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Pawlenty rejects early Medicaid

Gov. Tim Pawlenty on Tuesday rejected the Legislature's offer to enroll the state in an early Medicaid program, a program lawmakers say would bring $1.4 billion to Minnesota.

Pawlenty, in a letter to state Human Services Commissioner Cal Ludeman, said he is rejecting early enrollment because of significant general fund costs of $430 million over the next three years and uncertainty surrounding the federal government's ability to fulfill the massive spending obligations to the program in the future.

The enrollment was the last hurdle the Legislature faced with Pawlenty before adjourning the 2010 session. Supporters say the state would gain $7.45 in federal dollars for each $1 the state invested. Early enrollment in Medicaid would have been realized for former General Assistance Medical Care patients who know must seek emergency room treatment or care at one of four metro-area hospitals.

In the end, the Legislature dropped the idea but left open provisions that a future governor, including Pawlenty, could enact the early enrollment by executive order.

"Signing Minnesota up early for this entitlement program would strain the state budget and put us at significant risk," Pawlenty said. "Rather than simply expanding these rapidly growing and unsustainable programs, we should reform health care to pay for quality, rather than volume of procedures, and look for ways to provide additional access through the private market."

In the letter, the Republican governor writes that the inability of Congress to pass enhanced Federal Medical Assistance Percentages funding for states should serve as a warning about the federal government's ability to continue spending hundreds of billions of dollars in funds without any way to pay for them.

Supporters say the federal government would have matched state funding 50/50 until 2014 when the federal government would pay 100 percent.

Democrats accused Pawlenty of throwing up a roadblock to a clear-cut, common-sense path to improve health care for Minnesotans.

"Delaying early MA prevents Minnesota from capturing a federal match for state dollars we are already spending," Rep. Tom Huntley, DFL-Duluth, architect of House health reform, said in a statement. "Patients will still show up in our hospitals, but the cost of care will be passed onto middle-class families through higher health care premiums. Increasing health care costs for middle-class families is not a wise move as we emerge from this recession. We believe early MA is a more fiscally sound path forward."

The DFL-led Legislature put early MA into state law because it means $1.4 billion in federal funds and creates 30,000 jobs for hospitals and care providers, said Rep. Erin Murphy, DFL-St. Paul, in the statement.

"It means an assured safety net for sick and vulnerable Minnesotans or someone who loses their job," Murphy said. "It means an end to hidden cost shifting that increases premiums for middle-class families. Perhaps most importantly, it gives Minnesota the opportunity to drive market-wide payment reform, the best means to reduce future costs for everyone."

Pawlenty, however, disagrees,

"Our state budget is balanced," he said, "but next year there will be some tough choices to match expenditures and revenues for the next budget cycle," he said. "The last thing we should do right now is add another $430 million in costs to the bottom line and enmesh the state in an expensive federal health care program that does nothing to control costs or impose reform."

What the Legislature approved earlier does achieve really GAMC reform, he said.

"This reform was agreed upon by the Legislature and me," Pawlenty wrote Ludeman. "It represents a balance of the interests of various stakeholder groups. The (Coordinated Care Delivery Systems) model may provide opportunities to reform the way health care is delivered in the state. Not implementing early enrollment would provide time for the CCDS approach to work."

While only the four metro hospitals are CCDS's now, he predicted more will join Sept. 1. "The CCDS model will provide coverage at a fixed cost to the state."