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General Assistance Medical Care veto may cost NCRH millions

Gov. Tim Pawlenty's veto of medical care for the destitute could raise costs to North Country Regional Hospital nearly $4.8 million.

The veto came late Thursday to the Legislature's omnibus health and human services spending bill as the governor promised earlier in ending the legislative session Monday night -- budget deal or no deal.

The Republican governor line-item vetoed $381.1 million for fiscal year 2011 for General Assistance Medical Care grants, the program for adult Minnesotans on full public assistance, many suffering from chronic illnesses.

That move, according to the Minnesota Hospital Association, will increase uncompensated care costs to North Country Regional Hospital by $4.87 million in state fiscal year 2011, assuming Minnesota hospitals absorb the full reduction.

"As a result of the governor's line-item veto of GAMC funding in the health and human services bill last night, North Country Health Services in Bemidji will lose $4.9 million, money they spend to treat the poorest and sickest people in our state -- including veterans and seniors," Rep. John Persell, DFL-Bemidji, said Friday.

In fiscal year 2007, an average of 33,824 people were eligible for GAMC services each month, according to a Minnesota House research report last November. As of August 2008. 16,977 GAMC recipients were enrolled in prepaid GAMC or a county-based purchasing initiative, such as PrimeWest Health, utilized by Beltrami County.

"This is a devastating blow to over 30,000 of our most vulnerable citizens, the important hospitals that treat them, and the caregivers who will lose their jobs," Persell said.

Rep. Brita Sailer, DFL-Park Rapids, adds that the GAMC veto means that St. Joseph's Area Health Services in Park Rapids will lose $902,000.

"This is money used to treat the poorest people in our state -- veterans, senior citizens and the mentally ill," Sailer said. "It will devastate over 30,000 Minnesotans and the hospitals that care for them."

Pawlenty said Thursday he will not call a special session and there will be no government shutdown on July 1. If the Legislature doesn't provide a plan he can accept that closes a $3 billion gap between available revenues and spending bills they sent him, he will use his line-item veto authority in the current bills to trim spending and unallotment of funding after July 1.

He told reporters Thursday that he had proposed the GAMC cut to the DFL-led Legislature, along with provisions to establish a uncompensated care pool to help those hospitals which see an influx of GAMC patients. But, he said, DFLers rejected that proposal.

The GAMC program reimburses providers under both a fee-for-service system and a managed care system. It is completely state funded; there is no federal funding. As a result, some of the $2 billion in federal economic stimulus funding used to solve some of the state budget $6.4 billion deficit can't be used on GAMC.

The program covers adults with incomes not exceeding 75 percent of federal poverty levels, and include such services as physician care, hospitalization, rehabilitation, dental, medical equipment and supplies, mental health, prescription drugs, and medical transportation.

"The rate of growth in health and human services spending is forecasted to grow by approximately 15 percent in the next biennium and approximately 30 percent in the following biennium, and that rate is unsustainable," Pawlenty said in his veto message.

Pawlenty's budget proposal in health and human services spending would have saved $1.67 billion in General Fund dollars, he said. The Legislature's budget saved only $613.4 million.

"The impact of this item veto and related, anticipated unallotments will not occur immediately," Pawlenty wrote. "As a result, the Legislature will have an opportunity to address this change further if it chooses. Additionally, many individuals now eligible for GAMC may be eligible under the MinnesotaCare Program."

"This is just the first in many deep cuts our communities will face when the governor begins to balance the budget through unallotment," says Persell. "These proposed cuts to Minnesotan's medical services are irresponsible actions by Gov. Timothy Pawlenty and further illustrates his inability to lead."

Adds Sailer: "And the worst is yet to come. The line-item vetoes were just the first step. Deeper cuts are in store when the governor begins to unallot."