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Dayton’s human services budget drawing general enthusiasm from health care legislators

The plan seeks to spend $11.2 billion — a modest increase — from the general fund and would bring Minnesota in line with the complicated federal health care law.

Human Services Commissioner Lucinda Jesson said the governor invested $38 million in new aid for the department.
MinnPost photo by James Nord

Lawmakers across a broad political spectrum have praised Gov. Mark Dayton’s human services budget — nearly a third of state expenditures — even if they haven’t had an opportunity to fully digest the dense spreadsheets yet.

Health and Human Services committees in both chambers are plodding through the complicated budget proposal with the help of Dayton administration officials this week.

The plan seeks to spend $11.2 billion — a modest increase —- from the general fund over the next budget cycle and also includes provisions to bring Minnesota in line with the hugely complicated federal health care reform law.

“We’re still digesting it, actually,” Rep. Jim Abeler, a Republican leader on health care issues, said with a smile. “There’s a ton of details.”

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While the GOP isn’t terribly enthusiastic about the Affordable Care Act, Republicans and Democrats concerned with health care have greeted the governor’s proposed human services programs and spending targets with general enthusiasm.

Lawmakers are beginning to craft a proposal to fund Minnesota’s public health plans and other state support programs for the 2014-2015 biennium.

Human Services Commissioner Lucinda Jesson said the governor invested $38 million in new aid for the department, which also rearranged more than $200 million in existing support to better fund such agency priorities as children’s mental health, long-term care and workforce development.

“I think it’s fair to say you can look at things we’re emphasizing — kids, mental and behavioral health systems, program integrity, really moving to more quality-based payments for long-term care — … and say, ‘Yes, we see those as important directions,’ ” Jesson said. “We really went through and reprioritized our budget and redirected a whole lot of money.”

 Those reallocations come in the form of a $50 million investment in childhood development, $9.2 million in spending for behavioral health programs and more than $25 million in pay-for-performance-style funding, among many other examples.

New funding in the governor’s budget is also often paired with significant cost savings in the programs — or elsewhere.

DFL Rep. Tom Huntley, chairman of the House Health and Human Services Finance Committee, said he is glad the governor’s budget doesn’t include the “severe cuts” of previous years.

“If you look a lot at what they’re doing, they’re repurposing money,” Abeler said. “They’re taking it from here to buy that. They’re doing things a little differently. It’s a very healthy approach.”

Biggest changes spurred by federal law

The most significant changes were spurred by federal health care reform efforts. Jesson said she looks at the budget as two buckets: The Affordable Care Act, and everything else.

Lawmakers are racing to meet a March federal deadline to implement a state-based health insurance exchange, which is designed to be a marketplace to shop for coverage. 

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State officials also are working with lawmakers to expand eligibility for the state’s Medicaid program, adding those with incomes of up to 138 percent of the federal poverty level. One of Dayton’s first acts in office was to expand eligibility for single childless adults with incomes of up to 75 percent of the poverty guideline.

 Minnesota is moving forward quickly with the Medicaid expansion, which would increase average monthly enrollment by an estimated 87,000 people, including 53,000 who would move from the MinnesotaCare program.

 That alone could save the state $143 million, although costs would increase elsewhere. The governor’s plan related to the federal health care reform law is expected to be budget-neutral but would include about $300 million in reserves.

Huntley, chief author of the proposal, will bring it before a House committee on Thursday.

It’s unclear what will happen to MinnesotaCare, which is expected to expire at the end of the year. The program is a Minnesota-specific public plan for the working poor that is incompatible with standards established in the Affordable Care Act.

Jesson is negotiating for federal funding to maintain and improve the program.

“When I’ve been talking to [the federal government], I’ve been very clear we need to bring resolution to this issue by the end of February,” she said. “We need to take charge and push for that.”

 “We’re adapting to the Affordable Care Act,” Huntley said. “That’s a huge amount of work we have to get done in a short period of time.”

Two big cost-drivers

Dayton began outlining his $37.9 billion budget by touting roughly $1 billion in cost savings from contract reforms and a profit cap on managed care organizations.

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Jesson said those savings aren’t just one-time dollars and will last into the future. Lawmakers from both sides of the aisle have applauded them.

 But the state will also face a significant burden paying for services for the disabled and Minnesota’s aging population. Jesson said those will be the two largest cost-drivers bearing down on the state.

In fiscal year 2012, the disabled made up 16.7 percent of Medical Assistance enrollment but received nearly half of the aid. The elderly accounted for 7.8 percent of enrollment but received nearly 20 percent of the support.

 That’s why Dayton’s budget would restructure long-term care and attempt new service delivery methods as part of its Reform 2020 program, which is expected to save roughly $18 million over the next biennium.

Huntley said he’s pleased that former cuts to nursing homes would be slightly restored under the plan.

“We’re going to need those savings because we’re getting older, we’re living longer,” Jesson said. “The Reform 2020 work may not sound as sexy, but it’s critical.”

 With tens of thousands of low-income Minnesotans expected to enroll in public health programs in the near future, Jesson said it’s integral that the state ensures there are enough primary care doctors and dentists to meet the surging demand.

Dayton’s budget increases funding for medical training by about $6.4 million a year, which Huntley said he supports.

“Those aren’t big dollar amounts, but I think they’re two very important programs,” Huntley said of the Medical Education and Research Costs program and the Statewide Health Improvement Plan, which are both included in the governor’s budget

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Abeler said he expects the mental health side to be the “big winners” this budget cycle.

Dayton’s budget includes a $7.4 million investment in school-based mental health grants, $2 million for expanded mental health crisis response services and $4 million for new mental health transition services, for example.

 “The governor put some new money in,” Abeler said. “With all the tragic shootings, they need to take advantage of the terrible event to advance a worthy cause. It’s too bad it takes a tragedy to get our attention, but if it doesn’t get your attention, that’s even worse. We don’t want two tragedies.”

Huntley, a longtime leader on health care issues in the House, said he expects the Legislature’s HHS budget bill to be “very similar” to the governor’s plan but wishes he had more to spend.

“I feel very good about the governor’s budget, but I also realize it really is a starting place, and we welcome people’s ideas about how we could do things better,” Jesson said.

 “For the people who come to me and say, ‘We want you to spend $50 million more on one item,’ also give me ideas where we would get that money.”