Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. Minnesota Care



MinnesotaCare began in 1992 as part of a package of legislation aimed at reducing the number of uninsured in the state of Minnesota. With the advent of the MinnesotaCare demonstration project, all Minnesotan enrollees were transitioned to mandatory managed care. Phase I of the demonstration extended Medicaid coverage to families with children under 275% FPL and with no insurancae coverage. Under the demonstration, childdren and pregnant women receive all benefits available to traditional Medicaid enrollees. In May 1997, a bill was approved to expand MinnesotaCare eligibility for adults without children with income from 135% FPL to 175% FPL. The legislation also reduced provider taxes and added non-preventive dental coverage for adults in families below 175%.


MinnesotaCare is available to families with children who have incomes of less than 275% FPL and individuals who have incomes of less than 175% FPL. TO become eligible for MinnesotaCare, one must have been uninsured for at least four months and have had no access to employer subsidized coverage for 18 months or more. An asset test will be implemented when the amended demonstration waiver is approved by HCFA(now known as CMS). Under the asset test, families cannot have more than $30,000 in assets, and individuals cannot have more than $15,000 in assetss to be eligible for the plan.


The program offers a comprehensive benefit package including inpatient hospital benefits. However, inpatient benefits are capped at $10,000 annually for adults without children and for parents with incomes greater than 175% FPL.


Enrollees have the opportunity to choose a health plan upon enrollment into the program. Provider reimbursement was originally structured on a fee-for-service basis but now is a capitated payment system.


MinnesotaCare was originally funded through a cigarette tax, a provider tax, and family contributions. The cigarette tax is no longer used for MinnesotaCare support; it was only applied from July 1992 through January 1994. In July 1995, the state 1115 demonstration waiver was implemented, and the federal match was added to the funding mix. In 1997 a reduction was made in the provider taxes due to a surplus in MinnesotaCare funds.