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Pawlenty sliced Minnesota’s medical care for the poor, and now time’s running out

Gov. Tim Pawlenty used his line-item veto to strike $381 million in funding for General Assistance Medical Care, then unallotted another $15 million. The program will die March 1 — unless legislators can come up with a solution.

Pawlenty sliced Minnesota's low-income medical care, and now time's running out
MinnPost photo illustration by Corey Anderson

Sam Joyner expected state Rep. Jim Abeler, R-Anoka, and other lawmakers to listen to his testimony last session about how the General Assistance Medical Care (GAMC) program for impoverished residents had covered his treatment for painful degenerative disk disease.

What Joyner didn’t expect was that Abeler would invite him to his office after a February committee hearing. “He told me he was a chiropractor and he said, ‘Would you do me a favor and stand there for a minute,’ ” Joyner, age 62, recalled.

Within a few minutes, Abeler showed Joyner how his right shoulder was three inches higher than his left and advised him that “any good chiropractor” could help restore balance. Joyner found a chiropractor close to his Minneapolis apartment and reports: “I still can’t work, I can’t lift weights … but I can walk and I can function without being in total agonizing pain around the clock.”

A cynic might ask: Could lawmakers moonlighting as chiropractors and medical professionals be the Republican approach to cutting health-care costs for the poor?

The ‘softie Republican’
An optimist might respond: Republicans have a heart. Even Abeler describes himself as the “softie Republican” in the House.

Rep. Jim Abeler
Rep. Jim Abeler

Since that behind-the-scenes moment in February, a whole lot has happened to threaten the future of GAMC benefits for Joyner and nearly 35,000 Minnesotans and the hospitals and providers who care for them.

Three days before the session ended, Gov. Tim Pawlenty used his line-item veto to strike $381 million in second-year funding for GAMC, stunning Republicans and Democrats alike. The DFL-controlled House of Representatives failed to reach a two-thirds majority to override the veto in a straight party line vote. Then the Republican governor unallotted another $15 million, in effect speeding up the demise of the program on March 1 — unless legislators can come up with a veto-proof and unallotment-proof compromise to restore some form of GAMC.

The other BIG question hanging over the future of GAMC is the passage of federal health-care reform legislation. Each of the major bills before Congress, including the one just passed this week by the Senate Finance Committee, contains language to extend Medicaid coverage to anyone under age 65 with income up to either 133 percent (in one bill) or 150 percent (in other bills) of Federal Poverty Guidelines (FPG). Right now, Medicaid (called Medical Assistance in Minnesota) does not cover poor adults with no children under 18 unless they receive Social Security disability.

Has filled gap for 35 years
For 35 years, GAMC has helped fill the gap in coverage for childless adults making up to about $8,000 per year or 75 percent of FPG. Minnesota is one of the few states in the nation to offer a state-funded program for this subset, though counties in other states find ways to cover health care for the poor.
“What we really need is a bridge,” said Patrick Ness, public policy manager for Catholic Charities’ Office of Social Justice. “We need to find a solution in the first two weeks of the Legislature to bridge to federal health-care reform. They’re saying it will be three years before we see the fruits of this (federal reform). All we need is to find a short-term solution to bridge the health-care needs of this most-vulnerable population.”

The governor’s veto and the House’s failure to override him ignited a firestorm among communities ranging from homeless shelters to hospitals required by federal law to treat and stabilize anyone who shows up in their emergency rooms. And the situation has galvanized livid social-justice advocates and hospital CEOs, the nurses who may lose their jobs because of hospital cutbacks, DFL legislators and Hennepin County commissioners.

“It was one of the most stark and heart-wrenching debates I’d ever seen,” Ness recalls of the floor debate over the veto override. “Veteran lawmakers were breaking down in tears about what this says about Minnesota.”

Advocates ready to make their case
GAMC advocates are organized and ready to make their case when the Legislature convenes on Feb. 4. They’ve met with legislators to brainstorm solutions on how to restore some GAMC funding. A GAMC Alliance of 50 interest groups has formed within the Safety Net Coalition.

Lobbying is occurring across the spectrum: from the St. Stephen’s Human Services’ YouTube videos (below) of GAMC enrollees to Regions Hospital’s weekly email detailing how much treatment of GAMC patients cost at the St. Paul hospital that week, a case study of a patient and a countdown to Feb. 4.

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“There’s interest in moving forward,” said House Assistant Majority Leader Erin Murphy, DFL-St. Paul, “but it’s going to be like threading a really small needle to find something we can afford that provides the care for people who are sick and to make sure there’s a financial cushion for providers who care for them.”

Senate Health Finance Division Chair Linda Berglin, DFL-Minneapolis, has held a few work sessions with affected parties and legislators. “We’re working very hard to try to figure something out,” she said. “The question is whether the governor is going to be interested in having GAMC get fixed or not because no matter how many ideas we have about reform we don’t get enough savings to buy back a program that would be even half of the size.”

Sen. Linda Berglin
Sen. Linda Berglin

So, what is the governor’s stance?

MinnPost asked about Pawlenty’s parameters for a new GAMC proposal. Spokesman Brian McClung responded in an email: “Health and human services spending is on an unsustainable path, compared to growth in the economy and the rest of the state budget.”

Asked if the governor is taking a wait-and-see approach on GAMC funding, given the pending federal legislation, McClung wrote: “The federal health care reform legislation will likely be passed in advance of the 2010 legislative session, so the features contained in the federal bill will certainly inform actions that might be taken during the 2010 session. The vast majority of people now in GAMC are eligible for MinnesotaCare” (the health-insurance program for low-income residents).

Revenue forecast due next month
Looming on the horizon is the November tax-revenue forecast, when the state should know how big of a budget deficit is expected. Sales-tax receipts for the quarter ending Sept. 30 were down 13.5 percent and individual income tax receipts were down 7 percent from the same period a year ago. Corporate tax income is down, too.

Any resolution of the GAMC issue may come down to three Republican votes, the number needed for the two-thirds majority to override another veto. Abeler’s could be one of them. He has crossed party lines in the past, he said.

Could the DFL majority in the House rally three Republicans to override a veto if necessary?

“It’s a little more complex than that,” said Murphy, the House assistant majority leader and a nurse who serves with Abeler on the Health Care Finance Division. “Because Gov. Pawlenty has chosen to use unallotment in a much expanded way, from my perspective we could come up with legislation to reform and rebuild GAMC, and we could get the support of three Republicans, and the governor could still choose to use unallotment to undermine that. It’s imperative we work in a bipartisan fashion, and I think it’s absolutely imperative that we address this issue this session.”

As vice chair for the House Health Finance Division and a broker of sorts between the administration and lawmakers, Abeler said he was “just as astonished” as other lawmakers and the public when Pawlenty signed the Health and Human Services Omnibus bill but struck the funding for GAMC.

“When I heard about the line-item veto I thought, ‘this will create some dialogue’ and it didn’t — it just created more rock-throwing,” Abeler said. “Then it became political, and the politics of GAMC are very urban in nature. Even though the GAMC population is scattered about the state, it’s heavily concentrated in the urban area and the Democrats rule the urban world 100 percent. I live in Anoka. Do you know how many calls I’ve gotten in the suburbs about GAMC? Two — and that’s counting the activists.”

That gap between urban and suburban-outstate interests is part of the problem, advocates for the poor say. As they try to spread the word about what’s at risk for the poorest of the poor and the health providers who care for them, they find many Minnesotans are unfamiliar with the program.

“Most Minnesotans think GAMC makes really nice cars, so that’s the barrier we have,” said Ness of Catholic Charities. “But when you talk about people who are sleeping under bridges and in shelters, who are really at what people say is the bottom of society, they say, ‘Yes, the state should play a role in their health care. … There’s a broad understanding that not only is it morally correct but it’s also fiscally wise to respond to this with state funding.”
Who receives GAMC?
To become eligible for GAMC, recipients can’t earn more than 75 percent of federal poverty guidelines, which is about $8,000 for a single adult. Many earn less than $2,500 a year, said Ness, explaining that’s about the annual amount of a welfare payment called General Assistance.

More than 41 percent of GAMC enrollees live in Hennepin County, according to demographic data [PDF] from the state Department of Human Services. Ramsey County has the next-largest share of GAMC recipients: 12.6 percent.

Overall, nearly 28 percent of recipients say they are homeless. Nearly 56 percent of all recipients are white, and African-Americans account for 31 percent of the population. Nearly 66 percent of recipients are male.

Mental-health issues and/or chemical dependency are prevalent among the population: 31 percent of recipients are diagnosed with both problems; 16.1 percent with chemical dependency only and 13.3 percent mental health only. Otherwise, 39 percent are free of those problems.

From six-figure income to no work
Inconsolable after his wife’s death from cancer, Sam Joyner says he took his savings and traveled the country on a Greyhound bus. Eventually he ran out of money and spent time among the homeless in Minneapolis, picking up any odd job he could — from janitor to mailroom sorter. It was a long way from his six-figure job as a salesman while his wife was alive. Eventually, his degenerative disk disease caught up with him and he couldn’t work at all.

“My back was so bad,” he said. “For the last couple of years I’ve spent most of my time bedridden or sitting in chair because moving aggravated everything.” All that started changing in February, when he took Rep. Abeler’s advice and started seeing a chiropractor. GAMC allows 24 chiropractic treatments annually.

GAMC recipient Robin Simpson’s last job was as a live-in nanny, but for many years she waited tables at restaurants. Now, she’s a live-in caregiver for her 79-year-old mother, who is recovering from breast cancer and dealing with ulcerated sores on her feet.

Simpson, 50, and her mom, Estelle Elledge, live in a trailer court in Oakdale and scrape by on Elledge’s food stamps and Social Security as well as Simpson’s $203 a month from General Assistance. Simpson is in the process of applying for Social Security disability because of a herniated disk and a foot problem that makes it difficult for her to stand or work.

While the federal Medicare program has covered Elledge’s health care since she turned 65, only recently did her daughter become eligible for the state program.

Long-neglected ailments
Like many previously uninsured adults, Simpson is playing catch-up on her long-neglected ailments including decaying teeth and depression. Also like many of the estimated GAMC enrollees, she’s worried about the safety-net program going away March 1 and about sliding back into despair about her ailments.

“I just think Gov. Pawlenty should look out for people who are trying to take care of our families in difficult situations and can’t go out there and get work because of medical problems and the situation at home,” Simpson said. “If it wasn’t for this medical care, who’s to say we can be around for the people who have taken care of us all our lives?”

Simpson and Joyner don’t necessarily fit some of the stereotypes of GAMC recipients, and that’s part of the issue in crafting a solution to resurrect the program after March 1.

“Because there are different groups, the solution for each group does not necessarily work for other groups,” said Sen. Berglin. “If you have people who are applying for disability (through Social Security), that’s one group of people and what you do for that group of people isn’t going to work for people who are chronically mentally ill and showing up in the hospital emergency room eight times a year. … It is smart to look at categories and solutions that work best” for them.

Though the governor has said that GAMC recipients would be eligible for MinnesotaCare, Berglin and others say it’s not that simple. Legislators will need to work quickly at the start of the 2010 session to create a solution for GAMC. 

“If you throw 35,000 people off a program and a month later you fix it, then what? You have all these costs of notifying and dis-enrolling them and notifying and re-enrolling,” Berglin said. “If we miss that date, I think the chances of getting solution for it become much less likely.”

Premiums and co-pays too much for poor
Another problem with MinnesotaCare is that it charges premiums and co-pays to low-income residents.

What if you don’t have an address or a checking account from which to deduct the premiums? Twenty-eight percent of current GAMC enrollees are homeless. Even if they’re receiving $203 a month in General Assistance, a co-pay is unaffordable, their advocates say.

“I don’t think people realize that a $10 co-pay for someone who gets $203 a month equals a $1,500 co-pay for someone making $30,000 a year,” said Monica Nilsson, director of street outreach for St. Stephen’s Human Services in Minneapolis. “Are you willing to pay a $1,500 co-pay? Of course not.”

MinnesotaCare also has a four-month lag before it starts paying for services, which is a problem for poor people dependent on prescription medications.   

Nilsson said St. Stephen’s is hearing from homeless clients who are worried about where they’ll get their meds once GAMC expires. Some have said they’re trying to wean themselves or stockpile their meds, she said.

She’s also warning the downtown Minneapolis community, the police department and businesses about what’s to come if GAMC goes away and there’s a four-month wait to qualify for MinnesotaCare.

“They’re always complaining about panhandling and people causing disturbances,” Nilsson said, “and I’ve been saying that if you think we have an economic development issue now, just wait until our folks can’t get their anti-psychotic meds. There will be a lot more people talking to themselves” on March 1.

The other question is whether there will be enough money generated by a health-access fee paid by providers to fund MinnesotaCare to cover 35,000 more people.

“DHS is assessing and analyzing options that exist under current law for GAMC enrollees, and that we can administratively implement, to assist and provide health care services for current GAMC enrollees and future applicants,” DHS communications manager Karen Smigielski wrote in an email. “We are also providing information and technical assistance to legislators and others interested in GAMC alternatives. Because any transition would be handled administratively, no specific funding has been set aside.”

Which institutions are hit the hardest?
About 55 percent of GAMC funding goes to hospitals, where the poor and uninsured typically show up in emergency rooms, according to the DHS. The rest goes to outpatient clinics and health-care providers.

On this point most legislators can agree: Hennepin County Medical Center in Minneapolis, the state’s primary public safety-net hospital and trauma center, will feel the most pain if GAMC goes away. It stands to lose $43 million in funding in 2010-11. Regions Hospital in St. Paul is next in line, anticipating a loss of $23 million in the first year.

“We understand there’s a budget problem at the state of Minnesota, however the patient population doesn’t go away” if GAMC is cut, said Mike Harristhal, HCMC’s vice president for public policy. “Those patients will still be here, and the institutions that serve them are vitally important to the community. So, we really need the creativity and statesmanship of policymakers to figure out a way to get through this crisis or else we will suffer longer-term consequences that would include a state with not quite as healthy a population and ultimately fewer health professionals.”

One way or another, even Minnesotans with health insurance will suffer the loss of GAMC.

“It’s about cost-shifting,” said Regions CEO Brock Nelson. “These patients will continue to get care but it will be cost-shifted to (insurers) and those who pay the bill including employers, employees, etc.”

Regions has called attention to the plight of its GAMC recipients with a weekly email distributed to lawmakers, the governor and the media about that week’s costs and a story of the week about a GAMC patient. “I was amazed at the first report that was sent out,” Nelson said. “My email was barraged with the number of responses about it. That alone shows it’s very impactful.” Here’s the report from June 22.

Across the river, HCMC’s patient population breaks down this way: 45 percent of patients receive either Medical Assistance/Medicaid or GAMC; about 22 percent receive Medicare; between 23 and 25 percent are commercially insured and 8 percent are uninsured.

What kind of cost-shifting occurs at HCMC?

“As much as I can get away with in that small 23-25 percent (insured) population,” said Chief Financial Officer Larry Kryzaniak. To cover a $43 million loss on its own, HCMC would have to raise rates to insurers by 33 percent.

Could he get it? Kryzaniak laughs. “I happen to be friends with some of the people at the health plans and I can hear the laughter already.”

Cuts and delays
HCMC executives and Hennepin County commissioners have been busy trying to figure out what services the hospital can cut and which capital projects they can delay. Hennepin County taxpayers provide 5 percent of HCMC’s $550 million annual budget, and the county in effect is the hospital’s “banking backstop and line of credit,” said Kryzaniak.

County commissioners are considering a 3 percent property tax increase to support HCMC, which would bring in about $18 million but still leaves “a big hole” in the budget, Board Chairman Mike Opat said. For an owner of a $250,000 home, the annual bill would be $30 higher.


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Commissioner Mike Opat
Commissioner Mike Opat

Among the extreme measures under consideration: restricting access to Hennepin County residents, closing outpatient clinics, shutting down some programs such as statewide poison control, and training fewer doctors, nurses and others from the area’s medical schools.

HCMC also recently announced that it would form a private foundation to help raise money for the hospital. Many hospitals, including Regions, already have fund-raising foundations to help support their services and expansion plans.   

“I’m disappointed in the governor,” Opat said. “This is breaking faith with state policy in terms of providing health care for the poor. … I don’t get the sense that the governor and DHS commissioner (Cal Ludeman) are willing to help. It’s particularly disheartening to have the result of a meeting with the DHS commissioner to be a shrug of the shoulders and say, ‘We feel for you.’ “

MinnPost tried to get a response from Ludeman. Smigielski of DHS wrote in an email that Ludeman would not be available for an interview with MinnPost about GAMC. Communications staff also would not make an administrator available to answer questions.

Why can’t Minnesota’s nonprofit tax-exempt hospitals simply absorb the costs of uninsured patients? Isn’t there a tacit understanding, at least in Minnesota, that taking care of the poor and uninsured needs to be built into hospital budgets?

Pressure all around
“There’s no question, our No. 1 mission is we are here for the community, we’re nonprofit and we do everything in our power to serve the community,” said Ken Paulus, CEO of Allina Hospitals & Clinics, who estimates that Allina’s various entities could lose up to $40 million in GAMC funding over a two-year period. “Our goals and motives aren’t profitability or financial gain, if you will. One of our major problems is that if all of our different sources of reimbursement continue to be under pressure, then we just can’t run a viable business.”

Part of the problem is that reserves are dwindling because of stock-market losses in 2008, said Lawrence Massa, president and CEO of the Minnesota Hospital Association.

“The balance sheets of all of our members have really been ravaged by the stock market decline,” Massa said. “They’ve all shown losses from investment earnings and hospitals need to maintain fund balances. Systems like a Fairview or a Mayo are big systems with lots of capital needs. That fund balance is there to ensure that they continue to go on long into the future — and that’s the beauty of a nonprofit delivery system like we have here in Minnesota. We’re able to plow those any kinds of gains we make into reserves that can create additional benefit in the future.”

For example, Allina’s portfolio lost $129.3 million between 2007 and 2008, according to its financial report. At the end of 2008, the portfolio was $698.4 million.

What was the governor thinking?
Observers believe that Pawlenty, faced with a $4.8 billion budget deficit during the last session and refusing to increase taxes, went in search of general fund expenses he could slash.

In his veto letter of May 14, Pawlenty said the rate of growth in health and human services spending was “unsustainable,” citing that it is forecast to grow 15 percent in this biennium and 30 percent in the next. He also said legislators have enough time in the session beginning Feb. 4 to come up with a compromise before March 1. 

“By doing that, he makes it look like legislators have the opportunity to fix it,” Sen. Berglin says. “But in reality — we’re actually tracking the money on a monthly basis — it’s not the date that GAMC expires, it’s based on the amount of money available. So the program could end sooner than March 1. We know we’re running 3.2 percent higher than projected. At that rate, we won’t have enough money to take the program into March.”

Going forward, some advocates believe Pawlenty is “receptive” to ideas, said Michael Scandrett, who is heading up the GAMC Alliance, which consists of about 50 advocacy groups seeking to keep the program. “He’s got these basic bottom-line principles, which are no new taxes or increases and no major increases in state spending. There are other ways to accomplish this so it’s consistent with his principles but he’s not giving advance guidance.”

Others believe politics and constituencies played a role and continue to do so.

“I think it was an easy cut for the governor to make because it falls on one hospital or two and it’s a nuisance to other hospitals,” said Opat, the Hennepin County commissioner. “I think it was done in a rather cavalier fashion and an irresponsible fashion.”

Was it political? “It’s reasonably political,” Opat said. “It certainly isn’t his core constituency that’s hurt.” Did it have anything to do with Pawlenty’s national ambitions? “I’m not going to touch that one.”

MinnPost posed this question to Pawlenty: What do you say to critics who think you are turning a cold shoulder to the poor during a deep recession, and that you are more focused on running for national office than on helping vulnerable Minnesotans?

McClung, his spokesman, responded in email:
“The generosity of Minnesota’s government-subsidized health care programs far surpasses that found in virtually any other state. We have expanded programs in recent years that other states don’t even have. We have the second-lowest level of people without health insurance in the nation. However, it would be irresponsible for state government to allow these programs to grow at a rate that far exceeds inflation year-after-year.

“The explosive growth in health and human services is jeopardizing the state’s ability to fund education, public safety and other important programs. State government is on the brink of becoming nothing more than a giant welfare and social services provider. Dealing with this issue will be an important part of the policy debate in Minnesota for years to come.”

Rep. Abeler joined fellow Republicans in opposing the veto override on May 17. He defends Pawlenty’s unallotment decision, saying the governor is required by the state Constitution to balance the budget.

“Something has to happen or we’re going to ‘humanitarian’ ourselves out of business,” Abeler says. “Democrats will argue ‘but we can’t leave anyone behind.’ Republicans will argue that ‘the lifeboat will sink; we’re trying to rescue all we can.’ [In other words] there’s a fiscal capacity of the lifeboat. You can bring in the last three people but we’ll all drown.”

Joyner, the GAMC recipient, was there for the emotional override vote and he says he’ll be there when the Legislature convenes.     

“I was hoping to get Rep. Abeler to swing his vote,” Joyner said. “He’s a Republican but he’s also a chiropractor and he knows what eliminating medical insurance means. … If I get a chance I’m going to confront him in front of everybody: ‘You’re a chiropractor. Are you saying it’s OK to just suffer and not have any medical insurance?’ I’d like to see what he says to that.”

A matter of pragmatism
So, how does Abeler explain his kindness to a GAMC recipient and a vote against an override? “It’s not a matter of kindness — it’s a matter of [being] pragmatic,” he tells MinnPost.

“The irony in all of this,” the six-term lawmaker said, “was here’s a guy (Joyner) who had a ton of GAMC treatment. He had injections, X-rays and therapy … and he didn’t even know about the option of a chiropractor. So, he did all the medical mainstream things first but it’s the less-expensive treatment that worked for him.”

And, he and others concede, it’s a matter of context and politics. After the governor’s veto, Abeler says, no one from the DFL sought his assistance in trying to craft a solution that would be acceptable to both major parties and the governor. “When he vetoed the bill, they quit talking even to me.”

The polarization, he says, is a problem no matter which party controls the respective chambers.“The habits on both sides when they’re in charge are very poor — Republicans are no better than Democrats. They both get D-minuses in reaching across the aisle.… It gets so partisan. Everybody should take a breath.”

Abeler says he’s all for a bipartisan effort but has yet to receive an invitation to pre-session work groups.

“If there were Republicans interested in an override last session, I wish they would have stepped up, sent a note or some other signal,” said Murphy, assistant majority leader. “I am not gifted with the tools of Harry Potter. All I have is a continued openness to work together and even that has been tested in the last year.”

Casey Selix, a news editor and staff writer for, can be reached at cselix[at]minnpost[dot]com.