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Associated Press, Published August 15 2012

Thousands lose state health insurance in Minnesota

ST. PAUL – The state of Minnesota has terminated health insurance for about 3,100 family members of state employees after an audit revealed they weren’t eligible for the coverage, saving the state an estimated $10 million.

The budget deal struck last year between Gov. Mark Dayton and state lawmakers called for an audit of 34,000 state employees to determine if their children, spouses and other dependents were entitled to state health insurance. Workers had to submit tax returns, birth certificates and marriage licenses.

The audit found that 3,100 people, roughly 4 percent of the 75,000 state employee dependents, are not eligible. Supporters of the audit said it proves the program is working and could save the state millions of dollars.

“Anytime you scrub a large program, you’re going to find some mistakes,” Jim Schowalter, state commissioner of Management and Budget, told Minnesota Public Radio News. “You’re going to find some things that you wouldn’t have necessarily expected. And that’s what we found.”

Schowalter said the findings match predictions and cautioned against suggestions of intentional wrongdoing.

“It’s not fraud,” Schowalter said. “Some people may have grown old enough that they’re no longer dependents. They may have chosen not to continue coverage because they have coverage from other sources. There are a whole lot of reasons why people may have intentionally or unintentionally responded to the audit.”

Schowalter said some children of state employees may have passed the age of 26, making them ineligible for state-funded health insurance. He said grandparents might have mistakenly assumed some grandchildren were eligible. A total of 770 state workers didn’t respond to audit demands, he said, resulting in 1,600 dependents losing their coverage.

“We spent $400,000 and saved up to nearly $10 million,” said Sen. Dave Thompson, R-Lakeville, who pushed for the audit. “I think anybody would say that’s a fantastic return and worth doing.”

Thompson said the findings vindicate his concerns about undeserved state benefits and show how to save money in lean times.

Thompson would not say whether he believed anyone committed fraud. Jim Monroe, director of the Minnesota Association of Professional Employees, said he didn’t believe there was any intentional defrauding.

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