Same as it ever was: Pawlenty again wants state health care fund to solve his budget troubles

Ever since Tim Pawlenty was elected governor in November 2002, budget deliberations at the State Capitol have taken on a Groundhog Day redundancy. Regardless of whether the state’s general fund is showing deficits in the billions, millions, or even posting a rare surplus, Pawlenty tries to raid the Health Care Access Fund. HCAF is essentially a pot of money derived from a tax on Minnesota’s health care providers and insurance plans and specifically earmarked to underwrite Minnesota Care, which covers those workers and families who aren’t offered or can’t afford insurance from their employers. Then Sen. Linda Berglin, DFL-Minneapolis, who back in 1992 coauthored the legislation that created MnCare and HCAF, digs in her heels and reminds the governor that HCAF isn’t a slush fund for bailing out the general budget.

Although Berglin (pictured above with Pawlenty) and her DFL allies have mostly prevailed over the years, the governor was able to take approximately $400 million out of HCAF to help “solve” the $4.3 billion deficit during the 2003 session. (This money grab triggered an increase in the provider tax to replenish HCAF, which one might assume would blemish Pawlenty’s ever-bruited no-new-tax credentials, yet many continue to admire the embroidery on the emperor’s old suit.) A year later, Pawlenty broke his promise to Berglin that he would restore some of those HCAF dollars with federal money received by the state. Instead he specifically reallocated that money to shore up another general fund deficit. Meanwhile, the eligibility guidelines for enrollment in Minnesota’s state-supported health care programs (including Medicaid and General Assistance Medical Care as well as MnCare) were tightened five years ago, tossing 38,000 people off the rolls and depriving tens of thousands of others of coverage in the years since.

It was thus eminently predictable that when the bean counters discovered a $965 million general fund arrearage during the current biennium alone, Pawlenty proposed to solve part of the problem by taking $250 million out of HCAF. But in a shrewd bit of negotiation earlier this week, the governor announced that he would “compromise” and reroute the dollars differently. Now Pawlenty wants to use HCAF funds to insure people enrolled in General Assistance Medical Care who eventually become eligible for MnCare. It’s an obscure maneuver, but its effect would be to cost-shift that portion of GAMC from the general fund to HCAF to the tune of $48 million per year for the next three years, an annual cost that would almost certainly rise over time. Not to mention that getting HCAF to pay for an ongoing portion of the state’s general fund obligations would set a significant precedent. “If he gets GAMC this year,” asks Berglin, “what is to prevent him from going after ways to use the access fund [instead of general fund money] on Medicaid next year?”

Pawlenty’s latest attempted raid on HCAF is especially short-sighted given the dramatic changes that seemed to be in the offing…

Continued: Click “Read More” for Minnesota’s health care system this session. Last June, the governor appointed a 13-member Health Care Transformation Task Force charged with spelling out a comprehensive strategy to overhaul the way health care is delivered. They returned this winter with a set of sweeping recommendations that were not very different from conclusions reached by the Legislative Commission on Health Care Access, and a bill was hammered out based on their work. Both task forces tackled difficult aspects of the health care conundrum in a manner that promoted trade-offs and encouraged consensus. For those concerned about “socialized medicine,” there was the prospect of helping small businesses and others in the private sector to provide health insurance for their employees without undercutting the market by putting government in charge. For those concerned with the numbers of the uninsured, there was the prospect of expanding coverage to include tens of thousands more people. And for those concerned with value and eliminating waste and ineffective practices, there was payment reform to reflect health care outcomes instead of procedures.

Now the entire process increasingly looks like a giant game of bait-and-switch. Right off the bat, Pawlenty rejected his own task force’s call for an increase in cigarette taxes to help pay for the cost of implementing the various reforms. One of the next things to go was the notion of “125 plans” and “connectors” that let employees of small businesses get coverage with government support, a provision that was heartily endorsed by Pawlenty and Human Services Commissioner Cal Ludeman last year.

“The governor really wanted the health insurance connector last year. We didn’t immediately give it to him but gave him $500,000 for a consultant to study it further and make recommendations. They hired the consultant, and we had it in the bill this year and then suddenly in the middle of session he doesn’t want it in the bill anymore,” Berglin says. “It is hard to me to know how much pressure he got from special interests and House Republicans who want nothing to do with comprehensive health care reform because they say that no one should mandate businesses to do anything.

“Our bill had about the mildest mandate possible. If you are a business with 11 or more employees but fewer than 50, you must offer a 125 benefit [enabling employees to be eligible for government-supported health insurance]. The cost to business is just setting up the benefit, and if just two employees used that benefit, what the business could claim on its taxes would offset their cost — the tax reduction would take care of it. But that apparently was too much for some people.”

With no cigarette tax and no mandated connector guaranteeing that employees in small businesses can gain access to the health insurance plan, the bill’s grand design is largely shot already. (A conference committee is currently settling differences between the House and Senate versions before it is sent to the governor.) And now Pawlenty is saying that the budget shortfall makes expanding access, another pillar of reform, unrealistic. To make sure of it, he wants to siphon HCAF monies earmarked by the Legislature for reform into general fund expenditures.

Of course the reason both the governor and the Legislature proposed ambitious task forces in the first place — and the reason both task forces swallowed hard and came up with huge, radical reforms — is that health care costs are a cyclone destined to lay waste to government finances. Health care is projected to cost the state $50 billion by 2013 — or about $15 billion more than is currently spent on the entire general fund. Meanwhile, employers have seen the storm blowing in and are bailing out. A study released last week by the State Health Access Data Assistance Center at the University of Minnesota showed that between 2001 and 2005, more than 3000 private-sector employers dropped the health insurance benefits they were offering to their workers, resulting in 2.4 million fewer people receiving private-sector coverage.

That means more people getting health care at taxpayer expense. It can happen relatively economically, through government-supported health care plans, or more expensively, through uninsured care received in emergency rooms from safety-net doctors and hospitals. Try as they might, the no-tax crowd can’t get around certain laws in this country, such as providing an equal and adequate learning environment under special education, and treating those victimized by catastrophic accidents or illnesses under medical care, regardless of whether or not they are insured. While the governor plays Groundhog Day with HCAF, the wind is whipping up around him.