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How the Obama administration affected Minnesota

MinnPost file photo by James Nord
President Barack Obama speaking at Honeywell in Golden Valley, on June 1, 2012.

Minnesota has changed in the eight years since Barack Obama became the 44th president of the United States.

Many of those changes — our new stadiums, a change of address for the SPAM Museum, and even the fact that same-sex couples could get married in Minnesota as of 2013 — arguably didn’t have a whole lot to do with the president’s tenure. But others, for better or for worse, did.

As Obama prepares to step down and make way for his successor, President-elect Donald Trump, MinnPost asked experts and political observers just what Minnesotans have to say “Thanks, Obama” — facetiously or not — for.

Health care

So far, Minnesota has felt some of the biggest effects of Obama Administration policies in health care, said retired Carleton political science professor Steven Schier.

In 2010, Obama signed the Affordable Care Act, so central to his policy agenda that it became known as “Obamacare.” The legislation requires most Americans to have health insurance or pay a fee, allows young adults to stay on parents’ insurance policies until age 26 and requires insurers to cover people regardless of preexisting conditions, among other provisions.

Even before the ACA was signed into law, a low percentage of Minnesota’s population — 10 percent versus 17 percent in the U.S. in 2009 — lacked health insurance, so the effect of the law was smaller here than in the country as a whole. But Minnesota still saw a significant drop in uninsured people following the ACA’s implementation, according to data from the U.S. Census Bureau.

Persons under age 65 without health insurance, U.S. and Minnesota
Though both Republicans and Democrats say there are problems with the Affordable Care Act and MNsure, Minnesota's uninsured rates — among the lowest in the U.S. to begin with — have decreased in recent years.
Source: U.S. Census Bureau, compiled by Minnesota Compass

That’s not all the ACA did: one side-effect that’s become a major part of the political debate nationwide, as in Minnesota, has been rising health insurance premiums for people who buy insurance on the individual market — in Minnesota’s case, some 250,000 people.

“Minnesota’s individual health insurance market is experiencing serious disruptions in 2017,” a September report from the Minnesota Department of Commerce says, citing an urgent need for reform. “The dramatic rate increases facing Minnesotans who purchase their own health insurance are unsustainable and unfair.”

According to a federal Department of Health and Human Services report, premiums on the individual insurance market are expected to rise an average of 59 percent (an estimate based on coverage for a 27-year-old) between 2016 and 2017. That’s not the largest increase of any state, but it is pretty big, and Republicans and Democrats agree something has to be done about it, though they have different proposals for doing so.

Health care became a major issue in Minnesota’s November elections after DFL Gov. Mark Dayton said the ACA was no longer affordable for many people.

“So you’ve got increased coverage, but you’ve got skyrocketing premiums and an issue that delivered the state legislature to the Republicans,” Schier said.

Another ACA provision — a 2.3 percent excise tax on medical devices — drew enough attention from Minnesota’s medical device industry that the state’s entire Congressional delegation supported its suspension.

But the true effects of the tax — effectively 1.5 percent because companies can deduct some of the cost in their federal taxes, according to the Washington Post — are debated.

Arthur Erdman, the director of the University of Minnesota’s Medical Device Center, which receives support from medical device companies, said the effects of the tax on the state’s medical devices industry were significant. Specifically, he said, the tax caused layoffs at Minnesota medical device companies and likely hurt U.S. companies’ standing as countries like China and Taiwan poured money into developing medical devices.

A Government Accountability Office analysis of 102 medical device manufacturers found net profits increased between 2005 and 2014, mostly attributable to large companies' profits. The report cautions against attributing fluctuations in sales and profits of medical devices to the ACA, citing other factors that could be at play, including mergers and acquisitions, new products and recalls.

Minnesota medical device companies spent millions lobbying for the tax’s demise, succeeding in suspending it for two years in late 2015.

Ultimately, Obama’s legacy when it comes to health care reform is uncertain. At the federal level, Republicans are working to repeal and replace the Affordable Care Act, but the exact nature of changes to the law are unknown.

Energy and environment

Energy is an area where Obama policies probably helped to bolster an agenda Minnesota was already pursuing, said Roger Rose, associate professor of political science at the University of Minnesota, Morris.

In 2007, Republican Gov. Tim Pawlenty signed the Next Generation Energy Act, which required utilities to produce a quarter of electricity from renewable sources by 2025. Another law passed in 2013 requires big utility companies to generate at least 1.5 percent of their power from solar by 2020.

Nonetheless, the Obama Administration set an agenda, when it comes to energy, that has had effects in Minnesota, Schier said.

“You see Xcel (Energy) and other energy providers really jumping on the clean energy wagon,” Schier said. “That sort of emphasis is something that Obama really brought to the White House and … has shown up in Minnesota — has shown up in the behavior of corporate utilities and in the agenda.”

Between 2005 and 2015, the percent of energy generated in Minnesota from renewable sources increased from 6 percent to 21 percent — just 4 percentage points away from the state’s 2025 goal — according to the U.S. Energy Information Administration.

Electricity generation in Minnesota by source, 2005 and 2015
The share of electricity generated from renewable sources in Minnesota increased between 2005 and 2015.
Source: U.S. Energy Information Administration, Minnesota Department of Commerce

Even if the Clean Power Plan, an Obama Administration Environmental Protection Agency initiative to cut carbon pollution produced at power plants, is struck down by the courts (it is currently pending judicial review after states and industry groups filed stay applications) or ended by the new Congress, “the pathway that Obama’s agencies supported, Minnesota’s likely to stay on, at least for the next few years,” said former DFL lawmaker Steve Kelley, now a senior fellow at the Humphrey School of Public Affairs.

“The Obama support for subsidies for moving us forward on renewable energy has been important to Minnesota so far,” Kelley said. “I think it has put us on a path to achieving a much cleaner portfolio of energy sources than we’ve had in the past.”

While most of the Obama administration's environmental agenda’s effects in Minnesota have focused on fossil fuels and climate change, the state has also seen changes when it comes to extractive industry regulations, said former Republican Congressman Vin Weber.

“I think we’ve seen an impact in Minnesota in slowing down — whether it’s pipelines or the drilling process in Northeastern Minnesota for copper nickel,” he said.

In December, the federal Agriculture and Interior departments announced that mineral leases would not be renewed for a proposed Twin Metals copper-nickel mine project near Ely.

“That was a really controversial project,” said Monica Haynes, director of the Bureau of Business and Economic Research at the University of Minnesota-Duluth’s Labovitz School of Business and Economics. “For them to come in and block development — there were a lot of people who were very upset about that, and then of course on the other side, there were a lot of people championing it and celebrating the decision.”

Obama Administration policies haven’t exclusively slowed down extraction in Minnesota: This month, the U.S. Forest Service announced a land-swap agreement that will allow a PolyMet copper-nickel mining project to move forward in northeastern Minnesota, assuming it clears lawsuits filed by environmental groups.

Economics

While researchers say the economy figures into voters’ choices at the ballot box, it’s difficult to say just how much of Minnesota’s economic situation — whether you’re talking about the recovery or its current state —  is due to Obama administration policies, Rose said.

On average, Minnesota didn’t fare as poorly as much of the U.S. did during the Great Recession. At its highest, Minnesota’s unemployment was 8.1 percent in June 2009, while the national rate rose as high as 10 percent in October 2009.

Unemployment in Minnesota, U.S.
Note: this chart shows non-seasonally adjusted unemployment rates for September of each year.
Source: Bureau of Labor Statistics

According to an analysis by ProPublica, Minnesota received more than $9 billion in federal stimulus funding from the American Recovery and Reinvestment Act, passed in 2009. That’s about $1,700 per capita (about on par with the national average).

Some of the stimulus funding was used to offset the state deficit, but the bulk of the funding was spent on specific programs, from medical research grants for the University of Minnesota, to Title I grants for schools in Mahnomen County and rural business enterprise grants near Waseca, according to ProPublica.

Stimulus funds received by Minnesota, by federal department and agency
Minnesota had received more than $9 billion of the $522 billion federal stimulus package as of September 2012, according to analysis by ProPublica.
Source: ProPublica

Private payroll increased by $2.1 million from February 2010 to May 2011, according to figures from the Office of the Council of Economic Advisors. The council put Minnesota’s employment increase as a result of the stimulus bill at 61,000 as of March 2011.

“It is generally acknowledged that ARRA had a significant impact on the U.S. economy, but its benefit and the effectiveness by which it met objectives continues to be debated,” says a 2011 report on from the Minnesota Department of Management and Budget on the implementation of the stimulus package, acknowledging the full effects might not be known “well into the future.”

“How much is due to the federal government and how much is due to any particular presidential policy is hard to know,” Rose said. “I think it definitely helped. One could say it helped stabilize the housing market so there weren’t bigger spillovers for us.”

Minnesota recovered more quickly than much of the country from the hit it took in the Great Recession, which began in December 2007. It saw pre-recession levels of employment return in 2013, which it has now exceeded.

Other Obama Administration policies — such as tariffs aimed at reducing steel dumping by China and other countries have helped shore up the steel industry in the Northeastern Minnesota, Haynes, of UMD, said.

Not everyone agreed with the tariffs, but “(they) definitely helped the plants that were idling, and a lot of them have reopened since that has happened,” she said. The Recovery Act’s bailout of the auto industry, she said, also boosted the market for steel.

Too soon to know

It’s worth noting that the president’s ability to affect policy in the states is limited by the U.S. Constitution. There’s a separation of powers between state and federal governments, which contain their own separations of power between the executive, congressional and judicial branches (also worth noting is that Obama critics say he’s overstepped these separations with executive orders).

And though the effects of the presidency have been felt in some areas, it’s still too early to know what Obama’s enduring legacy in Minnesota will be, Schier said: his successor, Trump, hasn’t even taken the oath of office yet. A clearer picture will likely shake out over the next few years.

“Usually, you can tell a president’s effect only in reference to the actions of his successor,” Schier said. “In other words, what changes under his successor for good or ill, that helps us to assess what Obama did for good or ill. (For example), changes to health care policy are going to tell us the good or bad of what Obama did much more thoroughly.”

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