A key piece of the budget proposal from Republicans in the Minnesota House is a bill to fund health and human services. It cuts more than $1 billion in spending, effectively allowing the GOP to cut taxes by $2 billion.
The proposal has been controversial among Democrats, in part because $500 million of the savings come from ending MinnesotaCare, a health insurance program for the working poor.
Democrats are also pointing to another cut in the bill that they contend amounts to a budget gimmick.
They say the plan’s projected $300 million in savings from eliminating waste and fraud from Medicaid and other public programs would actually yield much less - around $16.5 million –which they say would leave a $283 million hole in the GOP budget for the coming biennium.
The DFL gets this right.
The Republican budget bill directs the commissioner of Health and Human Services to find $300 million in savings by verifying that everyone on public programs, including Medical Assistance, otherwise known as Medicaid, is eligible to be enrolled. The department would be required to contract with a vendor to find those savings.
An analysis done by Minnesota Management and Budget shows the savings would be many times smaller than what Republicans predict – about $16.5 million in the coming two years and about $142 million in fiscal years 2018 and 2019, though that money can’t be used to pay for spending in the current budget cycle.
Two other fiscal notes for similar bills introduced earlier this year report similar savings for the coming biennium.
That’s why Democrats are saying there’s a $283 million hole in the GOP’s budget.
What accounts for the big difference in the numbers?
For starters, the administration’s fiscal note assumes that the human services department wouldn’t sign a contract to conduct the audit until January 2016, and that the work wouldn’t start until six months later – hence a lag in savings.
The administration assumes that about 40,000 people would be removed from public programs – most coming from Medical Assistance - a figure that’s based on the department’s most recent data.
Additionally, some of the savings would be shared with the federal government, which helps pay for Medicaid.
House Health and Human Services Committee Chair Matt Dean, R-Dellwood, sponsored the bill. He said he considered previous fiscal notes on similar proposals. His bill assumes a roughly 3 percent error rate for all public programs.
But a close look at the numbers shows some budgeting shenanigans.
The health and human services budget assumes exactly 2.8 percent in savings for all public programs, from Medical Assistance to child care support. But there was no analysis that finds the state could actually save that much.
Dean also pointed out that the fiscal note DFLers are touting doesn’t include savings from overpaying vendors who collect too much money from the state for public program patients. But that portion of the bill hasn’t been scored, so it’s difficult to say how much it would save.
Dean also looked at other states where far more people have been found ineligible for public programs.
For instance, Dean says Illinois pulled roughly 400,000 people from its public program rolls after a major audit (though some were readmitted to the program) and Pennsylvania pulled 160,000 from its programs. In both cases, Dean said the savings are close to $300 million.
Meanwhile, a recent Legislative Auditor’s report found that Minnesota didn’t adequately verify about 17 percent of people who enrolled in public programs through MNsure, the state’s health insurance exchange.
But some of those people were eligible for other programs. And the report doesn’t predict $300 million in savings.
After sorting through the facts, PoliGraph found a lot of questionable assumptions and predictions behind House Republican estimates that verifying the eligibility of people on public programs will save the state $300 million over two years.
Based on all that evidence, the DFL claim that the GOP is using funny math to come up with the savings is accurate.