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Pawlenty budget solution could cost some Minnesotans their health care
by Tom Scheck, Minnesota Public Radio
May 18, 2004

Gov. Pawlenty says he will balance the state's budget deficit by using a mix of spending cuts and by taking money from a fund that pays for the state's subsidized health insurance program, MinnesotaCare. Seventy percent of Pawlenty's budget balancing plan will involve withholding payments to the Health Care Access Fund. The governor says the shift will not cause any problems for MinnesotaCare enrollees in the near term. But critics say they're worried the governor's action could lead to significant cuts to the program in the future.

St. Paul, Minn. — The Health Care Access Fund finances coverage for roughly 146,000 low- and middle-income individuals enrolled in MinnesotaCare. The premiums they pay and a 2-percent health care tax on doctors generate the bulk of the fund's cash. As of now there's $54 million in the fund. The fund has been running a surplus in recent years, which has made it a prime target to help plug recent budget deficits. In 2003, state lawmakers shifted $193 million from the fund to help fix the state's $4.5 billion deficit. Gov. Pawlenty plans to withhold a $110 million payment to the fund to offset the current budget deficit. He says no one enrolled in MinnesotaCare loses benefits. "These actions do not change eligibility or availability of services to those who would otherwise be qualified," Pawlenty said.

But the governor's plan has some concerned about the future of the MinnesotaCare program if the Health Care Access Fund isn't fully funded. With this latest loss, the fund could begin running a deficit by 2007.

Under state law, if a deficit occurs the human services commissioner can to cut eligibility or enrollment the very next year. That worries some who advocate on behalf of universal health care for children. "They're treating the Health Care Access Fund like some kind of ATM, when it was designed to make every child healthy," says Jim Koppel, the executive director of the Children's Defense Fund. He was also active in passage of the MinnesotaCare legislation in 1992.

Koppel says while Pawlenty and previous governors have used the surplus in the Health Care Access Fund to balance the state's budget, they have not increased eligibility rates for low and middle class working families. "They have taken a good program that was working right and in fact was spending less money every year than we anticipated. That's why we had this in the bank. But it was for the future and for more children to get covered. It wasn't to go to pay for roads or some other deficit," he said.

Koppel says the governor's plan is acutely painful because it comes just one year after the Legislature cut not only Minnesota Care, but General Assistance Medical Care and Medical Assistance as well. Paul Matson, with the Minnesota Medical Association, says the doctors in his organization aren't happy that revenue from the provider tax they pay is going towards fixing the deficit. For more than a decade, the MMA has lobbied the Legislature to eleminate the 2-percent tax entirely. He says state lawmakers promised his organization in 1992 that the state would only use Health Care Access Fund money for health insurance purposes. "We were given promises and told that the money would go only into health care. So we are concerned to see the Health Care Access Fund being eroded and being used to go back into the general fund to pay down the debt and balance the budget," according to Matson.

Finance Commissioner Peggy Ingison says she understands Matson's frustration, but says health care financing is not as clear cut as it used to be. She says the state's general fund pays for some state run health programs while the Health Care Access Fund pays for MinnesotaCare. Ingison says health care costs have increased at double digit rates in recent years and that financial pressure is causing problems for the state's overall budget deficit. "It's hard for us to sit here now facing a general fund deficit because we want to be really protective of the Health Care Access Fund, because something may happen there. There are a lot of people who depend upon the programs in the general fund where there's a pretty serious problem as well. Trying to keep the general fund in balance and put that together, I think is our priority at this point," said Ingison.

Ingison says state lawmakers and others should not concern themselves with what will happen to the Health Care Access Fund in the future. She says Gov. Pawlenty plans to address the state's health care financing system before the start of next year's session. She also says it's possible that the economy could turn around. That would mean additional revenue going into the fund.

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