By Dan Diamond and Lauren Weber
(c) 2024 , The Washington Post
Before he was Minnesota governor – and long before he was tapped as Vice President Kamala Harris’s running mate – Tim Walz was a congressman willing to defy political wisdom: He got into a public spat with the largest employer in his district.
The world-famous Mayo Clinic had acquired and then shut down services at small hospitals across the region, angering Walz, who said he was worried about the impact on patients “blindsided” by the moves.
“It’s just hubris,” Walz said in 2017. “These big consolidations of health care, [we’re] going to have to deal with this across the country.”
Seven years later, politicians in both parties increasingly agree: It’s time to take on the health-care conglomerates they say are contributing to higher prices and reduced access. The Biden administration has ramped up antitrust scrutiny of the health industry, and some lawmakers and experts said they hope Walz and Harris – who pursued her own investigations into health-care corporations as California attorney general – will go further if elected.
“If you’re a health-care conglomerate that’s using its market power to raise prices, then I would be concerned” about a Harris-Walz administration, said Richard M. Scheffler, a health economist at the University of California at Berkeley who has written about Harris’s health-care focus and favors a crackdown on bad actors in the industry.
While the newly formed Democratic presidential ticket has yet to formally lay out a plan on health-care consolidation, Harris is expected to discuss her economic plans and tout her record tackling mergers in a speech Friday. The Trump campaign did not respond to a request for comment on Trump’s strategy on health-care consolidation, and a spokeswoman at the Republican National Committee referred to Harris’s past support for Medicare-for-all, which would have overhauled the U.S. health system.
“Kamala Harris supports a total healthcare monopoly that would ban private health insurance for 150 million Americans,” Anna Kelly, an RNC spokeswoman, wrote in an email.
Harris has said she no longer supports Medicare-for-all, part of her shift from the progressive positions that defined her short-lived 2019 presidential campaign. And after their early-career battles with health-care corporations, it’s unclear whether Harris and Walz remain as keen to go to war with the industry.
Walz had another showdown with Mayo Clinic last year, after he became governor and joined his allies in the legislature in a bid to impose new health-care affordability measures and nurse staffing rules on hospitals across the state.
But the Mayo Clinic delivered a warning: The legislation needed to change, or the hospital system would halt planned investments in Rochester, Minn., where their global operations are headquartered.
This time, Walz would end up blindsiding his allies.
“We got word that Mayo made a call to the governor and made a demand … if those two provisions weren’t taken out of the Health and Human Services bill, they would take billions of dollars in funding out of Minnesota,” state Sen. Erin Murphy (D), who was steering the nursing legislation, said in an interview with The Washington Post last year. While some lawmakers believed that to be an empty threat – Mayo Clinic has been tied to its Rochester headquarters for more than 150 years – Walz treated it as a serious possibility. The governor threw his support to the health system, saying the nursing legislation should include exceptions for the Mayo Clinic – and shocking allies in the legislature.
“There were weeks of negotiation … but Mayo wouldn’t move, and the governor stuck with them,” Murphy said last year. Her nursing legislation ended up largely gutted after the concessions to Mayo Clinic, as other hospitals demanded similar carveouts.
In an interview this month, Murphy – now Senate majority leader in Minnesota – said she has since worked productively with Walz and the Mayo Clinic but acknowledged last year’s difficult legislative battle.
“Gov. Walz and I had an honest disagreement over that issue,” Murphy said.
Walz’s office declined to answer questions about his views on corporate power on health care but hailed his relationship with the Mayo Clinic and other organizations.
“Minnesota is one of the best places in the world to receive health care, and that reputation is thanks to institutions like the Mayo Clinic and countless companies working on health care innovation in the state,” Claire Lancaster, a spokeswoman for Walz, wrote in an email, citing a recent analysis by finance company WalletHub that ranked Minnesota as the best state for health care. “The Governor’s administration has always worked to balance the need to work closely with those companies with ensuring quality and affordability for patients.”
A Mayo Clinic spokeswoman declined to comment on last year’s legislative fight or other specific dealings with Walz.
“During his years in Congress and at the State Capitol, we partnered with Governor Walz on issues that were important to the best interest of patients, our three-shield mission [of patients, education and research] and the vitality of the State of Minnesota,” Mayo Clinic spokeswoman Andrea Kalmanovitz wrote in an email.
Larry Levitt, executive vice president for health policy for KFF, a nonpartisan health-care think tank, said Walz’s work with Mayo illustrates the opportunity – and challenge – of wrangling with the health-care industry.
“These big health-care companies are big employers and economic engines in states, so it’s always risky for politicians to take them on,” Levitt said. “And honestly, they don’t always win. … Walz took on Mayo and blinked to some extent.”
Some activists are worried that national Democrats could blink, too.
Matt Stoller, director of research for the American Economic Liberties Project, a nonprofit organization focused on fighting consolidation, wrote a New York Times op-ed last week warning that a Harris-Walz administration could retreat from Biden’s attempt to crack down on corporate power, noting pressure from donors who have complained about current regulatory efforts.
But in an interview, the anti-monopoly activist highlighted Harris and Walz’s strong records on combating health-care consolidation.
“What I hope for Harris is that she replicates what she did at the California AG’s office on health care,” Stoller said.
– – –
A persistent problem
The cost of health care remains a key issue in the 2024 presidential race, with the Democratic and Republican tickets both promising to lower prescription drug prices, provide more affordable coverage and pursue other solutions to improve patient access.
Experts say Trump’s administration was more aggressive on antitrust mattersthan prior Republican administrations, winning concessions from the largest health-care system in North Carolina and investigating a network of outpatient medical centers. But after Trump campaigned on a message of economic populism in 2016, the former president has said little about health-care corporate power in his current bid for the White House.
Levitt noted how Democrats sought to partner with the industry – rather than battle it – to win support for their 2010 Affordable Care Act. That legislation helped spur more industry consolidation by providing financial rewards for health-care providers that delivered low-cost, high-quality care, prompting mergers between organizations that focused on different parts of the health system.
But the Biden administration has been more aggressive in fighting health-care corporations compared with any administration he could remember, Levitt said, adding that the Harris-Walz ticket had “more depth” and experience in taking on the industry than their predecessors.
Walz’s views on health-care access and cost were honed by his own teenage experience, after his father’s death from cancer left his mother burdened with medical debt. His battle as a congressman with the Mayo Clinic foreshadowed some aspects of his tenure as governor, including his recent effort to block UnitedHealthcare, the nation’s largest health insurer and another major Minnesota employer, from winning a contract in the state’s Medicaid managed care program. And his willingness to wrestle with the health-care industry echoes Harris’s record in California.
“We intervened in the merger of hospitals that could’ve resulted in less competition or increased cost for their patients,” Harris said in remarks last year, emphasizing her 2012 efforts to investigate hospitals’ market power during her tenure as state attorney general. The initiative led to a lawsuit against Sutter Health, one of the state’s largest hospital chains, alleging it was engaging in anticompetitive behavior.
Harris also put constraints on a major hospital merger, helping quash the deal, and joined other attorneys general in a bid to block the merger of two health plans.
Harris “was investigating big health-care systems’ consolidation, seeing it through the lens of consumer protection,” said Rob Bonta (D), the current California attorney general. He credited the settlement with Sutter Health as providing a playbook of “best practices for how all mergers, acquisition, consolidation should be evaluated and scrutinized.”
Health and Human Services Secretary Xavier Becerra, who served as California attorney general after Harris and inherited her portfolio, said her work demonstrated that she “understood the power of transparency” in health care and would probablybuild on those efforts if elected president.
“She was one who was really seeking to have companies fess up on their operations so we could see if, in fact, they were being monopolistic or not,” Becerra said in an interview.
Democrats say Harris and Walz’s work on fighting health-care corporate power goes beyond mergers, pointing to their pressure on the pharmaceutical industry. Walz oversaw legislation that capped out-of-pocket spending on insulin for Minnesotans in 2020 – coming two years before the Biden administration undertook a similar effort that capped out-of-pocket spending on the diabetes medication for Medicare patients.
– – –
Resistance and compromise
The deep-pocketed and powerful health-care industry has pushed back on Democrats’ initiatives. UnitedHealthcare sued the Walz administration this month over its policy blocking the insurance giant from participating in the state’s Medicaid managed care plan, saying the rule was pushed through without public input.
“UnitedHealthcare is challenging legislation that limits choice for individuals, families and children in Minnesota,” the company said in a statement.
Some Democratic donors and officials have signaled that a Harris administration could scale back scrutiny of multiple industries under Biden.
LinkedIn founder Reid Hoffman, a major Democratic donor, last month called for Harris to replace Federal Trade Commission chairwoman Lina Khan, saying she had been too aggressive. Industry officials have also complained about crackdowns overseen by Justice Department antitrust chief Jonathan Kanter and Consumer Financial Protection Bureau director Rohit Chopra.
While Harris and Walz have challenged corporate power, politicians do so only because voters are pushing for it, cautioned Vikas Saini, president of the Lown Institute, a health-care think tank.
“The health-care corporations now are mega-regional players. They have huge clout. It would really take much more than a single politician,” Saini said. “It’s going to take a broader movement in the country. … Maybe we’ll get there as there is a lot of pain.”
Walz’s own path from Mayo Clinic critic to champion shows the power of the industry.
About six months after last year’s fight over Minnesota’s health-care bills – which resulted in a watered-down version of the affordability legislation – the governor made the 80-mile drive to Mayo Clinic headquarters, as the health system’s leaders unveiled $5 billion in pledged infrastructure investments in Rochester.
“It’s not lost on myself, our administration, or the people of Minnesota, you choose to make that investment in Rochester, Minnesota,” Walz said at the announcement, before turning to Mayo Clinic CEO Gianrico Farrugia and making a pledge. “You have our commitment from the state: Your belief in Minnesota is echoed in our belief in the Mayo Clinic. … Making sure we stand with you. Making sure the investments are there.”
– – –
Isaac Stanley-Becker contributed to this report.