Critical funding for health care preserved but small gains in support for families

The 649-page Health and Human Services budget bill contains multitudes. Overall, the final agreement for the FY 2020-21 budget reached by Governor Tim Walz and the Minnesota Legislature takes essential steps to protect affordable health care and makes some progress toward a broader prosperity that all Minnesotans can share. However, it stops short of making major investments to improve the lives of Minnesotans, and it includes some questionable fiscal mechanisms that undermine sustainable funding for services Minnesotans count on to thrive.

Affordable health care

Importantly, the final budget includes a permanent extension of the health care provider tax, albeit at a lower rate. Revenue raised by the provider tax funds affordable health care for over one million Minnesotans through Medicaid and MinnesotaCare, as well as other investments in healthy communities. Had policymakers not taken action, the provider tax would have sunset at the end of 2019, putting affordable health care at risk. While this important revenue source will continue, policymakers lowered the rate from its current 2 percent to 1.8 percent. The lower rate will mean fewer resources available in the long term to make progress on ensuring affordable health care reaches all Minnesotans.

The HHS budget also extends the Minnesota Premium Security Plan, commonly known as reinsurance, for two more years. Reinsurance is aimed at reducing health care insurance premiums for consumers who buy insurance on the individual market. Additionally, the budget deal lowers by $30 million the amount that the state will spend on health care coverage through managed care.

Affordable child care

Though the governor and the Minnesota House proposed increased state investments in affordable child care, the Senate’s position would have decimated affordable child care. The final agreement essentially includes a status quo budget for affordable child care, with some small but important adjustments to better serve families experiencing homelessness and those who move between counties. These changes will align the state with federal requirements and allow Minnesota to access additional federal funding. Proposals to reduce or eliminate the number of families on the waiting list for affordable child care and to bring provider reimbursement rates up closer to market rate are not included. This is a lost opportunity for Minnesota kids, parents, and employers, and is a priority that policymakers will need to address in the future.

Families and kids

The HHS budget includes an additional $100 per month for families participating in MFIP, Minnesota’s welfare-to-work program. This year’s investment is the first cash grant increase in over 30 years, and represents a sorely overdue improvement for Minnesota families struggling to make ends meet.

Additionally, the HHS budget makes other significant investments for kids and families, including a child welfare training academy, tribal child welfare expansion, affordable health care for kids in foster care, and safe harbor for sexually exploited youth.

Vulnerable adults

The governor signed a package of reforms to protect seniors and vulnerable adults that traveled separately from the HHS budget bill as House File 90 (Schultz) and Senate File 8 (Housley). This bill “will create a licensure framework for assisted living facilities along with other safeguards to protect older and vulnerable adults.” Minnesota had been the only state in the country without these important regulations and protections to ensure the safety of elderly Minnesotans and people with severe disabilities. The final HHS budget also includes funding for adult day care oversight improvements.

Behavioral and mental health

The final budget bill includes investments to make behavioral and mental health services available to more Minnesotans in more parts of the state. These include funding for certified community behavioral health clinics, school-linked mental health grants, shelter-linked youth mental health grants, mobile crisis services, and comprehensive suicide prevention. The HHS budget also implements a new method to deliver substance abuse disorder services more effectively, while also saving $16 million in FY 2020-21.

Minnesotans living with disabilities

The final HHS bill includes language to increase the eligibility standards for people with disabilities, so that more Minnesotans will be able to receive these vital services. This results in nearly $23 million in additional funding for affordable health care for Minnesotans in the FY 2022-23 biennium and beyond. It also includes funding to streamline home and community based services, and investments to help ensure fair pay for workers who provide direct support for people living with disabilities.

Hopeful and risky budgeting practices

The HHS budget bill creates a Blue Ribbon Commission on Health and Human Services tasked with finding $100 million in savings. Details of how the Commission will do its work and where it will find such massive savings are not spelled out in the bill; we will be closely monitoring any proposals that reduce access to affordable health care and other services that enable Minnesotans to live with dignity and thrive.

The final budget agreement counts $6 million in savings as a result of “program integrity” measures, meaning that state agencies will increase efforts to find errors and fraud. While it is paramount that public dollars be spent appropriately, counting on savings that may not materialize could present a risk to the balanced budget. We should be wary of efforts that create additional bureaucratic hurdles that simply result in eligible Minnesotans losing access to important services.

The HHS budget bill shifts $270 million in Medical Assistance spending from the state’s general fund to the Health Care Access Fund, or HCAF. This is simply an accounting shift that aligns the spending with a source of the funding while keeping funding levels consistent so that Minnesotans who rely on Medical Assistance are not harmed.

Overall, the final HHS budget agreement is a mixed bag for Minnesotans. Some important strides were made on affordable health care, support for families working towards economic security, protecting elderly and disabled adults, and increased access to behavioral and mental health services for Minnesotans around the state. However, important investments were left on the table. The state failed to make progress on addressing Minnesota families’ need for affordable child care, access to prescription drugs, and expanding paid leave. And, the budget includes assumptions about millions of dollars in savings and gimmicks. That introduces uncomfortable risks for Minnesotans who count on essential services being available and solvent when they need them.

About Betsy Hammer

Betsy Hammer is the Minnesota Budget Project's policy advocate.
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