Costs of insuring the poor shift to hospitals in GAMC fix

About 30,000 poor Minnesotans will continue to receive health insurance coverage under a deal reached Friday by Gov. Tim Pawlenty and DFL legislative leaders.

General Assistance Medical Care, or GAMC, was scheduled to run out at the end of the month and supporters of the program were worried the state's poorest would have no health coverage at all.

The deal ends roughly nine months of work to ensure that GAMC continues to cover low income adults without children, but the state won't pay for the coverage in the same way. Hospitals, doctors and dentists will have to pick up more of the tab.

Pawlenty says the state will continue to fund GAMC as it currently exists for another two months. After that, the biggest hospitals are expected to join what's called a Coordinating Care Organization to provide health coverage for GAMC clients.

Smaller hospitals will join a different pool where less money is available.

We believe this will help them to continue to serve the GAMC population.

"It represents significant cost savings in the current biennium and the next biennium and the ones beyond that if the program stays substantially in its form," the governor said. "It also represents a very significant step forward in health care reform in a direction toward in how we provide health care from an old way of doing it to a new way of doing it."

The catch is the state will no longer pay providers for each procedure they perform on a patient.

Instead, hospitals and counties will receive capped block grants to provide treatment to GAMC clients.

The hope is hospitals will do more than treat medical emergencies and instead focus more on treating chronic conditions like diabetes and heart problems, which could save money in the future by keeping GAMC clients out of expensive emergency rooms.

Democrats, who had worked hard to save the program from being zeroed out entirely, weren't exactly jumping for joy at the deal, but they said it extends health coverage for the state's poorest residents and also protects a fund that pays for MinnesotaCare, a subsidized health insurance program for low and middle income workers.

Pawlenty line-item vetoed funding for GAMC last year and vetoed a bill last month that would have extended it for another 16 months. He wanted to shift GAMC clients into MinnesotaCare -- which would have bankrupted that program by 2011 and would have been too expensive for many GAMC clients.

Rep. Erin Murphy, DFL-St. Paul, said the proposal is the best they can do in tough budget times. She characterizes the negotiations as "a difficult birth."

"We worked hard and long and it was painful at times and we yielded something that I hope will have a good life in the future," Murphy said.

Health care providers will see a big reduction in payments under the deal. Sen. Linda Berglin, DFL-Minneapolis, said hospitals, dentists and doctors should expect a 77 percent cut in state GAMC payments.

"We hope that the providers can understand that the program is covered to the level that it should be," she said. "But we believe this will help them to continue to serve the GAMC population."

Berglin added she hopes every hospital in the state decides to continue treating GAMC clients.

Lawrence Massa, with the Minnesota Hospital Association, said hospital officials are still crunching the numbers to see how this effects them individually, but, he said, the deal is better than Pawlenty's proposals.

"This has been a sinking ship and this solution offers a life boat at this point," Massa said. "It's certainly not ideal."

Massa joked that it's a long way for him to see any land on that figurative life boat, especially since the state's budget deficit will grow another $116 million -- to a total of $1.1 billion -- if the new proposal becomes law.

Pawlenty said he thinks they can pay for the program by cutting other Health and Human Services programs.

Berglin said she hopes the House and Senate can pass the bill in the next two weeks.

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