The MinnesotaCare budget in 1997 dealt with a projected FY 2001 surplus of over $580 million in the dedicated HCAF. The solution included increasing expenditures on some programs and the lowering of taxes used to fund MinnesotaCare. Due to these adjustments, the overall balance in the dedicated HCAF is estimated to shrink from $269 million in 1998 to $230 million in the year 2001.

Taxes. The 2 percent provider tax, levied on all hospitals and health care providers, was lowered to 1.75 percent for 1998 and 1999. The 1 percent premium tax, levied on all staff model HMOs, was repealed for 1998 and 1999. These tax reductions may continue past 1999 if the surplus in the HCAF continues to grow and statutory conditions are met that ensure a continued surplus. If the fund falls short, the taxes will be increased to former levels. The physician surcharge was repealed, with the HCAF transferring $4.1 million per year to the General Fund to make up the lost revenue.

Expenditures. Single persons and families without children were admitted to the program if their incomes were up to 175 percent of poverty, an increase from the prior 135 percent of poverty standard. This will cost the HCAF $12 million in 1998, increasing to $24 million in 1999, $27 million in the year 2000, and $28 million in 2001.

Parents and working adults within the GAMC program who would meet the qualifications of MinnesotaCare were shifted to the Minnesota-Care program. This will save the General Fund $17 million in 1999, the first year of the shift. For FY 1998, the HCAF will transfer $13.7 million to the General Fund, in lieu of savings if this initiative had been implemented sooner.

Dental reimbursement was increased by 15 percent, and expanded dental services were created for MinnesotaCare enrollees. An asset test was created for MinnesotaCare enrollees, limiting enrollment based upon an enrollee's assets. Finally, the $10,000 inpatient hospital benefit was waived on a pilot basis for MinnesotaCare enrollees, with the increased cost coming out of the HCAF.

$30 million was transferred from the HCAF to the Minnesota Comprehensive Health Association (MCHA) to offset MCHA projected deficits with the access fund projected surplus. The transfer does not continue past the 1997-99 biennium.

A reserve was created within the HCAF to pay for projected cuts in federal funding for health care-related programs. This fund was estab-lished at $55 million for 1998, growing to almost $100 million in 1999, and capping at $150 million in the year 2000.

A senior drug discount program was established to provide seniors with low-cost prescriptions, using state funds ($4 million per year from the General Fund) to establish discounts through community pharmacies. Enrollment is estimated to begin January 1998 and will be limited to meet the budget cap.