Penny-Wise, Billion-Foolish

The eventual cost of Pawlenty's "savings" will be staggering

Back in February, shortly after he had submitted a budget that would hack a billion dollars out of Minnesota's Department of Health and Human Services, Governor Tim Pawlenty let his nice-guy mask slip for a moment and referred to those who would be opposing the cuts as "victims du jour." A month later, a parade of citizens delivered wrenching testimony in front of legislative committees about the chaos and suffering that would ensue as a result of Pawlenty's fiscal priorities, exposing the mean-spirited sense of privilege in the Governor's cavalier comment.

Among those who came to the capitol were three women, each attending to a child in a wheelchair. They spoke with the measured patience, quiet purpose, and attention to detail that comes from long endurance in a tragic situation. One of them, Debbi Harris, lives in Pawlenty's hometown of Eagan. She was accompanied by her chronically ill 10-year-old son Josh, who suffered from a brain hemorrhage at birth, has cerebral palsy, and, as she noted, has had "23 surgeries and countless procedures." When Josh was an infant, Harris, who has a master's in health care administration, quit her career as a technical writer to stay at home and tend to him after an inexperienced home care provider nearly killed him by pouring too much formula down a feeding tube.

Under the terms of Minnesota's Consumer Support Grant program (CSG), which provides families with cash payments so they can manage their child's health care more flexibly, Harris was able to hire a knowledgeable, compassionate woman whose own son had died from conditions very similar to Josh's. (In fact, the state's CSG program allowed Harris to hire this woman despite her lack of certification.) Josh's physician recommends that he receive 16 hours of licensed nursing care a day, but due to changes in the Harris family's insurance and a shortage of nurses, he receives just 16 hours per week. Harris does most of the round-the-clock care herself, tending to him up to 96 hours per week, while still seeing to the needs of her other two children.

Shortly after the terrorist attacks of September 11, Harris's husband Victor, a marine reservist, was called to active duty for Operation Enduring Freedom and had to leave his corporate job. "He is fiercely proud to serve our country and we, his wife and three sons, committed ourselves just as proudly to that sacrifice," Harris testified. Then she added that "Josh's future has become critically uncertain." Under the budget changes Pawlenty is proposing, the family's monthly Medicaid payments would rise from $293 to $796; cuts to the CSG program will also deprive the Harrises of an additional $7,000 a year in funding.

As much as anyone, the Harris family probably qualifies under Pawlenty's definition of "victims du jour"; which is why, after the mother's testimony, the details of their plight were of particular interest to the local media. What is ultimately most poignant about their situation, however, is not its uniqueness, but the relative commonality of their increasing hardship. Under Pawlenty's budget, thousands of Minnesota families will see their Medicaid co-payments skyrocket. The governor has also proposed funding cuts for 200 of the 239 families currently receiving assistance under the CSG program. As Harris and the two women who preceded her made horrifically clear, the program allows dedicated parents to heroically shoulder the burden of tending to their chronically ill children at home, paying themselves and trusted helpers a minimal wage. If Pawlenty's cuts are enacted, they may be forced to look for outside employment and consider funding options that provide more "skilled" nurses and require more frequent institutional care--less quality at greater expense to the state.


According to House testimony by Human Services Commissioner Kevin Goodno, the Pawlenty administration tried to fashion a budget that protected services for the most vulnerable Minnesotans, whom were defined as "children, the disabled, and the frail elderly." But since Pawlenty has stubbornly refused to back down from his campaign pledge not to raise taxes or cut funding for classroom education (which comprises about 40 percent of the overall budget), this show of conservative compassion is simply hollow rhetoric. Listen to hours of testimony and read the fine print of Pawlenty's budget, and it becomes obvious that "vulnerable Minnesotans" will be dramatically affected by cuts in funding and services. As a result, every citizen in the state will suffer from the administration's cost-shifting.

By the state's own calculations, about 68,000 people will lose their health insurance if Pawlenty's budget passes. Simple logic, backed up by a number of studies, indicates that people without insurance rarely pay for preventative programs on their own and generally interact with the health care system only when their maladies have progressed to the point where costly treatments are necessary. "Just maintaining a person's health is important," says Mark Gibson, who as a former policy advisor to Oregon Governor John Kitzhaber was instrumental in establishing a method of determining efficacy and cost-effectiveness in Oregon's seminal state-run health plan. "It gets expensive when a person's health deteriorates, and as people fall in and out of coverage, they lose ground. You look at the data coming out of national studies, it shows that people who are uninsured delay care and diagnosis and suffer both worse outcomes and more severe symptoms as a result of not being covered at that time."  

This is especially true with respect to prenatal care. By the state's own estimates, nearly 3,000 of the people who would lose their insurance under Pawlenty's budget would be pregnant. "The governor wants us to back out of prenatal care for undocumented persons. That happened in California and they did a reputable follow-up study two years later that showed over three dollars worth of cost for every dollar saved," says Linda Berglin, chair of the Senate's Health, Human Services and Corrections Budget Division, who adds that babies born to undocumented persons are considered U.S. citizens, to whom the state is required to provide care. Lisa Edstrom, executive director of the Neighborhood Health Care Network, points out that those who are undocumented and pregnant tend to be "teens who by virtue of their age represent higher-risk pregnancies. At our West Side Community Clinic alone, 80 percent of our prenatal caseload will be affected."

According to the Minnesota Hospital Association, Pawlenty's budget cuts will also deprive the state's 140 nonprofit hospitals of $220 million over the next two years. "Eliminating general assistance medical care for the most vulnerable and poorest of Minnesotans concerns us because it is not only our moral but our legal obligation to care for them," says Lawrence Massa, CEO of Rice Memorial Hospital in Willmar. Fifty percent of the state's general assistance services are provided by three "safety net" hospitals in the metro area--Regions, Hennepin County Medical Center, and Fairview-University Medical Center. With that in mind, Tom Crowley of St. Elizabeth's Hospital in Wabasha stresses that rural hospitals will also be affected by cuts and the governor's proposal to charge higher premiums for MinnesotaCare, which will be borne by self-employed farmers and workers in small-town businesses that can't afford to offer health insurance.

Last year, 31 nonprofit hospitals operated in the red and another 40 had operating margins of less than one percent, which is not sufficient to upgrade medical technology or educate staff. Massa, who says that there will be cost shifting to private payers, still predicts that some hospitals will have to close down needed services or shut their doors altogether. His own facility is faced with eliminating its hospice program, diabetes education, and kidney dialysis; there will also be pressure to downsize an already overworked staff, and the mental health clinic, another service that frequently doesn't pay for itself, may be eliminated.

That's not the only way Pawlenty's budget could disrupt the lives of poor people with mental health problems. The governor's proposal to require those who use any of the state's health care plans (general assistance, medical assistance, or MinnesotaCare) to make a co-payment ranging from $1-$6 on prescription drugs and doctor visits may not seem like much, but when you read that he expects it to save the state an estimated $32 million over the next two years, you realize how often some people, especially those with mental illness, interact with the health care system. "About 60 percent of the people on general assistance have a severe mental illness. They need regular psychotropic medications, need to see a psychiatrist or therapist, need chemical dependency treatment," says Glenn Anderson, executive director of the Human Development Center in Duluth. "But their general assistance is $230 a month. A $3 co-pay for them is like an $87 co-pay for me--and many get multiple drugs and services. So they have a choice between meds and rent. They are going to stop taking their meds and as a result their life is going to go down the drain. The next time we see them will be when they go into the ER or get dropped off at the jail or scooped up out of a snow bank. Then the cost of taking care of them is going to be ten times or a hundred times as much."

The impact of Pawlenty's budget cuts is often exacerbated by the accompanying loss of matching dollars from the federal government and private sources. Ron Brand, executive director of the Minnesota Association of Mental Health Programs, says that "mental health has essential funding from the state to keep programs going. If that gets cut, or it becomes discretionary funding, then it is hard to also earn the private health care funding payments, or philanthropic money, and things diminish."  

"Almost all the programs I am dealing with have federal matching dollars, which we lose we when cut funding," says Ann Henry, of the Minnesota Disability Law Center. In a twist on the Bush-Pawlenty argument--that tax cuts will circulate more money into the economy--Henry wonders about the loss of dollars that, instead of being invested, will almost certainly be spent. "Almost all the funding for the elderly and disabled services goes to moderately paid workers. Because their salaries are usually very low, they have to spend nearly every penny they earn on Main Street, Minnesota; for fuel, housing, food."

One of the more clear-cut examples of state funding stimulating local economies would be nursing homes, which, according to testimony at the capitol, are frequently one of the largest employers in rural towns. Pawlenty's denial of cost-of-living increases and Medicare co-payments for nursing homes, and his request for an across-the-board, four-percent reduction in either the state's total payment rate or the facility's complement of beds, puts the screws to this already tenuous industry. It will compel nursing homes to either lay off staff, boot patients, or add cost to private payers. This in turn will force Minnesotans to either alter or discontinue their own employment to personally care for their parents and grandparents, or dig deeper to provide them with continued care. They may not be tax dollars, but money will be effectively taken out of taxpayer's pockets.

A billion dollars in cuts requires dozens and dozens of densely typed pages--providing an opportunity for budgetary sleight of hand. Right now, for example, the state mandates that the counties provide about $10 million to train and house mentally disabled citizens during the daytime. Pawlenty proposes eliminating the mandate, thus making the program voluntary. Odds are that the counties--who are themselves financially strapped due to the governor's drastic cuts in local government aid--will opt out of their now-voluntary $10 million obligation. That potential cut, which is not reflected in Pawlenty's budget, amounts to a hidden cut on the disabled poor.

Another cagey proposal appears to be a shell game involving Temporary Assistance to Needy Families (TANF), a federally mandated program to care for children on welfare. Under Pawlenty's proposal, disabled single parents who receive supplemental security income will have that TANF money cut by $175 per month. "You're talking about taking money from the poorest of the poor; an 18 percent reduction for a disabled single parent whose family income is $800 to $1000 a month, and who can't work," says Reggie Wagner of the Legal Services Advocacy Project. "My client doesn't have anything left at the end of the month now. This is a dedicated revenue stream for a specific population, involving mostly federal money. By the state's own standards, it shouldn't be cut."

What is at stake here is nothing less than the state's identity. The testimony of Mark Peterson, president of Lutheran Social Services, summarizes it well. "What is at the center of this debate is whether or not Minnesota will continue to distinguish itself in American society by demonstrating the effectiveness of social investment." One motivation for that social investment is compassion. But another, equally vital motivation is getting the most bang for the bucks you spend--and the bucks that you cut.

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