently are still significantly impacted by this conference agreement. The agreement limits access to services that allow individuals to live in their homes and avoid costly institutional care, reduces the hours of in-home assistance to help individuals meet basic needs, and it increases fees for parents needing services for their severely disabled children.

For individuals suffering from mental health issues, the conference agreement includes a few reductions, but drops the significant cuts to mental health grants that were proposed by the House.

There is a significant cut to the Children and Community Services Act (CCSA), which provides resources to counties to fund social services for children, adolescents and other individuals. One of the most significant uses of these funds is child protection services. The conference agreement includes a nearly $17 million reduction to CCSA in FY 2010-11 (and a smaller ongoing reduction in FY 2012-13), which is a larger cut than was proposed by either the House or Senate.

The agreement includes a variety of funding cuts to managed care, hospitals and other health care providers. Some of these cuts do not take effect until the FY 2012-13 biennium. There are also smaller cuts to nursing homes and in-home supportive services for low-income elderly Minnesotans. Facing their own budget challenges, these providers may make the difficult decision cut back on staff, reduce their level of services to all clients, or even stop providing some services altogether.

Early in the conference committee process, the House dropped a provision in their bill that would have raised $55 million in revenues in FY 2010-11 to prevent cuts to the elderly and other vulnerable populations. The provision – which repealed special treatment of Foreign Operating Corporations and closes a “tax haven” loophole – was added to the bill as an amendment on the House floor.

The conference committee agreement will now return to the House and Senate floor for final passage – a vote could come as soon as Wednesday evening.

-Christina Wessel

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Senate proposes $114 million in cuts to health and human services

April 30, 2010

The Senate health and human services omnibus bill was released Thursday morning with little fanfare, revealing a plan to reduce the state’s budget deficit by $114 million in FY 2010-11.

Like the House bill released earlier this week, the Senate bill does not make many of the cuts to health care and services for vulnerable populations that the Governor proposed.

  • General Assistance for very low-income adults without children is left untouched.
  • Eligibility for health care for adults without children on MinnesotaCare is not reduced.
  • Very low-income elderly and disabled adults will continue to get help paying for meals, housing repairs and fees for guardianship.
  • The Governor’s unallotment reductions are not made permanent.

However, unlike the House bill, the Senate proposal protects families on the Minnesota Family Investment Program from any direct cuts to their benefits. And the Senate only proposes a few small reductions to mental health grants for children and adults, compared to the significant cuts proposed in the House bill.

The Senate bill (along with the House bill) takes advantage of the opportunity to expand Medicaid to provide health care for very low-income adults without children. The recently passed General Assistance Medical Care agreement – which was intended to provide health care for this population – has been falling apart as nearly every major hospital in the state has announced it isn’t feasible for them to participate in the new system. Expanding Medicaid would provide more certainty for both participants and providers. 

There are service cuts included in the Senate bill, although the full implications are still unclear – Thursday’s hearing announcing the bill lasted just an hour and there was very little discussion or testimony.

  • The Senate proposes a one-time reduction in Children and Community Services Act grants to counties for social services (which Senator Berglin says could be offset by expected federal funds). The House proposed a permanent reduction.
  • The Senate includes some cuts to child care assistance, which will increase the barriers for low-income parents trying to work.
  • The bill adopts the Governor’s proposed limit to the number of individuals with disabilities that can access home-based Medicaid services, which enables them to avoid being moved into a more expensive and confined institutional setting.
  • There is a 10 percent reduction in MinnesotaCare reimbursement rates to providers for services to adults without children over 75 percent of the federal poverty guidelines.
  • The Senate also cuts in-home supportive services for low-income elderly Minnesotans.
  • The bill proposes a surcharge on hospitals, nursing homes, facilities for individuals with disabilities, and HMOs to draw down federal dollars. These entities would get a corresponding increase in their reimbursement rates to keep them whole, although private-pay nursing home residents could see an increase in their costs.

There are additional cuts in funding to nursing homes, hospitals and other health care providers, but most of these reductions don’t take effect until FY 2012.

The Senate Health and Human Services Committee is expected to vote on the bill on Monday, sending it on to the full Senate Finance Committee.

-Christina Wessel

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