As the federal health care reforms start rolling out, Governor Pawlenty might have already put Minnesota at a disadvantage. His recent decision to turn down $1.4 billion in federal Medicaid matching funds could cost Minnesota 22,000 jobs, $2.7 billion in business activity, and $984 million in salaries and wages, at least for now, according to the Minnesota State House 2010 Session Summary.

A press release from the governor’s office explaining his decision not to sign Minnesota onto an early expansion of Medicaid stated that it would “add another $430 million in costs to the bottom line.”

Not exactly. The transfer of many Minnesotans from state programs (like MinnesotaCare) to Medicaid would save Minnesota $242 million in the health care access fund from 2010-2013. Here’s the math: $430 million – $242 million = $188 million net cost. Not $430 million.

In addition to saving $242 million in the health care access fund, early expansion would also decrease uncompensated care costs, reducing a massive hidden tax on Minnesota’s citizens. Uncompensated care costs are incurred when the uninsured can’t pay out-of-pocket for emergency care and hospitals are stuck with the bill. The uninsured can only cover an average of 37% out of pocket, while government programs and charities pay 26%. The remaining 37% is paid for by a hidden tax on American families and businesses in the form of higher insurance premiums. In 2008, this hidden tax was estimated at $1,017 per family per year.

By not opting into early Medicaid expansion, Minnesota would face increased uncompensated care costs — which totaled $268 million in 2008 — as the number of uninsured in Minnesota and health care costs continue to rise. Recently, the Minnesota Department of Health ­­­­­­­­­­­­­­­estimated that by 2014, Minnesota will spend 52% more on health care in 2014 than in 2008. As this spending skyrockets, so will the hidden tax on the insured.

Pawlenty has already vetoed the expansion but a newly elected governor will have until January 15^th to approve the opt-in.

Expanding Medicaid early would:

• Decrease the uncompensated care totals that impose a hidden tax on Minnesota’s insured
• Provide better care for some of our most impoverished citizens (those who make 75% or less of the federal poverty line, or up to $8123 for an individual)
• Increase the productivity of 43,791 adults who would be newly covered by the expansion by reducing lost work time in sick days and promoting better health in the work force
• Infuse $1.4 billion dollars — about a $7 to $1 match — of federal money into our health care industry, thus stimulating our economy and creating jobs
• Generate thousands of new jobs, produce billions in business activity, and generate nearly $1 billion in salaries and wages for Minnesota’s labor force

I don’t disagree that we need to spend carefully; with a massive budget deficit on the horizon, we need to prioritize spending on programs that give us the biggest bang for our buck. This is one of them.

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Tags: budget deficit, Early Medicaid Expansion, Economic Stimulus, Governor Pawlenty, Healthcare Reform, Heath Care Access Fund, Jobs, Medicaid, MinnesotaCare, Uncompensated Care

This entry was posted on Wednesday, July 7th, 2010 at 12:02 pm and is filed under Budget, Health Care, Jobs & the Economy, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.