THE ROAD TO HEALTH-CARE REFORM
This is the first in a series of occasional posts that will explore how Minnesota’s policy and programs stack up against federal health-care reform legislation and which proposals could have the biggest impact here.
If only it were 2014, a couple of public-health funding headaches could begin to go away in Minnesota.
Under proposed health-care reforms in Congress, the expansion of Medicaid would cover the 36,000 impoverished adults without dependent children currently enrolled in the state’s General Assistance Medical Care program. If it were 2014 there would be no need to move them to the MinnesotaCare insurance program for low-income residents because the governor struck $381 million in 2010 funding for GAMC.
And if it were 2014 the Health Care Access Fund — which finances MinnesotaCare through a tax on providers and insurers and through premiums from more than 117,000 current members — might not be on the verge of going broke. There might not even be a need for MinnesotaCare if new federal subsidies make coverage affordable to low- and moderate-income citizens through insurance exchanges.
It’s not 2014, of course. While the U.S. House of Representatives has passed its version of health-care reform, the Senate is still working through its 2,074-page bill. If the Senate passes a bill, members of both chambers need to reach consensus on legislation sent to President Barack Obama. A lot could change until the legislation is signed, but for now the bills offer hints of consensus on approaches to health care for poor and lower-income people.
A daunting task
In several ways, Minnesota’s health-care policy and public insurance programs are ahead of federal reform proposals and practices in other states. For now, however, Minnesota legislators are faced with a daunting task amid a shortfall of $1.2 billion in tax revenue going into 2010: how to preserve health coverage for poor and low-income residents until federal reform takes hold and picks up much of the cost for childless adults earning up to 150 percent (House bill) or 133 percent (Senate bill) of Federal Poverty Guidelines (FPG).
They’re considering ways to do that in a constantly shifting federal reform environment; there’s talk this week in the U.S. Senate of widening Medicaid eligibility to higher incomes and lowering age qualifications for Medicare.
Today at 12:30 p.m., state DFL legislators will give more details about their plan to restore some GAMC funding for the rest of the biennium. (Here’s a sneak preview. And here’s the update.)
In recent years, the state and federal government have split the cost of Medicaid — called Medical Assistance in Minnesota — for about 557,400 parents, disabled adults and children (as of 2009) up to 100 percent of FPG.
Since the mid-1970s, the state’s general fund has borne the cost of covering childless adults making up to 75 percent of FPG (about $8,000 annually) because Medicaid does not cover adults without dependent children unless they’re disabled. MinnesotaCare, which launched in the early 1990s, currently insures childless adults making up to 250 percent of FPG, parents and older children up to 275 percent, and children up to 280 percent (infants to age 2).
DHS expects 175,000 new Medicaid enrollees
Under the House bill, the federal government would pick up the entire cost of covering impoverished adults without kids for the first two years after implementation and 91 percent thereafter, according to state Medicaid Director Brian Osberg of the Minnesota Department of Human Services. The Senate bill covers 100 percent of the cost for three years and 80.3 percent after that.
DHS estimates that at least 175,000 more Minnesotans would be enrolled in Medical Assistance by 2016, 100,000 of them adults without dependent children. Besides widening eligibility for more Minnesotans, proposed legislation would eliminate the “asset test” that prevents some people from qualifying currently for Medicaid, he said.
“That’s probably where our biggest exposure is financially — the growth in the Medicaid program because of eligibility changes for the current Medicaid program,” Osberg said.
Under federal stimulus legislation passed early this year, the federal government is picking up 61.59 percent of Minnesota’s Medicaid costs until the end of 2010, including parents earning up to 275 percent of FPG through the MinnesotaCare program.
The proposed reform legislation requires the state to maintain current eligibility standards (called “maintenance of effort”) for all Medicaid populations for an undetermined period, he said.
“The big issue is, how do we continue to afford our obligations to cover the current Medicaid population because of maintenance of effort requirements that go on indefinitely in both bills,” he said.
After the enhanced match expires in 2010, Minnesota will continue to pick up 50 percent of the Medicaid costs for all populations, he said.
Relief for Health Care Access Fund
Still, Minnesota’s Health Care Access Fund could be in store for financial relief down the line, possibly more than $500 million a year, according to Osberg’s calculations. “It’s very significant for us when we get to 2014 and beyond — especially when we get to 2015 when it’s (reform expansion) fully in place. That’s a significant savings, assuming that we’re able to maintain coverage up to 250 percent of FPG for adults without kids until that time.”
State Rep. Tom Huntley, chair of the House Health Care and Human Services Finance Division since 2007, sees as much as $800 million in annual savings.
“There’s $400 million a year that we won’t have to pay for GAMC,” said Huntley, DFL-Duluth, one of 21 lawmakers from across the nation asked by the White House to work on federal reform efforts. “Second, there’s a big chunk of adults without kids on MinnesotaCare who would be eligible for the new MA (Medicaid) expansion … and that is probably another $400 million a year.”
Ahead of the pack
Minnesota long has stood out for its public health insurance programs and one of the lowest uninsured rates in the nation. In recent years, only Massachusetts, which has an individual mandate, and Hawaii, which has an employer mandate, report lower uninsured rates than Minnesota.
And Minnesota is in the minority of states voluntarily covering impoverished adults without children and offering a low-cost insurance program like MinnesotaCare for low-income working people. Under federal reform, all states will be required to cover childless adults and contribute a share of the costs.
Will MinnesotaCare even be needed after reform?
MinnesotaCare’s future “ultimately depends on whether those income standards or the subsidies [offered through insurance exchanges] require a lower or higher share of income from people compared to the current MinnesotaCare program,” said Julie Sonier, director of the Minnesota Department of Health’s Health Economics Program.
MinnesotaCare has limited cost-sharing, no deductibles and no large co-pays other than a $10,000 limit on inpatient hospital benefits, she said. (Here’s a Congressional Budget Analysis [PDF] of subsidies and cost-sharing proposed in the House bill.)
“So, depending on how the federal bills are structured, MinnesotaCare definitely could still fill a valuable role,” she said.
MinnesotaCare would still serve unmet needs in Minnesota, said state Sen. Linda Berglin, chair of the Senate Health Finance Committee. “My view on that is the plans that are going to be in the exchange aren’t going to cover a lot of things — eyeglasses, dental care, durable medical equipment. So, both the House and Senate plans allow a state, if it has a public plan, to be on the exchange. MinnesotaCare is our public plan at the moment and it seems an opportunity to fill in gaps that will inevitably exist” in federal bills.
It’s not just public programs that have led to a low uninsured rate — 7.2 percent in 2007, according to the most-current data from the Health Economics Program.
“Overall, the rate of health-insurance coverage is a traditional strength for us and one of the main reasons for that is because we’ve traditionally had a very high rate of employer- based insurance,” said Sonier. “We also have public insurance programs that are more generous than most states both in terms of eligibility and in terms of the comprehensiveness of what they cover.”
This pie chart shows that more than half of the insured population is covered by employer-based plans and nearly 11 percent by MA/Medicaid, GAMC and MinnesotaCare. [PDF]
How that pie chart changes in the next few years and how federal reform affects the state’s bottom line remain to be seen. Meantime, Minnesota’s general fund will be required to transfer $109 million into the Health Care Access Fund in 2011 to keep it from going broke.
“If the Health Care Access Fund is viable, then there’s going to be a benefit … once this enhanced federal match kicks in,” Osberg said. “That’s the challenge right now: How do we finance coverage for adults without kids until Medicaid coverage kicks in under federal legislation?”
If only it were 2014 …
“Good point,” Osberg said, chuckling a little.
Casey Selix, a news editor and staff writer for MinnPost.com, can be reached at cselix[at]minnpost[dot]com. Follow her on Twitter.
Good article. Eventually there may will be a medicare buy in for adults 55+. Fodder for a future article.