MINNEAPOLIS, May 21, 2009 - The 2009 Legislative session ended May 18 with Gov. Tim Pawlenty using his veto power to tear into Minnesota's health care safety net.

During the final days of the session, Pawlenty signed the health and human services budget bill passed by the DFL-controlled Legislature.

The MMA supported the budget bill approved by the House and Senate as a least worst option. That bill proposed reducing forecasted health care spending by $500 million, whereas Pawlenty proposed about $1 billion in health care cuts.

The House and Senate bill included about $10.5 billion for health and human services over the next two years, an increase of about $850 million, or 4 percent a year, above current spending.

However, once Pawlenty received all of the budget bills, he informed the Legislature that he planned to implement a go-it-alone strategy of resolving the states’ $4.6 billion budget deficit with line-item vetoes and unilateral cuts known as unallotments.

Pawlenty’s move
Pawlenty used his line-item veto power to eliminate the General Assistance Medical Care program, which serves about 35,000 low-income Minnesotans, effective July 1, 2010. Eliminating the program is expected to save the state about $381 million.

Pawlenty also is expected to cut an additional $1 billion from the state budget after July 1 through his unallotment authority. One of his earlier proposals indicated that he could cut another $250 million in health care spending in unallotments.

Could have been worse for physicians
The MMA supported resolving the state’s $4.6 billion budget shortfall with a combination of program cuts and new revenues. However, the governor vowed to veto any new taxes.

As the budget battle wore on, the MMA supported the budget passed by the House and Senate, as preferable to Pawlenty’s budget proposals.
The House and Senate budget resolution tried to minimize cuts to doctors by protecting primary care.. The House and Senate bill included a 5 percent reimbursement cut to specialty physicians, it did not include a payment cut for physicians providing primary care

The House and Senate budget also aligned well with the MMA’s top two priorities of protecting eligibility levels for safety net programs and preventing raids on the Health Care Access Fund.

In his original budget, Pawlenty proposed more than $1 billion in reduced health care spending, with the biggest cut being eliminating coverage for about 115,000 Minnesotans by eliminating General Assistance Medical Care and downsizing MinnesotaCare.

Pawlenty modified his original budget proposals to cut Minnesotans from state health care rolls in order to accept federal stimulus dollars, which the state could only receive if it maintained the number of people covered by state safety net programs.

He also proposed eliminating the Health Care Access Fund and transferring the revenues from the provider tax to the state’s general fund. He also proposed a 3 percent reimbursement cut for all physicians. In addition, the governor wanted to cut benefits such as physical therapy and dental care to enrollees in safety net programs, such as Medical Assistance, GAMC, and MinnesotaCare.

Pawlenty’s long-term budget plans still include large cuts to the MinnesotaCare program in 2011, after the federal requirements abate.

The challenge ahead
Since some of the cuts don’t take effect immediately, health care providers may have some time to try to reverse them. For instance, the MMA plans to prevent the loss of coverage for enrollees in General Assistance Medical Care.

“We will need to work with the governor and lawmakers prior to and during the 2010 session to try to stop plans to dismantle Minnesota’s health care safety net,” said Dave Renner, the MMAs director of state and federal legislation.


The Budget Details

The House and the Senate Health and Human Services Budget Bill:

• Appropriated about $10.5 billion for health and human services over the next two years, an increase of about $850 million, or 4 percent a year, above current spending.

• Cut reimbursement rates for specialist physicians by 5 percent, but did not cut rates for physicians providing primary care.

• Cut hospitals payments by 1 percent.

• Left nursing home payment rates unchanged.

• Shelved a proposal to encourage women on public programs to use nonhospital-based birthing centers.

• Maintained $47 million in funding for tobacco and obesity prevention programs.

Gov. Pawlenty:
• Eliminated General Assistance Medical Care through a line-item veto to save $381 million.

• Plans more cuts through unallotments.