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Minn. agency sounds alarm over health law rewrite

Gov. Mark Dayton and U.S. Rep. Keith Ellison listen as James Robinson, right, talks about care he received with his Medicaid coverage. Brian Bakst | MPR Photo

Updated at 5:45 p.m. with comments from Gov. Mark Dayton event

The agency that manages Minnesota's insurance programs for the elderly, disabled and poor said Wednesday that a proposed rewrite of a federal health care law would put coverage for many at risk and place a "significant strain" on the state budget.

The Minnesota Department of Human Services sent a letter to the state's congressional delegation with an analysis of the potential impact of a plan now before the U.S. Senate. It's similar to a rundown the agency released in response to a version adopted by the U.S. House in early May.

The letter signed by Commissioner Emily Piper says Minnesota stands to lose $2 billion in anticipated federal money over the first 18 months due to Medicaid funding revisions and changes to eligibility.

The bill would put new caps on the Medicaid costs borne by the federal government, depending on the type of person enrolled. No caps apply to coverage for children with disabilities under age 19, for instance, but there would be scalebacks for childless adults on Medicaid.

"Under the capped Medicaid funding that the BCRA and the ACHA propose," Piper writes, using the acronyms for the Senate and House proposals, "there would be no good options for Minnesota -- the state would be required to pick up the significant cost by severely cutting other areas of our budget and we would be forced to cover many fewer people, cut services and make deep cuts to provider reimbursements."

Minnesota would also see federal funding drop for the premium-based MinnesotaCare program, which stands to impact 85,000 people who rely on it each month. According to the state agency, the phaseout would mean a $211 million hit in 2020 that more than triples by 2030. There are provisions allowing for waivers, but DHS says "it is unclear that such a waiver would allow the continuation of MinnesotaCare federal funding."

Gov. Mark Dayton appeared at a north Minneapolis health clinic with Piper, U.S. Rep. Keith Ellison and a clutch of DFL legislators to speak against the federal bill.

Dayton described the potential effects as dire.

"There's no way the state has the ability to afford to pick up those additional costs. They talk about giving governors more flexibility. The only flexibility we're going to be given is deciding who to cut and what to cut. That's the only flexibility that's available when you get that kind of drastic reduction."

James Robinson is worried, too. He's on Medicaid and says the coverage has helped him battle chemical addiction and mental illness.

"I am fortunate to have been placed in a treatment center because Medicaid paid for that. I was introduced to a new way of life, a new understanding," Robinson said.

Critics of the Senate proposal have focused heavily on the changes to public programs and state assistance. Supporters of the bill argue that a health care overhaul is imperative to save the private insurance market from collapse given skyrocketing premiums and a reduction of offerings on health insurance exchanges.

State Sen. Michelle Benson, R-Ham Lake, said the Department of Human Services' analysis is slanted to portray only worst-case scenarios. Benson is chairwoman of the Senate Health and Human Services Finance and Policy Committee.

"They definitely have a perspective that is slanted toward more federal involvement and paying for care," she said, adding, "It is concerning that we would have a decline in federal funding. But when you look at promises made in the Affordable Care Act, they were unsustainable. In light of a $20 trillion debt, we can't keep making more promises and spending more money without a real opportunity for reform."

Benson said she favors the House bill because it does more to protect Minnesota programs than the Senate version.

The Senate delayed action on the bill until after it returns from an Independence Day holiday recess.

Minnesota's two Democratic senators, Amy Klobuchar and Al Franken, have indicated opposition to the bill.