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Reform takes more than spending

Yesterday’s solutions don’t fix tomorrow’s challenges.

Minnesota State Capitol
Minnesota State Capitol
MinnPost photo by Peter Callaghan

At a recent speech, one of Minnesota’s most prominent and successful entrepreneurs was asked if the state still was a place that supported innovative enterprises. There is no better place than Minnesota, he said, especially in his field of medical device development and manufacturing. Minnesota has the critical mass of people, research and facilities that set it apart from other locations.

He then added this, comparing Minnesota to a country club: “If you want to belong to a high-end country club, you have to expect to pay the dues.”

Fair point. Minnesota offers a high quality of life to most residents. The state’s population is well-educated, enjoys world-class natural and cultural amenities, is safer than most places in the country (even with a recent spike, the rate of violent crime rate in Minnesota is 30% lower than the national average), has a median household income well above the national average (and a poverty rate that ranks among the lowest of all states) and residents of Minnesota are among the healthiest people in the nation.

Gov. Tim Walz and the DFL majorities that control both chambers of the legislature have big plans to make Minnesota even better, particularly to “make it the best state in the country for children,” in the governor’s words.

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Who can argue with that lofty goal? Recalling the Time Magazine cover story of 50 years ago that praised Minnesota as the state that works, Walz is calling for a new “Minnesota Miracle” to reduce the number of children in poverty, to support families, to make communities safer, to expand affordable housing programs, to move Minnesota more aggressively to a carbon-neutral future and to achieve other long-sought DFL goals.

To paraphrase Mel Brooks, “It’s good to be the king and to have an $18 billion budget surplus.”

Without question, the DFL agenda tackles a panoply of critical issues. But are the solutions part of a new “Minnesota Miracle,” as Walz promises, or just adding massive amounts of money to put temporary patches on longstanding challenges?

The fact is that there is precious little true reform or innovation in the DFL programs and a lot of unsustainable funding, much of it propping up broken or inefficient systems. Look at the state’s public schools. Minnesota has about 330 school districts serving 827,000 students in a bit more than 2,000 E-12 schools throughout the state. The average district – with all the administrative costs that go into running a school district of any size – is serving about 2,500 students in six schools. Remove the three largest metro-area school districts and the numbers are even more out of whack.

Small school districts have the same challenges whether they are in rural parts of the state or in the suburbs of the Twin Cities. There simply aren’t the number of students necessary to support high-level, diverse curricula, especially in math and science. The DFL’s plan to add more than $2 billion to school funding formulas doesn’t address that fundamental problem. Absolutely, more money helps and is needed. But better, more efficient uses of all public dollars to achieve better outcomes is even more critical.

Government programs – free from accountability and evaluation – too often take on lives of their own. Quality gives way to expediency. MinnesotaCare is a case in point. This innovative program was created in 1992. It addressed a fundamental need for many Minnesotans who were working in jobs that paid wages too high to qualify workers for Medicaid but too low for them to afford health insurance in the private marketplace.

Over the years, MinnesotaCare worked spectacularly well, contributing to making the state one of the healthiest in the nation. But MinnesotaCare also came to face the same dilemma challenging every insurer – rapidly rising health costs. Rather than address the thorny core problem of controlling health costs, legislators did what they often do. They buried the problem. Instead of a solution, they applied a patch – reducing reimbursements paid to health providers, especially dentists.

The long story short is that as reimbursements paid to dentists fell far below the cost of providing care, many dentists made the unfortunate but necessary decision to stop providing care to those enrolled in MinnesotaCare. An estimated two-thirds of children in public programs received little or no basic dental care.

While the state has moved to increase payments to dentists in recent years, a generation of children in low-income families face a lifetime of preventable and expensive health problems, including chronic physical health issues, because they were denied preventive dental care. Those costs don’t go away. A study by the Minnesota Department of Health a few years ago found that Minnesotans with chronic health conditions account for 83% of all health care spending. The average annual medical spending of Minnesotans with at least one chronic condition is eight times the amount of those with no chronic conditions. Are all these chronic conditions due to poor oral health care in childhood? Of course not. Could many of these conditions and their related costs have been prevented by spending a few more dollars for dentists? Absolutely.

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Don’t misunderstand. Walz and the DFL are tackling issues vital to Minnesota’s future. But the solutions they are offering aren’t sustainable. Even the Democrats recognize that if the answer to today’s challenges always is more money, then more money always will be needed. The DFL is proposing a host of new taxes, including a new income tax rate of 10.85% on the state’s wealthiest. That would give Minnesota the third highest marginal rate in the country.

Minnesotans have voted to enjoy the amenities of a high-end country club. But the state also has to compete with other states for people, investments and businesses and there is growing evidence that the state’s taxes are tipping the balance in favor of other locations. The total tax burden in Minnesota – total state income, property and sales and excise taxes as a share of total personal income – is eighth highest, according to WalletHub. Minnesota’s lowest marginal individual income tax rate is higher than the TOP rate imposed by half the states.

Minnesota Democrats would build a better future if they did the heavy lifting of reforming outdated systems and programs, not just propping them up with new spending.

Republicans aren’t off the hook for standing on the sidelines of reform. Too much of their time and political capital is spent on promoting tax cuts and waging culture wars.

Tom Horner
Tom Horner
The 1992 health reform program should be the model for today’s GOP. Expanding access to health coverage emerged from a commission created by DFL Gov. Rudy Perpich and was pushed in the legislature by two powerful Democrats. They proposed a plan closer to a massive single-payer, government-run health takeover than a program targeting low-income workers. It was Republican Gov. Arne Carlson who vetoed the first effort, but recognized that saying no wasn’t a solution. He convened a bipartisan group of eight legislators who crafted the MinnesotaCare program that Carlson signed into law.

Democrats could have used this year to study the very real problems they seek to address and find new solutions. Republicans could have moved beyond the agenda of the far right and offered a meaningful voice. Both chose more narrow political paths. As a result, Minnesota’s “country club” may have more amenities, but fewer people who can afford (or are willing) to pay the dues.

Tom Horner is a member of MinnPost’s board of directors. This commentary was reprinted with permission, and originally appeared on his blogsite, Politics and Policy at the Innovative Center.