Health care providers 'stunned' by Dayton budget cuts

The tv room
Residents watch television at a nursing home in this undated file photo. Gov. Dayton's budget proposal calls for cuts in the reimbursement rate that nursing homes in Minnesota receive from the state.
MPR file photo/Tom Robertson

Stunned, disappointed and hoping it doesn't get worse. Those are some of the reactions from health care providers and advocates who face deep cuts in Gov. Dayton's proposed budget.

Dayton's plan raises surcharges on providers, cuts rate payments and eliminates health coverage for 7,200 adults on MinnesotaCare. The DFL governor said he did what he could to protect core health services for the state's neediest residents, while also taking steps to control dramatically rising health care costs.

Groups on the receiving end of the cuts say Dayton's budget will compromise the health and safety of thousands of Minnesotans.

Virtually everyone with a stake in health care readily concedes that they knew it was going to be a challenging budget year. With the state facing a projected $6.2 billion shortfall, painful cuts were inevitable. And few areas in the budget are as vulnerable as Health and Human Services programs, which account for 32 percent of the state's general fund spending.

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Still, Patti Cullen thought the governor would distribute his cuts more evenly. Cullen is president and CEO of Care Providers of Minnesota, a nonprofit trade group that represents more than 500 long-term care providers in the state.

Cullen says health programs that serve Minnesota seniors took a beating, while education programs escaped relatively unscathed.

"There are more seniors that are going to be served than school-aged kids," said Cullen. "Aren't we a valuable investment? Aren't seniors just as important as kids?"

"There are more seniors that are going to be served than school-aged kids. Aren't seniors just as important as kids?"

Dayton's budget proposal cuts $775 million from Human Services programs. The Dayton plan does raise revenue by substantially increasing surcharges on nursing facilities, hospitals and health plans. Those surcharges amount to $877 million. The overall pain of the spending cuts is set at $383 million.

Cullen says $87 million of that comes out of long-term care programs, primarily through rate reductions. Nursing homes, for example, would have their rates cut by 2 percent across the board.

Dayton said providers will be able to recoup much of those extra tax payments through higher reimbursement rates that will flow in from the federal government.

But Cullen says for many of her members, it won't work that way.

"The money only comes back for beds that are full, and beds that are not Medicare," she said. "So facilities that have high Medicare utilization or empty beds are not fully being paid back for the tax that they just paid."

Non-nursing home programs that serve elderly and disabled people in their own homes or in a community-based setting face an even bigger rate cut. The governor proposes cutting those programs by 4.5 percent.

Steve Larson, co-chair of the Minnesota Consortium for Citizens with Disabilities, says a cut of that magnitude could compromise the health and safety of some disabled individuals who may be left unattended for longer periods of time.

"Four-point-five percent, I think, is stunning," Larson said. "We knew that this was going to be a difficult legislative session. But to have this type of substantial cut in the governor's budget makes it even more difficult."

That's because Dayton's budget likely establishes the best-case scenario for people like Larson, who are lobbying to preserve health programs this session. Advocates worry that Republicans, who oppose tax increases to fix the budget, may view the Democratic governor's ideas as a starting point for even deeper health care cuts.

Lawrence Massa, who heads the Minnesota Hospital Association, says that would be a mistake. Massa worries that many lawmakers believe the growth in health spending is largely driven by wasteful spending in the health care system. He says that's not the case, and shouldn't be used as an excuse to slash programs.

"Most of that growth is being fueled by the number of people that need these programs because of the economy, and because of the aging of the population," Massa. "It's not because of increasing the cost of doing business and what they pay to providers."

Dayton's budget may not have won much praise among those directly affected by his health care cuts. But many told MPR News that they are glad the governor is willing to raise income taxes on the highest earners, to avoid even deeper cuts in health care.