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Pawlenty, DFL lawmakers in dispute over provider tax for health care funding

A provider tax for health care funding lies in dispute for legislative conferees and Gov. Tim Pawlenty.

As House and Senate conferees sit down to hammer out differences in their bills, Republic Pawlenty on Saturday outlined his key differences.

"In the 2010-2011 biennium, my budget proposal saves roughly $1.67 billion in the General Fund, while maintaining core safety net programs that are more generous than virtually any other state," Pawlenty wrote Saturday in a letter to Sen. Linda Berglin, DFL-Minneapolis, and Rep. Tom Huntley, DFL-Duluth, chief conferees.

"The House and Senate bills save significantly less, even though both use federal stabilization funding," Pawlenty wrote. "Moreover, part of my solution integrates public financing of health care programs by merging the Health Care Access Fund with the General Fund."

A 2 percent tax on health care providers funds the Health Care Access Fund, which carries a surplus and is used primarily in MinnesotaCare to provide subsidized health care to working poor.

House and Senate DFLers would keep that fund for health care, saying that Pawlenty's proposal would cut at least 84,000 people from MinnesotaCare.

"Minnesota's spending on government-subsidized HHS (health and human services) funding is forecast to grow by about 15 percent in the next biennium alone and about 30 percent in the following biennium," the GOP governor notes. "As I've made it clear over the last several months, that rate is unsustainable. As those programs grow at a pace that is out of control, they take limited funding away from other priorities like K-12 education and public safety."

Both House and Senate bills spend about $11 billion in two years for HHS programs. The House would cut about $400 million from projected growth, and would add 50,000 children to health insurance.

The Senate would cut about $600 million, amounting to about a 7 percent reduction. Senate Democrats would also raise taxes $2.2 billion but also would cut funding to nursing homes and hospitals.

The latter point caused Sen. Mary Olson, DFL-Bemidji, to vote against the Senate bill, which did pass on a 40-23 vote.

"Even though I voted against her (Berglin's) bill, I thought it was a much, much better bill than the governor proposed," Olson said last week in a telephone interview. "First, it doesn't take from the Health Care Access Fund. Secondly, (Berglin) is much more thoughtful about how the cuts are made in a way to try to keep our safety net programs in place for people who really need them."

Services might be limited but not eliminated, Olson said. The bill keeps funding to critical access dental clinics, such as that just opened in Bemidji, while Pawlenty would eliminate the funding.

Pawlenty would also cut supplemental funding for 16 most common medical procedures in rural hospitals, she said. "Of that money that was cut, even though there are 120 hospitals in the state, 20 percent of that money would have come from our local North Country Regional Hospital."

But the Senate bill contained enough measures that were "problematic" that the Bemidji Democrat could not support it.

Olson tried to change the bill's proposed nursing home reductions to help rural nursing homes, but her amendment failed in a 45-20 vote.

"Sen. Berglin told me she was going to try very hard not to cut nursing homes at all," Olson said. "But if she had to, as a last resort, she was only going to take the money from the highest reimbursed nursing homes."

But Olson thought that would apply only to those nursing homes rated as "metro" and not include those rated "rural" or "deep rural." The bill, however, reduces reimbursements to the highest reimbursed facilities in each care group.

"At Neilson Place, under the b ill, they would see $120,000 reduction while under my amendment to take out that within each tier group language, it would have dropped the reimbursement cut to around $30,000," Olson said.

Most nursing homes under either measure will not see a cut, but those that are on the higher end would get some level of cut, she said. "I didn't think that was fair. I thought we should look at this from a statewide perspective."

A study released late last week by the Long-Term Care Imperative says that budget proposals to cut older adult services would amount to significant economic losses in Minnesota.

The Senate's bill would result in the loss of economic activity of $72.4 million and 766 lost jobs in the next biennium, the Long-Term Care Imperative said. The House proposal also produces significant losses of $38.7 million in lost economic activity and 382 jobs lost.

The Senate proposal for nursing facilities, which includes rate cuts for many facilities, is estimated to result in a loss of $47.8 million in economic activity and 542 jobs. The House proposal, while not cutting as deep, also creates losses for the state, totaling $14.1 million in economic activity and 158 jobs, it said.

Both the House and Senate adopted the governor's proposed reductions for home and community-based services providers, which result in additional losses to the state, it said. The cuts to providers under the elderly waiver program result in $24.6 million in lost economic activity and 224 lost jobs.

Olson said she also opposed the Senate bill as it creates gaps in services.

"I do have a concern about expanding eligibility at the same time that we're cutting reimbursements," the Bemidji Democrat said. People have written her saying they can't afford to lose MinnesotaCare or they will lose their home.

"But they have said they could afford to pay a little bit of a deductible or a co-pay that would be much better than losing the program altogether," she said. "I have a problem with extending either eligibility or reducing co-pays ... or whatever that is making the cost of the program more expensive at the same time that we are reducing the reimbursement rate."

A tipping point is being reached in rural Minnesota that it won't matter how many more people are eligible if there isn't a facility there to deliver the service, she said.

"It's definitely an issue for smaller communities," Olson said.

Olson also said she was concerned about some last-minute amendments added to the bill to allow insurance plans to keep monies in reserve and then using them as reserves in issuing reinsurance for other plans.

"It would be better as excess reserves, rather than using them for their own investment purposes or to benefit themselves, maybe that money would better delivered back to the subscribers in terms of reduced rates," Olson said.

Another amendment which didn't get a committee hearing would require hospitals to have birthing centers paid at a lower rate and requiring that all normal deliveries "go in that direction," she said.

Olson called that "very directed in terms of how health care is delivered," and something best left to the medical community. Such a measure could be costly to NCRH, she said.

"I have some concerns about whether we ought to be making potentially quality of care kinds of decisions in our budget without the medical community weighing in," she said.