Minnesota state leaders trying desperately to tamp down expenses have found an unlikely area where they saved more than $1 billion — health care for low-income residents.
State officials are starting to see results after taking aggressive steps in recent years to ease the sting on the state budget as residents age and use up more tax dollars.
Part of it has been luck, as healthier-than-expected residents joined Medicaid, the state's medical assistance program, as well as MinnesotaCare, an insurance program for lower-income residents.
Other efforts have been more deliberate. Last year, Minnesota launched a competitive bidding process statewide that trimmed payments to some managed-care providers and is expected to save the state $234 million over the current two-year budget period, according to the Department of Human Services.
State officials were surprised that new enrollees in the state's Medicaid program "were actually healthier" than what they projected, said state budget director Margaret Kelly. "There were similar things going on in our MinnesotaCare," said Kelly, noting that new enrollees also were healthier than expected and the share of federal contributions has grown.
Minnesota spent $4.6 billion on Medicaid and MinnesotaCare in 2014, about $1.2 billion less than what had originally been projected, according to Senate fiscal research and the Minnesota Management and Budget agency.
Two-thirds of that Medicaid spending, $3.1 billion, paid for nursing homes and other services for seniors and those with disabilities. By comparison, spending on other Medicaid participants such as single adults and families with children was $1.5 billion. MinnesotaCare accounted for $254 million of that overall spending.
Legislators and human services officials in the coming years will grapple with how to best manage the growing cost of caring for the state's aging population. Older residents are more likely to require more expensive medical treatments for chronic conditions or other ailments.