Governor Proposes Painful Cuts in Health and Human Services

Governor Pawlenty announced his budget proposal for the 2004/2005 biennium on February 18, 2003. The cuts to health care and […]

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Governor Pawlenty announced his budget proposal for the 2004/2005 biennium on February 18, 2003. The cuts to health care and community support programs administered through the Department of Human Services (DHS) will significantly affect many Minnesotans with disabilities.

Minnesota has a huge projected budget deficit of $4.2 billion for the next biennium. Because DHS, which administers Minnesota=s health care and community support programs for persons with disabilities, is a significant part of state spending (25 percent), the governor has proposed deep cuts which will affect many services for persons with disabilities. Out of a projected DHS budget of $7 billion in state funds for the next two state fiscal years, the governor proposes cutting $895 million state dollars and increasing revenue, fees and federal funding for $117 million, to save over $1 billion or over 14 percent of projected spending.

Funding For Persons With Developmental Disabilities (MR/RC Waiver)

In the area of home and community waiver services to support persons who are eligible for an institutional level of care in the community, the governor has proposed eliminating all new service funding for 600 persons with developmental disabilities slated to get services in the next biennium. This reduction will mean a service cut of nearly $27 million because federal Medicaid funds match state funding. The elimination of new waiver slots is in addition to a cut called Arebasing@ for the MR/RC waiver. The rebasing was done administratively by DHS, not by the Legislature, and will result in a service funding reduction of $126 million (state and federal Medicaid funds) for the next biennium. (See Steve Larson=s article.)

TBI And Other Waivers

The governor also proposed limiting access to the waiver for persons with traumatic brain injury (TBI) to 150 new people each year. This will undoubtedly mean that the TBI waiver will have a waiting list for the first time. This cut will remove $9.8 million total dollars from services for persons with TBI in the next biennium. Also, there is a proposed delay of waiver service improvements for all home and community waivers for persons who would otherwise be in hospitals, nursing homes or ICFs/MR (intermediate care facilities for persons with mental retardation). This delay will save the state $3.9 million for the next biennium. The improvements to be delayed include establishing a case management benefit for persons with disabilities who rely upon personal care assistant services in the community, and the development of a common service menu for the disability waivers. These improvements would be delayed until July 1, 2005.

DT&H Mandate

Because there will be funding reductions throughout human services, there will be many proposals to eliminate mandates or requirements for services. One such proposal in the governor=s budget is to eliminate the requirement that for persons with developmental disabilities who need day training and habilitation services (DT&H), counties must see that the service is provided. The elimination of this important protection will mean that when individuals graduate from high school at the age of 21, there will be no right to obtain services for supported employment or other community habilitation activities as an adult. Because this requirement also applies to persons in ICFs/MR which the state funds with Medical Assistance funding, there is an estimated $3.2 million in service funding reduction associated with this proposal due to the assumption that some living in ICFs/MR will choose not to attend a DT&H program.

Elimination Of GAMC And Other Health Coverage

The governor proposes to eliminate Minnesota=s safety net health coverage for persons who have no other options. The General Assistance Medical Care (GAMC) program provides health coverage to approximately 30,000 Minnesotans. While the governor=s budget proposes to allow people to change to the MinnesotaCare program, an important feature of the GAMC program safety netCretroactive coverage for one month and the ability to spend resources down to qualifyCwill be eliminated. In other words, when an individual without health insurance experiences a health crisis, such as an accident or serious illness requiring hospitalization, GAMC can cover the hospital costs going back (retroactively) for one month. Also, GAMC currently allows individuals, whose income is too high, to qualify after their income is spent and medical bills remain to be paid. Under the governor=s plan, there will be no retroactive coverage and very low-income people, many of whom have disabilities but have not yet qualified for Social Security, would have to purchase coverage in advance. The governor=s proposal would allow those living on less than 75 percent of the Federal Poverty Guidelines (FPG), $562 per month, to get MinnesotaCare without paying a premium. For individuals who have more than $562 per month, MinnesotaCare would be available only if they pay a monthly premium of about $260, 46 percent of their monthly income. Over 6,600 individuals are projected to lose health coverage because of the elimination of GAMC. Many of these individuals have mental illness, cancer, congestive heart failure, diabetes or emphysema.

Another 27,000 adults are projected to lose MinnesotaCare due to the increased premium of $260 per month for adults (without children) whose incomes are over $562 per month. Undocumented persons with disabilities would lose GAMC coverage and are not eligible for MinnesotaCare. It is estimated that by July 2004, over 50,000 children and adults would lose health coverage due to the governor=s proposals to change GAMC, MinnesotaCare and Medical Assistance for low-income children and families.


The treatment program for children with special health needs is seriously cut by the governor=s proposed budget for the Health Department. Each year, MCSHN (Minnesota Services For Children With Special Health Needs) pays for health care services for over 2,100 childrenCwith chronic conditions such as diabetes, hearing loss, asthma, cystic fibrosis and epilepsyCwho have no other coverage available.

Cut MFIP For Low-Income Families With Disabilities

The governor proposes to reduce Minnesota=s low-income cash assistance payments (MFIP) by up to $175 per month for families with a member who receives Supplemental Security Income (SSI) payments due to disability. This proposal takes $29.9 million away from low-income families with a member who has a disability.

Co-Payments For Medical Assistance Services

The governor=s budget proposes that many persons with Medical Assistance coverage will be required to pay co-payments when using health services. The following co-payments are proposed: for medications, $3 per brand name and $1 per generic prescription; nonpreventive office visits, $3 per visit; eyeglasses, $3; nonemergency room visits to the emergency room, $6 per visit. DHS expects that many persons using Medical Assistance services will have to pay, including those with spenddowns, those participating in prepaid plans, and individuals who are elderly and disabled living in the community. Federal law prohibits co-payments for pregnant women, children, and persons in institutions such as nursing homes.

Provider Rate Cuts

All providers of community support services and institutional services are proposed to have a rate cut of 4 percent, with the exception of personal care assistant (PCA), private duty nursing (PDN) and home health agencies (HHA) which are slated for a 2 percent rate cut. This proposal will save the state general fund $81 million for the coming biennium and result in rate reductions of $162 million, including federal Medicaid funds. Because some providers are operating on tight margins, it is expected that this level of rate cuts will reduce the availability of services so that some eligible persons will not have access to services in some areas of the state.

MA-EPD Changes

The MA-EPD (Medical Assistance For Employed Persons With Disabilities) program is proposed to change in a number of significant ways. First of all, eligibility requirements would change so that a minimum of $65 must be earned per month to qualify and taxes must be withheld from earnings or paid on a quarterly basis if self-employed. The minimum premium of $7 per month would rise to $35 per month, the new minimum premium for everyone on MA-EPD. Also, all MA-EPD enrollees would be required to pay 5 percent of their unearned income, such as Social Security, plus a charge for Medicare Part B premiums on a sliding scale basis from $5 to $58 per month for those with incomes over 120 percent FPG ($906 per month). On the positive side, MA-EPD eligibility is proposed to continue for four months if a person loses their job through no fault of their own.

Cuts In State Continuing Care Grants

The Consumer Support Grant Program (CSG) allows individuals to flexibly use the state portion of their home care (usually PCA) funding for individualized services allowing them to remain in the community rather than move to a nursing home or other institution. The CSG program currently has 200 individuals who get an exception grant amount larger than the regular grant formula allows. The exception grant formula will be eliminated under the governor=s proposal, saving $2.5 million for the biennium from services for 200 persons. Other grants proposed for elimination include the epilepsy grants ($502,000), public guardianship alternative grants ($500,000), Region X quality assurance grants ($1.1 million), foster parent and RSVP state funding.

Reductions In Community Service Block Grant

Community service grants in children=s mental health, homelessness, fetal alcohol intervention, family preservation and various other grants are proposed to be consolidated, reduced by $37.5 million over two years, and provided to counties with less requirements or mandates for services. Many groups who now benefit from specific grants are likely to be adversely affected by the proposal to group together the block grant funding streams to counties and eliminate mandates or requirements for services.

Parent Fees For Services For Children with Disabilities

For parents whose children are eligible for Medical Assistance services through TEFRA or a home and community waiver without regard to family income, fees for most families would increase substantially. The proposal, for example, would increase fees for a family of four with about $49,000 income from $25 a month to $168 per month. The proposal to increase parent fees is projected to raise $4 million from about 5,600 families with children whose disabilities qualify for an institutional level of care due to developmental disabilities, physical disabilities or severe emotional disturbance.

Mental Health Services

Besides the very serious impact of the elimination of GAMC on persons with mental illnesses, there are a number of other proposals affecting services for children and adults who need mental health services. The governor=s budget proposes to phase out adult mental health day treatment and substitute rehabilitation services and partial hospitalization instead. State-operated services are to be refinanced by reducing the size to 15 or fewer beds in order to qualify for Medical Assistance coverage. A similar proposal for Rule 36 residential facilities would reduce the size in order to qualify for Medical Assistance coverage to fewer than 16 people per facility.

Several proposals attempt to improve Medical Assistance benefits for children=s mental health by changing restrictive rules for in-home services, expanding eligibility to children before they reach a crisis, increasing mental health screening and establishing coverage for an adolescent mental health crisis facility.

Changes For ICFs/MR

The governor=s budget proposes to eliminate payments for empty beds in ICFs/MR which would mean a $4.6 million cut for such facilities. In addition, the governor proposes to establish a county share of 10 percent for the daily cost for persons living in ICFs/MR of more than six beds for a cost shift to counties of $16.5 million for the coming biennium.

Other Cuts

The State Council on Disability is proposed to be eliminated and all state funding (72 percent of total) for Centers for Independent Living is proposed to be eliminated. The Department of Human Services would be cut 15 percent and have to reduce staff by 107 positions. The Ombudsmen for Mental Health and Mental Retardation would be cut $300,000, or 20 percent, and would lose 2 staff positions.


Metro Mobility would change under the governor=s budget by reducing service hours for weekends and evenings for persons living in the outer ring suburbs, and by raising fares. Medical Assistance coverage for special transportation would be changed by requiring a broker system for Medical Assistance nonemergency transportation in the seven-county metro area. This proposal would reduce funding for special transportation by $5.2 million, including federal Medicaid dollars.

How Will The Decisions Be Made?

Committees in both the House and Senate will hold hearings to consider the cuts and other changes during March and April. The Legislature must adopt changes to balance the budget as required by the state constitution. The primary tools which could be used for balancing the budget this session are spending cuts and tax increases. The governor has pledged not to raise any taxes to lessen the blow of painful spending cuts described above. The Legislature is slated to end May 19, 2003. The cuts which are adopted would likely become effective July 1, 2003.

Anne L. Henry is an attorney with the Minnesota Disability Law Center.

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