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Federal government finalizes changes that will cost MinnesotaCare millions

photo of cms administrator seema verma
REUTERS/Kevin Lamarque
Earlier this year, the Minnesota congressional delegation sent a letter to Center for Medicare and Medicaid Services Administrator Seema Verma objecting to proposed Basic Health Program funding changes.

The Centers for Medicare & Medicaid Services (CMS) will change how they fund Minnesota’s health care system, resulting in a projected loss of millions in federal health care funding used by the state.

Since 2015, funding provided by the Affordable Care Act’s Basic Health Program has been used to support MinnesotaCare, the state’s health insurance program for those that earn too much to receive Medicaid, but have incomes below 200 percent of the federal poverty line.

Only two states currently use the funding: Minnesota and New York. With the new rules, the states are set to lose a combined $151 million in 2019, according to CMS’ own analysis. New York’s program is significantly larger, and the state is projected to lose the lion’s share of that amount. In May, Minnesota was projected to lose $24 million for 2019 and 2020, but the Minnesota Minnesota Department of Human Service (DHS) is still calculating the fiscal impact of the final rule.

In 2017, the MinnesotaCare program paid out $397.2 million for medical services.

Years-long fight

The funding changes close a chapter in a years-long fight between Minnesota and the Trump administration over Basic Health Program funding.

In 2018, New York and Minnesota sued the Trump administration after the administration argued that CMS should not be providing a portion of Basic Health Program funding without an explicit appropriation from Congress. They settled in court; the administration agreed to pay $17.3 million to Minnesota and $151.9 million to New York. Following the settlement, the administration committed to working with states to develop a new formula.

But in April of 2019, HHS proposed the new funding formula. At the time, The Minnesota DHS said a change to the funding formula would result in around $24 million in lost health care funding for both 2019 and 2020. In the finalized rule, the changes will only impact 2020.

Changes condemned

The finalized funding formula has been denounced by Minnesota’s DHS, the Minnesota Hospital Association, and Sen. Amy Klobuchar.

“Federal funding instability challenges the state’s ability to plan for the future and creates instability for our clients,” said Tom Moss, Acting Commissioner for DHS’s Health Care Administration.

The Minnesota Department of Human Services said that while some of the changes to the final ruling from the draft form are positive, they are considering all options to challenge the new payment structure. “This is a cost-shift from the federal to the state government that does not occur in other states,” the agency said.

Matt Anderson, interim president and CEO of the Minnesota Hospital Association, said the changes are a way “CMS can save money without a huge outpouring or outcry from the rest of the country.”


Sen. Amy Klobuchar condemned the finalized rule change: “As I warned the administration months ago, the adjusted MinnesotaCare payment methodology could jeopardize coverage for Minnesotans as the state is forced to confront the funding shortfalls that are created by a dramatic reduction in federal funding. I will continue to fight to protect the health coverage of the more than 84,000 MinnesotaCare enrollees in our state.”

When the formula changes were initially announced, almost every member of the congressional delegation denounced the changes in a letter to CMS Administrator Seema Verma. “An abrupt shift in BHP payment methodology could jeopardize coverage for Minnesotans as the state is forced to confront the funding shortfalls that would be created by a dramatic reduction in federal funding,” the letter, signed by nine of the delegation’s ten members, reads.

The only member not to sign on was the First District’s Rep. Jim Hagedorn, who sent his own letter. At the time, his office said that he did not yet have enough information to ask CMS to reconsider the changes. Hagedorn’s office did not respond to a request for comment on the final rule change.

“This is not a Republican or Democrat issue. This is about making that low income working Minnesotans have affordable access to healthcare. And that’s what we’re all about. And that’s what our congressional delegation is about,” said Anderson.

“We wish that was what the federal government was about.”

Comments (12)

  1. Submitted by Robert Ahles on 11/08/2019 - 12:00 pm.

    “America’s health care system is neither healthy, caring, nor a system” Walter Cronkite

  2. Submitted by Robert Ahles on 11/08/2019 - 12:01 pm.

    Trump seems so threatened by Obama and his legacy that his only policy objective since he has been in office is to try and undo everything Obama achieved. Petty and juvenile. I don’t think I’ve ever seen a more narcissistic and insecure person. This country deserves so much more……..

  3. Submitted by Robert Ahles on 11/08/2019 - 12:01 pm.

    When small businesses struggle to keep their doors open, there are fewer jobs. And when a single illness or medical emergency can bankrupt a family that family won’t be shopping at our small businesses or contributing to a robust economy.

  4. Submitted by Robert Ahles on 11/08/2019 - 12:03 pm.

    Does the Affordable Care Act (Obama Care) need some improvements? Of course. But we shouldn’t scrap what’s working for a new plan that increases costs, allows insurance companies to charge more for people with pre-existing conditions, and gives tax breaks to the wealthy and insurance and drug companies.

  5. Submitted by Robert Ahles on 11/08/2019 - 12:04 pm.

    Welcome to America where it’s good to be rich but it sucks to be poor. Republicans would rather spend billions on stupid walls and tax cuts for the rich than on safeguarding the health of their citizens. The US military budget is bigger than the next 10 countries combined and they nickel and dime health treatment. It is shameful….. for some who have good health to want it denied to others.

  6. Submitted by Robert Ahles on 11/08/2019 - 12:04 pm.

    Remember when Trump said he would repeal Obamacare on his first day in office and replace it with something that would be the greatest healthcare there would ever be! He said it “would be cheaper, it would provide better coverage, and it would cover everyone”.

  7. Submitted by Joel Stegner on 11/08/2019 - 12:55 pm.

    I hope that New York uses his tax returns to identify how much he cheated the state out of taxes he owes over past year, with a large fine and other legal consequences, and also goes after his kids, who certainly profited from the tax cheating. One way to recoup some of the money his latest vendetta has taken away. Minnesota will do the right thing and figure out a way to pick up the cost, because when Minnesotans talk about trying to cover everyone with better coverage and great outcomes, we are not lying. Frankly, I don’t think even Republicans are going to want to boot people off their healthcare coverage. Pawlenty did that and showed that he was a wolf in sheep’s clothing.

    I can remember when Republicans took pride in covering people and even today, most smart business people who support their local hospitals understand that people get more expensive care if poorly covered, and corporations and their employees pick up the cost.

  8. Submitted by Ron Gotzman on 11/08/2019 - 02:03 pm.

    ” In May, Minnesota was projected to lose $24 million for 2019 and 2020, but the Minnesota Minnesota Department of Human Service (DHS) is still calculating the fiscal impact of the final rule.”

    I think they have other issues to deal with at the present time.

  9. Submitted by Connor OKeefe on 11/08/2019 - 03:11 pm.

    When confronted with the enormous costs of their generous social programs, liberal states most often reply it reflects their values. More realistic people observe that spending other people’s money isn’t generosity; paying the bill yourselves is.

    There is no reason for even one person to lose their Minnesotacare coverage. All you have to do is pony up the revenue in Minnesota as your values direct.

    • Submitted by ian wade on 11/08/2019 - 04:55 pm.

      This from someone who supports a guy that’s literally spending other people’s money to compensate for his own dismal fiscal policy decisions.
      Irony is dead.

    • Submitted by Robert Ahles on 11/08/2019 - 07:49 pm.

      Trump’s golf has cost U.S. Taxpayers about $107,000,000 as of August 4, 2019.

  10. Submitted by Alan Straka on 11/11/2019 - 12:00 pm.

    The Republicans are dead set against single payer and yet they are doing their level best to kill viable alternatives so people are driven to support “Medicare for All”.

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