Saying it costs too much, Gov. Tim Pawlenty vetoed Thursday a health care bill that could have sent $5 million more a year to North Country Regional Hospital.
Pawlenty, in his veto letter, said the bill raises "serious concerns regarding new spending financed by higher surcharges. The surcharges on hospitals, insurance companies and group homes will increase health care costs at a time when we should be focused on lowering health care costs."
Legislative leaders, however, say the $189 million in new revenues will trigger $1.4 billion in new federal money, more than making up for the initial investment.
"It's hard to even imagine any rationale the governor could give for refusing" the bill, Sen. Mary Olson, DFL-Bemidji, said Wednesday night. The bill includes $1114 million in health and human services cuts, as well.
"The money that we're getting to fund this bill comes from things that we're doing that enhance payments that we're getting from the federal government," Olson said. "Certainly the governor is counting on that federal money to balance his budget."
Under the newly passed federal health care reform bill, Minnesota may apply for early entrance into an Enhanced Medical Assistance program under which former General Assistance Medical Care patients were served.
Pawlenty unallotted money for GAMC last summer, ending the program April 1. A new legislative agreement prompted by Pawlenty will now enroll those folks into MinnesotaCare, the state's subsidized health care program for the working poor.
Moving them in to the Enhanced MA program will need a 50/50 state/federal match now, but it will be paid 100 percent by the federal government by 2014, Olson said.
"Why would he want that money to go to some other state, and us have to pay higher taxes here in order to simply say no," Olson said.
Moving GAMC patients into MinnesotaCare will bankrupt MinnesotaCare, Olson fears.
Hospitals may enter into a cooperative pool to share nearly $200 million in state money to help pay for the new program, but so far only four metro hospitals have signed up - and they want Pawlenty to limit their risk by limiting the number of cases of indigent care they handle.
That, she believes, would be unconstitutional. But it does signal that poor people in the Bemidji area would have to travel to the Twin Cities for state-paid health care.
A formula change in the bill favoring rural hospitals would give NCRH about $3.2 million more a year, plus the Enhanced MA would give the Bemidji hospital nearly $2 million more.
"The provisions in this omnibus bill is going to mean a difference of 21,500 jobs," Olson said. "Just to translate that to our area where our hospital is one of our largest employers, we're looking at a difference of over $5 million to our hospital in just one year. And then a substantial increase continues going forward. That's a lot of jobs in our area, too."
The bill did not appear dead yet Thursday, as legislative leaders continued budget talks with Pawlenty, and administrative staff was being consulted. The Republican governor had blasted the DFL-led Legislature in his veto letter for not consulting with his administration prior to a vote on the bill.
"We don't make any cuts to nursing homes," Olson said. "We maintain the money we have to keep critical care dental access clinics open."
Also maintained, Olson said, are state-operated services for vulnerable Minnesotans, which were to be deeply cut under Pawlenty's suggested budget. "Mental health services were really going to be severely impacted by the governor's proposal, and that's been tempered."
"This is a great way to get back some of our hard earned tax dollars from the federal government," Rep. John Persell, DFL-Bemidji, said late Wednesday night in a statement. "We put up $188 million, get $1.4 billion back, and use that money to provide more funding for Minnesota hospitals, clinics, nurses and doctors. This is good for Minnesota."
The bill includes $114 million in cuts in 2011, and $155 million in 2012-13. Included among the cuts are a small rate reduction to hospitals and HMOs, which will be more than offset by the early MA option, and a rate cut to specialists. Additional savings is garnered by delaying rate rebasing for both hospitals and nursing homes until 2013.
"For every additional dollar spent in this plan, we get $7.45 back from federal government," said Persell. "At a time of continuing budget deficits and persistent deep cuts to the health care budget, this legislation succeeds in protecting our most vulnerable citizens, including seniors and children, and restores fiscal balance to the Health Care Access Fund."
Rep. Brita Sailer, DFL-Park Rapids, last week hailed the House version of the bill, which went after taxes on foreign-operated companies to provide small increases to nursing home reimbursements.
Lawmakers knew Pawlenty would probably veto the bill, she said, "but if you don't make some attempt other than just say he's going to veto this, then we know we aren't going to get anywhere."
Sailer said that
we'll come back and take another run at it and see what we can come up with."
Had the governor signed the bill, it would have meant reductions in health and human services spending of $2 billion in this biennium, Sailer said.
"As we cut the costs for mental health, law enforcement costs are going to go up," she said. "When you cut in one place, it shifts to another area."