Minnesota Shifts 18,000 Adults from SCHIP to Medicaid Programs

Published February 1, 2009

The Minnesota Department of Health and Human Services is transferring coverage responsibility for some Minnesota parents from the State Children’s Health Insurance Program to Medicaid, Gov. Tim Pawlenty (R) has announced.

The change was one of the terms of Minnesota’s SCHIP renewal agreement with the federal government, which will guarantee the state receives more than $100 million in scheduled SCHIP funding between January 2009 and June 2011.

Funneling Money into Programs

Instead of traveling directly from Washington to the programs Congress has assigned them to fund, all federal dollars Minnesota receives for its health care programs, including SCHIP, Medicaid, and Medicare, are funneled into MinnesotaCare, where the monies are consolidated and reallocated by state officials.

Prior to the renewal agreement, MinnesotaCare officials used the consolidated funds to extend SCHIP coverage to children and parents at a higher income level than is allowed under federal guidelines. When time came for funding renewal, federal negotiators refused to continue providing funds if the state planned to continue directing them to the approximately 18,000 parents who had been receiving health insurance despite being outside the allowable income range.

In order to secure the renewal of federal SCHIP funding, state officials in charge of MinnesotaCare agreed to maintain the integrity of the federal money earmarked for SCHIP, and to shift the ineligible adults to the state’s Medicaid program.

Maintaining Coverage for Ineligibles

While state Health and Human Services officials say the new coverage format will allow the state to continue providing needed health care for poor families but in a more efficient manner, critics say it improperly extends Medicaid eligibility—and the tax dollars that fund the program—to people who should never have been considered qualified for enrollment in either Medicaid or SCHIP.

“If we wouldn’t have got our waiver, it would have put coverage for 18,000 people at risk,” said Karen Smigielski, communications officer for HHS, in defense of the plan.

“It’s essentially expanding Medicaid to cover people Medicaid should not be covering,” said Twila Brase, president of Citizens’ Council on Health Care, a St. Paul-based organization dedicated to promoting individuals’ control of their own health care. “The reason we have an SCHIP program is because it goes above and beyond Medicaid. But what Minnesota has done is to convince the federal government to commit Medicaid dollars to people who are not eligible for either program.

“The result of this is the state getting more of what it shouldn’t have had in the first place, courtesy of the taxpayers,” Brase concluded.

Jillian Melchior ([email protected]) writes from Michigan.