Austerity Forever

Health care took the most visible hits at the Legislature this year, and the future only looks bleaker: Linda Berglin, the only DFLer who stood and fought Pawlenty's cuts.

I sat down and figured out that less than 20 percent of the monthly benefit for MnCare goes to hospitalization. Hospital bills are a lot, so you know that the program is working the way it was supposed to--people were using good, low-cost outpatient services and not ending up being sick in the hospital.

I said, "This isn't going to work. If you put in place a $2,000 cap on benefits, about 75 percent of these people are going to run out of benefits during the course of the year and quit paying premiums to be in the program. And if somebody is close to running out of their outpatient benefit and something happens to them, there is going to be an incentive to hospitalize them. Because then at least the provider can finish providing some of the care and get paid for it. So you'll have people dropping out, we won't be collecting premiums, and we'll have more utilization on the hospital side, which will drive up the average cost of care.

Finally, using $93 million in [matching] federal money, I was able to get the outpatient cap for MnCare up from $2,000 to $5,000. At that number, about 75 percent of the people won't run out of their benefit. The rest of the federal money was spent correcting some cost shifts they had made. And we still left $21 million of the available federal money on the table.

CP: What strikes me about these negotiations is that Pawlenty kept saying we need to reform government. Yet in your budget you came up with $200 million in savings through reforms and your programs don't benefit from those savings.

Berglin: Right. The governor had sent out a letter saying he would support user fees but only if they were going to support the activities related to where they were getting the money. So we were going to have an increase in criminal fines and use that money to pay for the public defender's office. Well, we ended up with a disaster on our hands in the public defender's office because they took away those fees. All the prevention programs are eliminated from that office and the short-term offenders are going back to the county. Only about a third of the cost to the county is being paid, so the rest will be on the property tax.

Pawlenty and the administration had proposed a 15 percent cut in the central office [for the Department of Human Services], but only in the second year of the biennium. No cut in the first year. Well, I felt like before we were going to make all these terrible deep cuts to elderly and disabled people, you ought to be reducing your administrative costs as well. In the end they wouldn't accept that. And since that time, I have heard the commissioner of Human Services has sent a letter out to all his employees informing them I proposed cutting their jobs and that he saved a lot of their jobs. It is an interesting world.

CP: Former Finance Commissioner John Gunyou wrote a story in the Star Tribune recently about the hidden costs associated with this budget and how projected spending for the 2004-05 biennium may be underestimated up to a million dollars a day. Are there poison pills and nasty surprises in store?

Berglin: The Pawlenty budget is based on the assumption that the economy is going to get better and that there will be growth due to the savings from the budget cuts. So if the economy doesn't get better or if they were overly optimistic about the savings generated--or both--then obviously the budget will be in trouble.

There is an assumption that if you take money out of the economy by making budget cuts, that is not bad for the economy. But if you take money out of the economy by way of a tax--even something like a cigarette tax, which would have some beneficial side effects--that is bad for the economy. I find that to be a strange concept. One way or another, this money is coming out of the economy. People are no longer going to be able to pay their rents and buy their groceries if their benefits are cut. If health care workers are not getting paid, then that is less money to spend in the economy.

CP: Under the original Pawlenty budget, it was estimated that 68,000 Minnesotans would lose their health care. You got that number down to an estimated 38,000 people, which is still a lot. How does this break down among the state's three health insurance programs, Medical Assistance, General Assistance Medical Care, and MinnesotaCare? Was medical assistance hurt much?

Berglin: Yeah, pregnant women [earning] over 200 percent of the poverty level were eliminated from the program. Children between 150 and 175 of poverty were eliminated from the program. And currently if a child is born while on Medical Assistance, they would get two years of care to make sure they got a good start in life. Now it is one year.

CP: The big cut in General Assistance Medical Care was eliminating outpatient benefits for people without children earning between 75 percent and 175 percent of the poverty level, right?

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