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House DFL protects hospitals, nursing homes

Rural health care facilities could fold under Gov. Tim Pawlenty's health care proposals, DFL House leaders say.

"The governor did not come through this year with any big reform to health care," House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said Monday morning in a telephone conference call with outstate reporters.

"His idea of reform to health care is to take Paul Bunyan's ax and just chop a whole bunch of people off of health care," Kelliher said.

The Legislature sent Pawlenty a bill to target $1 billion in new income tax dollars to schools, hospitals and nursing homes -- a bill he vetoed only hours later before taking to White Bear Lake at 3:30 a.m. as part of the Governor's Fishing Opener.

While Pawlenty told the Pioneer that a safety net for the state's most vulnerable is maintained under his budget, "the governor also proposed kicking 113,000 people off of health care," said Rep. Tom Huntley, DFL-Duluth, chairman of the House Health Care and Human Services Finance Division.

A conference committee on health care and human services finished its work late Sunday, and was expected to put it on the Senate floor Monday night. The House approved it in an 80-51 vote.

"Those people don't go away, they're still there," Huntley said. "They're still going to go, unfortunately, to emergency rooms to get treatment, and they won't be able to pay. So hospitals will take a bigger hit by the governor's proposal."

Rural hospitals and nursing homes are threatened under Pawlenty's budget which cuts reimbursements for public assistance medical care, he said. With less than a week before the session is set to adjourn, they need to know whether they're still in business or not.

Pawlenty also proposes getting rid of the hospital part of General Assistance Medical Care for poor adults, Huntley said. "That would have been a direct hit on hospitals, because that's where hospitals get most of their care."

The legislative conference report maintains state-paid GAMC, he said, "so that will help the hospitals that have a relatively high population of low-income people."

The governor's proposed health care budget would cut $14.3 million for the biennium from North Country Health Services, which operates a hospital and long-term care facilities, according to House DFL Research.

The figure is 17.7 percent of its gross revenues, figured from 2007 reports, and does not include the loss of federal matching dollars which would bring the potential loss closer to 25 percent.

The Minnesota House bill had a $980,000 reduction over two years to NCHS, which saw some minor changes in the conference committee report. Still, the legislative cuts are only about 10 percent of that Pawlenty proposes for hospitals, House DFLers said.

"I think we have a lot better ideas of how to reform health care and contain the costs and continue to work," Speaker Kelliher said. "We need to partner with our federal partners ... to make sure that more Americans and more Minnesotans have both access and coverage to care."

A problem with the Senate's bill -- and a reason why Sen. Mary Olson, DFL-Bemidji, voted against it -- is a proposal to reduce state subsidies to hospitals that receive the most. But instead of only taking the top metro-classified hospitals, the bill also included those hospitals in rural and deep rural classifications for cuts.

Bemidji , in the rural classification, is a top user of state aid as it serves more public assistance patients than any other, bar the Twin Cities metro hospitals.

"The cuts to hospitals are closer to the House position," Huntley said of the conference report. "There are some features in the bill that do give money to Hennepin County (Medical Center) hospital and Regions (Hospital in St. Paul) because they have the highest rate of Medical Assistance patients, but across the state there are large hospitals, be they Bemidji or the two in Duluth that have almost as high a Medical Assistance rate as in the Twin Cities."

Huntley said that "we did attempt to fix that - it's not as bad in the conference committee as the Senate bill was, but hospitals are still being cut every place."

The governor's budget would do away with a provision that rural hospitals could not receive a rate less than 90 percent of the metro rate, Huntley said, but it is retained in the conference report.

"We are very nervous about the situations of our hospitals around the state, particularly rural hospitals which are all at the edge of going into negative margins," he said. "We have to be very careful, and we were in this bill to minimize the cuts to hospitals."

Pawlenty proposes using a surplus in the Health Care Access Fund, generated by a 2 percent health care provider tax, to shore up the General Fund. That won't happen, the DFLers said.

"That will not happen -- it will be over my dead body before we get rid of the Health Care Access Fund," Huntley said, adding that the top Senate negotiator on health care, Sen. Linda Berglin, DFL-Minneapolis, agrees the same.

Pawlenty's push amounts to "a taking" of the Health Care Access Fund, Kelliher said. "He leaves the (provider) tax in place and makes it a general tax increase. ... He keeps the provider tax in place and really takes it all and dumps it into the General Fund. We think there's an honesty about the way that fund was set up and the work that it does to help Minnesotans get coverage to health care."

The GOP governor, late Monday, sent a letter to DFL leaders with what he said was a compromise. Instead of bonding to make up about $1 billion of a $4.6 billion budget deficit and repaying it through tobacco settlement monies, he would only bond half that.

He'd also agree with the Senate DFL and drop his proposal to leave a $250 million budget reserve. And he would agree with House DFLers with their proposal to shift K-12 state payments to the next biennium, a figure higher than his.

Pawlenty's compromise would yield the $1 billion that was increased taxes in the vetoed bill.

"While I offer these ideas in the spirit of compromise, I want to be clear that I will continue to oppose any tax increases," he wrote. "Minnesota is already a highly taxed state. The people of Minnesota are taxed enough. We should also stay focused on holding taxes down so employers can grow jobs and help us recover from the recession."

Kelliher, later Monday, used her Twitter account to question if the proposal was indeed a compromise. "Compromise in word only," she said. "Doesn't balance the budget. Not a responsible plan."

The Legislature, facing a Monday deadline, will work to find a bill Pawlenty can sign. If not, an attempt to override his veto will be taken late in the week, Anderson said. Four Republicans would have to switch over for that to happen.

"It is very difficult for members of the governor's own party to break with him," the speaker told outstate reporters. "But I am encouraging them to see what the choices are, to see are for their own school districts, to see what their choices are with their hospital."

In the end, Anderson said, "there's good will in many of the eyes of these members of the opposite party, and they want to do the right thing. They want to do right by their community, not right by their governor."