Minn. governor calls for health care cuts to offset $4.8 billion deficit

Minnesota Gov. Tim Pawlenty's two-year budget proposal would cut hundreds of millions from state health care programs and has drawn criticism from both physician organizations and Democratic leaders in the state Legislature.

Pawlenty's 2010 and 2011 budget request, released Jan. 27, calls for ending coverage for tens of thousands of low-income uninsured people. The governor also would pool the state's Health Care Access Fund with the state's general fund. The access fund -- which covers most of the costs of MinnesotaCare -- is almost entirely financed by a 2% gross revenue tax on doctors, hospitals and drug distributors. That tax is expected to raise $477 million in 2010 and $508 million in 2011, according to Minnesota Management & Budget, the state's budget agency.

The significant health reductions would include cutting:

• $508.1 million by ending public health coverage for about 55,000 adults. The reductions would apply to Minnesota's General Assistance Medical Care and MinnesotaCare.
• $65.7 million by ending coverage for 29,000 parents and caregivers of children in MinnesotaCare.
• $96.3 million through a 3% reduction in fee-for-service pay for physicians and hospitals in Medicaid and GAMC.
• $38 million by eliminating dental coverage for adults in Medicaid, GAMC and MinnesotaCare.
• $22.9 million by delaying Medicaid, GAMC and MinnesotaCare payments to physicians by one month in 2010 and 2011.

But reducing health insurance coverage won't really save money, said Philip Stoyke, MD, chair of the Minnesota Academy of Family Physicians' Legislative Committee. "You're probably in the long run costing more money as these people are going to get sick." The academy and the Minnesota Medical Assn. oppose the cuts.

These health care cuts and other reductions are necessary to help close a budget gap of at least $4.8 billion for fiscal 2010 and 2011, Pawlenty said during his Jan. 15 state of the state speech. "We must slow down the rate of spending growth in these programs or it will eliminate our ability to fund other priorities in the future."

The budget proposal could be the first salvo in a fight between Pawlenty, a Republican, and the Democratic-controlled House and Senate. While the Senate has enough Democratic votes to override a Pawlenty veto with a two-thirds majority, the House is three short of the 90 needed for a veto override, said Rep. Thomas Huntley, PhD, chair of the House Health Care and Human Services Finance Division Committee.

Huntley and Sen. Linda Berglin -- chair of the Senate Health and Human Services Budget Division Committee -- staunchly oppose shifting the 2% tax on physicians and hospitals.

"Over my dead body will they move that to the general fund," Berglin said.

Pawlenty's budget proposal also would nearly halve funding for implementation of a 2008 health reform act, said Minnesota Medical Assn. President Noel R. Peterson, MD, a urologist practicing in Rochester. The act creates several work groups for crafting proposals to support medical homes, enable payment coordination and alleviate health professional shortages, he said.

Pawlenty's office did not respond to requests for comment.