Counterpoint: Drug price controls would cost plenty
With the deck stacked against people who need new drugs, let's not dismiss them because their interests happen to align with the drug industry.
A substantial effort is under way to save Minnesota’s General Assistance Medical Care program (GAMC) from expiring on March 1. As someone who wholly supports the reinstatement of GAMC, I’m increasingly worried this effort might fail because, to date, none of the discussions at the Capitol adequately consider the state’s broader budget mess — the overriding reason why GAMC is set to end in the first place.
GAMC is a state program that serves essentially two roles: It is 1) a financing scheme for uncompensated hospital care and 2) a health plan for poor adults without children.
As most people tell it, Gov. Tim Pawlenty vetoed GAMC to help balance the budget. This is true, but it’s not where the story starts, and it unfairly paints the governor as a Scrooge willing to cut health care for the poor.
Months before the veto, Gov. Pawlenty actually proposed a dramatic overhaul of GAMC. This would have created an uncompensated care pool, encouraged clinic use over expensive hospitalizations, added care coordination, and reduced costs substantially. This entirely new vision for GAMC is exactly the sort of systemic reform the state needs in the face of long-term budget deficits. Unfortunately, the state Legislature ignored it, and Gov. Pawlenty then vetoed the unreformed program. Importantly, the governor gave legislators time to propose alternatives.
Consider a few more details, and it becomes clear that the governor has consistently used GAMC to help steer the larger budget conversation. The reform I just referred to was a key element in the March 2009 budget revisions. The governor specifically used this proposed GAMC funding reduction as a platform to highlight his budget priorities and to criticize the DFL budget plan for failing to set priorities strategically.
The decision to veto GAMC also was a key part of the governor’s budget-balancing process. The veto came at a time when budget negotiations were stalling, and it’s fairly clear that vetoing GAMC was a strategic play to advance his goals for Minnesota’s budget.
In short, the governor’s proposal and his eventual veto were never about just GAMC. They were always tied to developing, prioritizing, and negotiating solutions for the state’s budget. With that in mind, we shouldn’t be surprised if future gubernatorial action on reinstating the program is similarly linked to broader budget solutions.
Linking the two is altogether appropriate and necessary. The budget landscape turned more treacherous after the November economic forecast predicted an additional $1.2 billion shortfall, followed more recently by a judicial ruling challenging the governor’s unallotment authority. The resulting reality is stark: There’s simply no money to reinstate GAMC. If it is to survive, then lower budget priorities must give way.
To date, lawmakers, health care providers, advocates for the poor, and others have devoted countless hours toward developing GAMC solutions. Quite understandably, these solutions don’t address other budget issues. We shouldn’t expect the Minnesota Hospital Association to take a position on education funding or corporate taxes.
While there may be work yet to do on the nuts and bolts, it’s time for lawmakers to begin discussing how reinstating GAMC fits the new budget landscape. Many DFL legislators will undoubtedly claim that their solution already addresses the budget by slashing costs and fully funding GAMC through new federal Medicaid revenue. However, this ignores GAMC’s place on the negotiating table, the dire need for longer-term budget solutions, and the controversy over how they plan to tap federal funds.
This is not meant to throw wrenches in the works. GAMC deserves new life. It serves people who can’t help themselves, and it keeps the cost of health care more transparent for everyone.
Furthermore, I’m not saying that a solution to fix GAMC must tie into a comprehensive budget solution, but it does need to improve the state’s balance sheet.
To assure GAMC new life, I’d recommend that we start identifying lesser priorities. Let’s start making a list. Washington State’s Office of Financial Management publishes a report that itemizes and prioritizes spending initiatives as a part of that state’s budgeting process. A similar list would serve Minnesota well.
Indeed, last year the governor and the Legislature failed to balance the budget in large part because both refused earnestly to question state spending priorities. One side relied too heavily on short-term budget maneuvers, the other on tax increases. Once we start seriously examining priorities, I’m confident we’ll all agree that GAMC remains a priority worth saving.
Peter Nelson is a policy fellow at the Center of the American Experiment in Minneapolis.
This commentary originally appeared in the Pioneer Press on January 21, 2010.
Permission to reprint in whole or in part is hereby granted.
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