The Grand Consensus - Part V
The Progressive Legacy
A Bipartisan Approach to Health Care Reform
By Iric Nathanson
The governor was effusive with his praise.
“You were superb,” he told the Minneapolis legislator. “Congratulations on a splendid effort….”
The year was 1992. After a series of intense negotiations, Minnesota’s Republican governor, Arne Carlson, had reached agreement with DFL legislative leaders on an ambitious health reform plan known as HealthRight. Later, the plan would be renamed Minnesota Care. Carlson’s congratulatory letter to a key DFLer, Linda Berglin, the Chair of the Senate’s Health and Human Services Committee, came a day after he signed the landmark measure into law on April 21.
The bipartisan atmosphere that pervaded the Capitol in April 1992 was a dramatic change from the political rancor of a year earlier. Then, DFL leaders were furious about a string of Carlson vetoes, including one that torpedoed their own health care overhaul proposal. The 1991 plan, House File 2, had been based on recommendations from a study group established by the DFL-controlled legislature in 1989, but Carlson vetoed the DFL bill, saying that it was too costly, promised more than it could deliver and lacked a long-term funding mechanism.
Lacking the votes to override Carlson, the DFLers had to stand by and watch their plan die. As the 1991 session came to an end, legislative leaders hurled angry words at the Governor for blocking so many of their initiatives. “The man (Carlson) cannot be trusted,” fumed DFL Senate Majority Leader Roger Moe. “He has a Rambo mentality and he is showing contempt for Minnesota.”
Even normally soft-spoken Linda Berglin was irate, when she learned that Carlson was about to veto HF 2. “If he doesn’t sign the bill, I believe it’s because he doesn’t want (care for the uninsured) to happen,” Berglin declared at a state capitol news conference.
But even as he was signing the veto order, Carlson was opening the door, at least a crack, to an eventual compromise with DFL leaders. He noted that he would be moving ahead with his own proposal known as CHIP (the Consumers Health Insurance Plan) which set up a pilot program to subsidize health insurance premiums for a limited group of uninsured Minnesotans.
The state’s most fervent health care reform advocates were not mollified by Carlson’s gesture. The Star Tribune’s columnist, Jim Klobuchar, spoke for many of them when he declared that “nearly 400,000 people living in Minnesota don’t have health insurance, among them the working poor and the aging in both city and country, and especially in the country. “
“These are the ones that Arne Carlson kicked in the gut this week. ‘We have got to be responsible,’ his flacks said. Carlson plays that tune well. It is a nice sanitized version of the real message that went out to the uninsured: We have got ours, you can wait until next year and the year after that.”
Klobuchar’s angry words merely reinforced the view of most observers that major political hurdles stood in the way of any significant advances on the health care reform front in Minnesota. But, to the surprise of many, those hurdles began to fall after tempers cooled following the end of the 1991 legislative session.
The Gang of Seven
As he looked back, two years later, at the legislative battles over HealthRight, one social policy historian could see that the hurdles were not as high as they seemed in 1991. In his 1994 article, “Minnesota: the Trip From Acrimony to Accommodation,” Howard Leichter acknowledged that Minnesota politics did not seem conducive to bipartisanship in 1991. “Despite Governor Carlson’s veto of HF 2, there were important forces nudging the players towards reconciliation,” Leichter noted. “The public wanted health care reform, the governor needed a political boost to revive his sagging popularity, and in 1992 the entire legislature was up for re-election.”
In the summer of 1991, two veteran House members felt the nudge. They were Paul Ogren, a liberal DFLer from Aitken and Dave Gruenes, a conservative Republican from St. Cloud. Ogren, who chaired the House Tax Committee, had been the chief author of HF 2. Greuning, had been a member of the House Health and Human Services Committee and the Republican’s lead player on health care issues.
Ogren and Gruenes happened to meet at a Chamber of Commerce luncheon, where they were both invited to speak on health care reform. When the session was over, the two men realized that they shared some common views. Gruenes suggested that they keep meeting to discuss some options for a bipartisan approach during the next legislative session. Ogren was delighted with the overture from his Republican colleague. Later he told Howard Leichter: “It was the first time, in all these years of discussion and debate and legislation that somebody from that side of the aisle had said. ‘Look, there is probably some common ground.’”
This chance meeting at the Chamber luncheon led to the creation of a bi-partisan working group later known as the “Gang of Seven.” In addition to Gruenes and Ogren, its members included two Republicans; Senate Minority Leader Duane Benson, and Brad Stanius, a House Assistant Minority Leader. They were joined by DFLers Linda Berglin, Lee Greenfield, the Chair of the House Appropriations Committee’s Human Resources Division (right), and Senator Pat Piper, the Chair of the Senate’s Health and Human Services Committee’s Health Care Access Division.
The group began meeting privately in November 1991, with the closed door sessions extending into the early months of 1992. “We operated by consensus,” Lee Greenfield later noted. “If someone vehemently objected (to a provision) you couldn’t move on.” With an approach later emulated on a national level by Hillary Clinton and her health care team, the seven Minnesota legislators shut lobbyists out of their proceedings and said little to outsiders about the nature of their work.
The Governor gave his tacit approval to the effort but took a hands-off stance—at least initially. Work continued on an overall framework into early March when a staff draft was prepared for the seven members to review. But now, partisan tensions began to build when the Republican members of the working group voiced objections to some of the specifics in the initial draft—including the proposal for a large new state bureaucracy to oversee the implementation of a new health reform system.
Then, tensions continued to mount when Carlson and his staff became involved in the discussions in a substantive way. Curt Johnson was the Governor’s emissary to the Gang of Seven, and he shared the Republican members concerns about the direction the group was taking. “The size of the implied bureaucracy was staggering,” Johnson later recalled. It was not anything “anyone with a conservative streak would agree to.”
With tensions reaching the breaking point, the seven legislators began nearly round the clock negotiations with the Carlson’s staff in early March. Finally, just after midnight on Monday morning, March 9, a deal was finally struck. “What I remember most about that (final session) … was the increasing evidence that those (DFL) folks wanted a bill,” Johnson observed. “They wanted a bill more than they wanted an issue. And that was the turning point for me, and my willingness to talk to the Governor about it.”
Later that day, the seven-member working group released a nine-page plan entitled “A Bipartisan Proposal for Health Care” at a hastily assembled news conference. In the preface to its plan, the group noted that its discussions began “at ground zero,” without a pre-determined outline or framework. Those discussions culminated in a plan that was not merely the result of political compromise, but rather one whose components complimented each other, the seven members explained.
The working group went on to observe that “reforming health care in Minnesota will involve more than a grand gesture in a single legislative session. Reform will be an ongoing process, reflecting the dynamics of change. Major health care legislation will likely be considered for years to come, even if this proposal becomes law this year.”
The plan’s overall goal was to “restructure Minnesota’s health care system to increase access, control costs, and maintain quality.” It outlined several key strategies that were intended to achieve this goal. They included the establishment of a state-supported health care program for the uninsured; cost containment through use of managed care, practice parameters, and malpractice reform; and new limits on underwriting and rating practices used by private health insurance plans.
The plan’s centerpiece was a new program known as HealthRight, a name that would be applied to the overall health reform plan, itself. HealthRight broadened eligibility for state health insurance subsidies in several steps, culminating in 1994 when all Minnesota families that met the program’s eligibility requirements, would be able to enroll in the program. These eligible participants would pay a sliding fee insurance premium based on their income and family size.
The working group proposed to pay for this new initiative through a 5 cent per pack increase in the cigarette tax, effective on July 1, 1992. But the cigarette tax was not the only new revenue source. In what would become the plan’s most controversial feature, it proposed two new surtaxes; one on hospital net patient revenues starting on January 1, 1993 and the other on the gross revenue of all licensed health care providers, beginning January 1, 1994.
Carlson later praised the plan, saying that “a remarkable thing happened around a conference table in St. Paul. A bipartisan group of blurry eyed negotiators reached agreement on health care reform legislation that could bring health care into reach for every Minnesotan.”
The show of bipartisanship at the March 9 news conference received kudos from the state’s political journalists, including the editor of St. Paul Pioneer Press. “The sight was so politically incongruous that it produced audible gasps from the crowd of news reporters and other onlookers,” the editor observed two days later. “There was Rep. Paul Ogren, the liberal DFLer from Aitken, clasping the hand of Independent-Republican Governor Arne Carlson in a victory salute.”
The Star Tribune’s editor added his own words of praise for the bipartisan effort but tempered them somewhat. “It is an absolute wonder that Independent Republicans and DFLers were able to agree… but they did and produced a fairly-good bill. Legislators: Do not pass Go, do not collect $200 from lobbyists for doctors, hospitals or trial lawyers. Pass this legislation.”
Running the legislative gauntlet
Once the television lights were turned off at the March 9 news conference, the heavy legislative lifting began for the bipartisan proposal. Now, the plan would need to makes its way through the legislature’s complex committee system, where it could be picked apart by its critics. Almost immediately, the critics pounced when they realized that their financial interests could be threatened by the ambitious overhaul of the Minnesota’s health care delivery system.
In the past, key members of the state’s powerful health care industry had voiced general support for health care reform when it was little more than a vague promise. But now, a price tag had been placed on reform and many industry members were not at all pleased by what they saw.
“It is a first rate program, with a second rate funding source,” declared Vic Ellison, referring to the surtax on hospital revenues. Ellison, a spokesman for a group of metro-area hospitals, said that “taxing the sick and injured is a poor way to finance universal access.” He maintained that HealthRight should be financed through the state income tax system rather than through the hospital surtax.
Douglas Fenstermaker, HealthEast’s chief financial officer, was even more outspoken. “If those folks think we are going to absorb these costs, they have wiped out our ability to pay debt service and operate our hospitals. The only way we can do that is to pass 100% of the cost on to the consumer.”
Later, the Minnesota Medical Association joined the hospital groups in voicing opposition to the bill. “The (Association) supports affordable health care for all Minnesotans but HealthRight is the wrong answer,” Dr. Andrew J.K. Smith, the MMA’s board chair, told the Pioneer Press. “Funding the $200 million plan through a 2 percent tax on health care services would make medical care more expensive. Minnesota doesn’t put a sales tax on necessities and health care is a necessity.”
Smith also objected to a provision in the plan that would limit the use of new technologies and new medical procedures until a state commission determined which ones were cost-effective. “This could have a chilling effect on improvements in health care,” he maintained. “Often new technology means less invasive and cheaper procedures such as the use of lasers to remove gallstones.”
But not all Minnesota doctors shared Smith’s views. Dr. Christopher Reif, state co-chair of Physicians for a National Health Program, endorsed HealthRight saying that “It provides a quality package of health care benefits for the uninsured. In time, insurance coverage should be mandated… And the sliding fee schedule may need to be adjusted to close all gaps in coverage. But, overall, this is a good first step toward basic coverage for everyone,” Reif said.
Soon after the plan was released , Rochester’s powerful Mayo Clinic weighed in with its objections to the bill. “Mayo attacks HealthRight,” the Rochester Post-Bulletin declared on March 21. The paper reported on a statement by the Clinic’s Chief Executive, Robert Waller, saying that the bill as “presently drafted will make it difficult for Mayo to continue to compete nationally with other major medical centers.” Waller was particularly concerned about the prospect of a tax on revenues the clinic gained from out-of-state patients. Mayo lobbyists succeeded in getting some exemptions inserted in the House version of the bill, but most of those were later dropped in the House-Senate conference.
In rural communities throughout the state, opposition to the bill was especially intense. There, small town hospitals, often their community’s major employer, were fearful that the surtax could push them over the financial edge. Rural opposition prompted many outstate legislators from both parties to oppose the bill as it moved through the legislative process.
While they may have been outnumbered and outspent by the bill’s opponents, a group of advocates rallied to support HealthRight. They included the Minnesota Nurses Association, the Minnesota Council of Health Maintenance Organizations (HMOs), and the Minnesota Chapter of the American Academy of Pediatrics.