Death by a Thousand Cuts

How does Minnesota's fresh-minted 2003 budget make this a meaner place? Let us count the ways


Schools: Holding Education Harmless, the Pawlenty Way

Pawlenty repeatedly pledged that he would "hold education harmless" by funding it at levels that wouldn't hurt "classroom learning." The recently passed K-12 education bill that he will sign into law directly contradicts those words.

Basic education aid to school districts is being cut by $185 million over the next two years.

In addition, the state will save $11 million by limiting the eligibility of children in the limited-English-proficiency program.

Changes in the "compensatory aid" formula used to allocate funds to schools with an inordinate number of students in poverty erased approximately $45 million.

Additional funds earmarked for special education are set to be whacked by about $62 million.

There's no way the general student population can fail to be hurt by the pending cuts. For example, all schools are mandated by federal law to provide an appropriate learning environment for special-ed students, whose expenses are frequently tied to rises in health care costs. Thus, any cuts in state special-ed funding are almost certain to be borne by the school's general education budget. Likewise, cutting money for poor students and immigrants learning English doesn't occur in a vacuum--they're all in the same classrooms. That's especially true in urban districts like Minneapolis, which laid off 464 teachers last week.


Health Care: The Biggest Hole in the Safety Net

The Governor's budget proposal would have savaged funding and raised eligibility requirements for the state's three health insurance programs--Medical Assistance, General Assistance Medical Care (GAMC), and MinnesotaCare--enough to deprive over 60,000 Minnesotans of coverage. Due to the tenacity of Sen. Linda Berglin (DFL-Minneapolis) and a late infusion of federal dollars (which Pawlenty himself did not want to spend this year), families with children and single adults earning less than $561 per month will in most cases retain their current health care benefits. Overall, "only" about 13,000 people are now likely to lose their health insurance. (This figure includes "undocumented" people, mainly immigrant workers, who will be booted off at a savings of $35 million to the state.)

But even that sobering number doesn't factor in the ways access to health care will be compromised for some enrollees. For example, the state will no longer pay for primary care medical services for single adults enrolled in GAMC who earn between $561 and $1143 per month. The state will pay for emergency inpatient services at a hospital for those adults--provided they cough up a $1,000 co-payment. For single adults earning the same amount of money who are enrolled in MinnesotaCare, the state will pay for primary care (if the MnCare enrollees chip in their monthly premium and various co-payments for services) but will maintain a cap of $10,000 a year for inpatient hospital services and impose a cap of $5,000 per year on outpatient services.

Given the skyrocketing cost of health care, it won't take long for many adults with chronic illnesses to exceed those caps. In all, the restrictions and caps imposed on the state's health care programs amount to a budget cut of more than $200 million.

But refusing to pay for health care doesn't miraculously lessen the expense. The hundreds of millions "saved" by the state will show up as costs shifted onto hospitals, which have a legal obligation to treat patients. For example, if an adult on GAMC making $561 per month doesn't come up with a $1,000 co-payment for his catastrophic treatment, the state can stick the hospital with the entire medical bill.

Simply by closing the loophole that allowed hospitals to retroactively enroll patients who met all the GAMC eligibility requirements, the new budget estimates that the state will manage to avoid paying for $78 million in care. Hospitals also eat the treatment costs (or rather, pass them along by charging higher rates to private insurers) that accrue when MnCare patients exceed their insured $10,000 cap. For good measure, the state is reducing its Medicaid hospital payments by five percent.

With the federal government also ratcheting down its Medicare payments, it's no wonder that 31 of the state's 140 nonprofit hospitals operated in the red last year. The situation is particularly dire for the three "safety net" hospitals in the metro area--Fairview/University, Regions, and Hennepin County Medical Center--which treat a disproportionate share of the poor and indigent and are estimated to be on the hook for about half the total of the state's cost shift.

In anticipation of the costs it will have to absorb this year, HCMC has already laid off 190 employees and reduced spending on travel and new equipment. The hospital's administrator, Jeff Spartz, says that most of these cuts were in nonclinical areas, but warns that as further cost shifts from the budget are added over the next two or three years, "I don't how we can avoid cutting into our clinical services."


Public Safety: Y'All Be Careful Out There!

Time and again Pawlenty has called public safety the state's number one priority. But not for purposes of this budget, apparently. When the lion's share of a local government's expenditures are for police and fire protection, and the state cuts local government aid by 25 percent, public safety is not improved. Layoffs and reduction-by-attrition in police and fire departments have been the topic of the day lately in many cities around the state.

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