National Health Care Reform: The Proposals and the Politics

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Presentation by Elizabeth Lukanen at the University of Minnesota Academic Health Center's Student Leadership Summit in Minneapolis, MN, December 5, 2009.

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  • 1934-1939: The Great Depression (1929-1939)Income disparities in access to health care had grown, medical costs rising, charity care risingCitizen groups called for gov relief including government-sponsored health, but were most focused on unemploymentPresident Roosevelt appointed a Committee that recognized NHI was of lower priority than a retirement and unemploymentLarge Democratic majorities existed in both the House and Senate, but there was concern that major health reform would defeat SS An increasingly powerful AMA opposed NHI (lose their autonomy, required group practice, salary or capitated. Business and labor groups were not supportive, nor was the emerging private health insurance industry.In the end, it was left out of the 1934 Social Security ActAttempts by a second committee to revive a state centered health reform, was defeated by congress (So. Dems aligned Rep oppose government expansion)
  • 1945 – 1950:World War II, in 1943 The War Labor Board ruled that certain work benefits, including health insurance coverage, should be excluded from the period’s wage and price controlsEmployer began to use generous health benefits recruit workersIn the boom after WW II, Large American businesses were sufficiently profitable that unions could successfully negotiate for greater fringe benefits, including health insurance.Taking on an initiative that FDR had begun, President Truman was promoting the right to medical care as post war econ bill of rightsFirst mid-year post war elections, the Republicans gained the majority in both houses of Congress in 1946 and opposed NHITruman then campaigned two years later in part by targeted the Republican Congress for opposing NHITruman won and seemed to have mandate from the people for NHIStill SO. Dems blocked Truman’s initiatives (in part due to federal action , which may impact segregation at a time when hospitals were still separating patients by race) Labor unions were somewhat split on government-sponsored insurance, some supported, but as workers gained better benefits from their employers, unions believed they could negotiate even more in the futureThe AMA vigorously opposed the Truman plan, using the fear message of “socialized medicine.” This was followed by a drop in public support in part related to anticommunist sentiment
  • 1960 – 1965:In 1960s productivity swelled with well-educated workforce financed by the G.I. billESI was growing, but private plans began to use “experience rating” to set health premiums making it hard for sick/retired to affordEisenhower and Congress passed act giving states federal grants to cover health care for the elderly poor, only 28 states participatedCongress began working on a solution, which had the initial support of Kenndey, but was blocked by Souther Dems.After Johnson’s election, he made this his major priority and with the help of new liberal dems, labor unions who recognized the growing cost of insuring retirees, the AHA, which realized government support was needed to make it cost effective to treat the elderly. AMA opposed Medicare, again characterizing it as socialized medicine, and created a political action arm to increase lobbying efforts.The final bill included Medicare Part A to pay for hospital Care, limited nursing and home health, optional Medicare Part B (paid in part by premiums) to help pay for physician care, and Medicaid, a separate program to assist states in covering poor and disabled. The final bill left the elderly with out certain services (Rx) and there were no government cost controls allows claims to be paid base on standards of “reasonableness” for physician fees.Took advantage of a strong president, support of labor and most industry, growing civil rights awareness, public supportThe federal agencies that now estimate the economic costs of legislation did not yet exist.Cost projections, while considered, were not as central to the Congressional debate as they would become later.Keep economist quite
  • In 1970, inflation was becoming a serious problem With Medicare and Medicaid, health care costs had grown rapidly from 4 percent of the federal budget in 1965 to 11 percent by 1973,Lead to an era of health care regulation, certificate-of need programs, state hospital rate-setting, requirements on HMOs Sen. Ted Kennedy, offered a universal single-payer plan, with a national health budget, no consumer cost-sharing, and was to be financed through payroll taxes. President Nixon countered with his own plan in 1971, a comprehensive Health Insurance Plan (CHIP) called for universal coverage, voluntary employer participation (65% premium necessary to finance)To gain support Kennedy created a middle-ground bill with an employer mandate and personal cost-sharing.The Washington Business Group on Health and the Chamber of Commerce endorsed Nixon’s planThe insurance industry believing NHI loomed, supported more incremental reformsLabor groups chose not to support the Kennedy-Mills compromise, believing that a larger Democratic majority in the next Congress would make for a stronger (less compromised) and veto-proof bill. Those supporting NHI in 1974 were more bipartisan and willing to compromise than in any other NHI effort.However, the wide mix of competing proposals complicated the legislative process, while the Watergate hearingsthat led to Nixon’s resignation dominated Congress, eroded presidential leadership and overshadowed anyaction on NHI.
  • 1976 – 1979, cost cutting, stagflation lead to little NHI reform debateReagan tax cuts, increases in defense spending and moderate cuts in domestic programs—federal debt reached record levels. The Federal Reserve Board acted to control inflation, but health care costs continued to escalate rapidly reaching 12%of the nation’s GDP in 1990 income gap was widening and a recession in 1990-91 added to financial insecurityIn early 1990s a poll found that more Americans worrying about losing their health benefits and not being able to pay their medical bills in the future. eventually focusing the 1992 presidential campaign on the economyA large and varied mix of proposals surfacedAs the 1992 election approached, the “managed competition” approach gained traction and eventually was favored by President Clinton, who hoped to send Congress a health reform plan within one hundred days of taking office.Clinton’s plan, the Health Security Act, called for universal coverage, employer and individual mandates, competition between private insurers, and was to be regulated by government to keep costs down. Health Care Task Force, chaired by First Lady Hillary Clinton and managed by processed the input from 34 closed working groups comprised of over 600 expertsCongressional leaders were sidelined as, The complex plan was shared very lateWhilte Democrats held the majority in both houses, they were divided how to achieve health reform. Other bills were sponsored including a single-payer bill sponsored (Rep. McDermott and Sen. Wellstone) Support Clinton plan from key stakeholders was often conditional. Some labor unions and other public health advocacy groups did not want to be seen as opposed to Clinton’s plan, yet backed the single-payer bill. Other groups supported pieces of the plan, but held back their support wanting to modify the parts they opposed.The Health Insurance Association of America (HIAA) and the National Federation of Independent Businesses(NFIB, mostly small businesses) led the opposition. HIAA worried that its smaller members would be forced out of business and NFIB believed the employer mandate would create a hardship for small businesses and their workers. Both ran effective phone and letter-writing campaigns to Congress. HIAA also produced television ads (Harry and Louis) depicting a middle-class couple feeling threatened by health reform.In the end, President Clinton, having been elected with less than a majority of votes, lacked the large electoral mandateThe size and complexity of the not only slowed its passage through Congress but also made it difficult to generatepopular activism. The opposition was effectively organized and the divided Democratic majority in Congress couldHowever, incremental reform was not dead. In 1997, with a Republican Congress and bipartisan support, the Children’s Health Insurance Program was enacted, building on the Medicaid program to provide health coverage to more low-income children.
  • McAllen, Texasby AtulGawandeJune 2009 New Yorker
  • So far, has left details to CongressSticking points: Universal coverage, lower costs, improve quality, protect consumer choice, public plan option (maybe), budget neutrality
  • National Health Care Reform: The Proposals and the Politics

    1. 1. National Health Care Reform: The Proposals & the Politics<br />Elizabeth Lukanen, MPH <br />State Health Access Reform Evaluation (SHARE )<br />State Health Access Data Assistance Center, <br />University of Minnesota<br />2009 Center for Health Interprofessional Programs <br />Student Leadership Summit<br />Minneapolis, MN<br />December 5, 2009 <br />Funded by a grant from the Robert Wood Johnson Foundation<br />
    2. 2. Outline of Presentation<br />History of Reform<br />Current Drivers of Reform<br />Key Players in Health Reform<br />High Level Policy Overview<br />Proposals Status<br />Cost Estimates of Proposals<br />Legislative Process – Next Steps<br />Impact on Health Professionals<br />Outlook for Reform<br />2<br />
    3. 3. History of Health Reform in U.S.<br />3<br />Source next 4 slides: Kaiser Family Foundation: National Health Insurance — A Brief History of Reform Efforts in the U.S.<br />
    4. 4. 1934-1939: National Health Insurance (NHI) Movement <br /><ul><li>Great Depression
    5. 5. Citizen groups called for Gov’t relief, but were focused on unemployment
    6. 6. Congress was concerned that NHI would lead to the defeat of Social Security Act
    7. 7. Increasingly powerful AMA opposed NHI
    8. 8. Business and labor groups were not supportive, nor was the emerging private health insurance industry and the bill failed</li></ul>4<br />
    9. 9. 1945-1950: National Health Insurance (NHI) Movement <br />WWII, health insurance excluded from existing caps on wages <br /><ul><li>Generous health benefits used to recruit
    10. 10. Truman promoted “the right to medical care” in post war Economic Bill of Rights
    11. 11. Unions believed they could negotiate for better benefits from their employers
    12. 12. The AMA called it “socialized medicine”
    13. 13. Public support was lost and the bill failed</li></ul>5<br />
    14. 14. 1960-1965: Medicare and Medicaid<br />ESI growing, but private plans began to use “experience rating,” pricing out sick and old <br />Congress gave state grants to provide subsidies for elderly with limited success<br />Johnson made Kennedy&apos;s “Medicare” a major priority<br />Labor unions supported it to reduce the high cost of their retirees, AHA supported it to cover high cost of treating elderly<br />Medicare and Medicaid Are Signed into Law!<br />6<br />
    15. 15. 1970-1974: Competing NHI Proposals<br />Inflation was becoming a serious problem <br />Since Medicare and Medicaid, health care costs had grown from 4 to 11 % of the federal budget in 8 years<br />Many bills were proposed, two strong bills emerged led by Sen. Ted Kennedy and President Nixon<br />Competing interests, multiple bills and Watergate contributed to the failure<br />7<br />
    16. 16. 1992 – 1994: The Health Security Act<br />Under Regan, federal debt soared as did health care costs<br />Americans worried about losing health care<br />Clinton vowed to introduce bill in first 100 days<br />Complex bill was crafted behind closed doors<br />Stakeholder support was often conditional<br />HIAA and NFIB lead the opposition by raising concerns for the middle class<br />Bill stalled and failed<br />8<br />
    17. 17. Health Reform Today<br />9<br />
    18. 18. What is Driving Health Care Reform?<br />10<br />Cost<br />Access<br />Quality<br />Could be better!<br />
    19. 19. U.S. Health Care Costs<br />The U.S. will spend roughly $2.5 trillion on health care in 2009<br />$8,160 per person<br />Since 2000, inflation-adjusted costs have been growing at 5.5% per year, considerably faster than overall economic growth<br />11<br />
    20. 20. National Health Expenditures Per Capita, 1986-2010<br />12<br />Actual<br />Projected<br />Calendar Year<br />Source: CMS, Office of the Actuary, National Health Statistics Group.<br />
    21. 21. “Status Quo” Projected Federal Spending<br />13<br />
    22. 22. Increase in number of uninsured15.4% of the population in 2008<br />Millions of Uninsured, all ages<br />14<br />Source: U.S. Census Bureau, Current Population Surveys (March), 1989-2008<br />
    23. 23. Drop in Employer-Sponsored Coverage<br />Source: US. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2008.<br />15<br />
    24. 24. Quality: Misuse, Overuse, Underuse<br />2.5-fold variation in Medicare spending across counties cannot be explained by local prices, age, race and underlying health of the population (Wennberg J, et al.)<br />Medicare beneficiaries in higher-spending, higher-utilization regions do not receive “more effective” care (Fisher ES, et al.)<br />54.9 % of American adults receive only half of their recommended health care (McGlynn EA, et al.)<br />16<br />
    25. 25. Quality: Regional Variation<br />17<br />Source: Dartmouth Atlas of Health Care<br />
    26. 26. Key Players in Health Reform<br />
    27. 27. President Barack Obama<br />Reform one of highest domestic priorities<br />Vocally supporting action across the nation<br />Until now, has left details to Congress<br />19<br /><ul><li>Iraq war, Iran Nuclear, Afghanistan war, competing for his time
    28. 28. Sticking points: Universal coverage, lower costs, improve quality, protect consumer choice, public plan option (maybe?), budget neutrality</li></li></ul><li>Administration <br />20<br />Director, Office of Health Reform <br />Nancy-Ann DeParle<br />White House Chief of Staff <br />Rahm Emanuel<br />HHS Secretary Kathleen Sebelius<br />Director Office of Management and Budget <br />Peter Orszag<br />Director Congressional Budget Office Douglas Elmendorf<br />
    29. 29. Committees<br />21<br />Chair House Education and Labor <br />Rep. George Miller, D-CA<br />Chair House Ways and Means<br />Rep. Charles Rangel, D-NY<br />Chair House Energy and Commerce<br />Representative Henry Waxman, D-CA<br />Senator Finance Chair<br />Sen. Max Baucus, D-MT<br />Senate Health, Education, Labor and Pensions (HELP)<br />Sen. Chris Dodd, <br />D-CT<br />
    30. 30. Other Legislative Players<br />22<br />Speaker of the House <br />Nancy Pelosi (D-CA)<br />Senate Majority Leader <br />Harry Reid (D- NV)<br />Blue Dog Democrats<br />Senator<br />Olympia Snowe<br />R- ME<br />
    31. 31. Special Interest Groups<br />23<br />President <br />America&apos;s Health Insurance Plans<br />Karen Ignagni<br />President-elect,<br />American Medical Association<br />J. James Rohack<br />President <br />American Federation of Labor and Congress of Industrial Organizations <br />Richard Trumka<br />President<br />National Federation of Independent Business<br />Dan Danner<br />President of the Service Employees International Union <br />Andy Stern<br />AARP CEO<br />A. Barry Rand <br />
    32. 32. High-level Policy Overview<br />24<br />
    33. 33. Agreement Across Proposals<br />25<br />
    34. 34. Agreement Across ProposalsMarket Regulation<br />Insurance exchange<br />Pool model for individuals, small employers and those without ESI<br />Individual Mandate<br />With hardship waivers<br />Insurance Market Reforms<br />No rating on health status, gender, or occupation; rate restrictions on age <br />Guaranteed issue<br />No annual/lifetime benefit cap<br />26<br />
    35. 35. Agreement Across ProposalsBenefits/Quality<br />Standards for “adequate coverage” or “minimal benefit package”<br />Require no cost sharing on preventive services<br />Wellness initiatives, focus on prevention<br />Delivery System Reform, “Medical home”<br />Money toward comparative effectiveness research<br />Workforce development grants<br />Targeted towards nurses, primary care and rural areas<br />27<br />
    36. 36. Agreement Across ProposalsAccess<br />Expand Medicaid to across-the-board eligibility floor, most likely up to 133% FPL<br />Subsidies for families &lt; 400% FPL to buy into the exchange through sliding scale “affordability credits”<br />Employer Participation<br />“Pay or Play” Mandate or weaker “free rider” penalty<br />Tax credits for small employers offering employer sponsored insurance<br />28<br />
    37. 37. Agreement Across ProposalsRevenue/Savings<br />Savings<br />Medicaid and Medicare<br />Medicare Advantage plans<br />New Revenue:<br />Individual and employer penalties for violating mandate<br />29<br />
    38. 38. Disagreement Across Proposals<br />30<br />
    39. 39. Disagreement Across Proposals<br />Public Option<br />Necessary in areas where there is high market consolidation?<br />Will it act like Medicare and set rates or will it negotiate for rates?<br />Can states opt out? <br />Size of Expansions and Tax Credits<br />The lower the subsidy, the lower the cost and perception of government intervention<br />Assumptions about “affordability”<br />31<br />
    40. 40. Disagreement Across Proposals<br />Federal Role<br />House wants Fed to play a strong role, Senate wants state to play a larger role<br />Locus of exchange, insurance regulation, financing Medicaid expansions<br />Tort Reform<br />New Revenue<br />Tax insurers? Tax the wealth? Sugary beverage tax? Tax “Cadillac Plans”? Tax Medical devise manufactures? Tax elective surgery?<br />32<br />
    41. 41. Disagreement Across Proposals<br />Payment Reform<br />Increase primary care rates relative to specialty care?<br />Cut Medicare payments attributable to avoidable hospital readmissions?<br />Tie Medicare hospital money to quality?<br />Medicare regional rate re-alignment?<br />Abortion<br />Prevent insurance purchased with federal subsidies from covering abortions?<br />33<br />
    42. 42. Proposal Status: House<br />
    43. 43. House – H.R.3962<br />Affordable Health Care for America Act<br />Originated from 3 bills<br />Education & Labor (Miller, D-CA)<br />Ways & Means (Rangel, D-NY)<br />Energy & Commerce (Waxman, D-CA)<br />Bill was merged via House Rules and moderated:<br />Public option softened<br />Premium subsidies reduced<br />Greater number of employers exempt from mandate<br />States pay for more of Medicaid expansion<br />35<br />
    44. 44. House – H.R.3962<br />Scored by CBO, brought to House Floor<br />To gain support, an amendment passed to prohibit federal funds for abortion services in the public option and in the insurance &quot;exchange”<br />Late endorsements from AARP, the AMA and the Conference of Catholic Bishops were crucial<br />On November 7 HR 3962Passed (220-215)<br />219 Democrats for, 39 voted against, garnered one Republican vote<br />$891 billion over 10 years and will cover 36 million people<br />36<br />
    45. 45. Proposal Status: Senate<br />37<br />
    46. 46. Senate – H.R. 3590<br />Patient Protection and Affordable Care Act<br />Originated from 2 bills<br />Health, Education, Labor and Pensions (HELP) Committee (Harkin, D-IA; Formerly Kennedy, D-MA)<br />Finance Committee (Baucus, D-MT)<br />Passed out of committees by party line vote plus, historic vote in finance by Republican Olympia Snowe (R-ME)<br />Bill was merged via Senate Rules and moderated:<br />States can opt out of public option<br />Tax on elective cosmetic surgery<br />Tax on “Cadillac plans” starting at higher threshold<br />Tax on medical devise manufacturers lowered<br />5% Medicare payment cut for “outlier” physicians removed<br />38<br />
    47. 47. Senate – H.R. 3590<br />First hurdle: procedural motion to allow debate (needed and got 60 votes)<br />Now Senate will take up amendments<br />Adopting amendments is an uphill battle<br />As it stands, it would cost $848 billion over 10 years and cover 31 million people<br />Once the amendment process has concluded, full Senate vote<br />Need 60 votes to cloture, 51 to pass bill<br />Unless….they use reconciliation<br />39<br />
    48. 48. SenateReconciliation<br />Reconciliation: Bill may pass the Senate with simple majority of 51<br />Key problems with Reconciliation:<br />Byrd Rule: Can only take up “budget” matters to “reconcile” legislation with Senate Budget Resolution<br />Senate Parliamentarian decides what <br />Laws are time-limited to 10 year budget window; then sunset<br />Example: SCHIP – created in 1997, nearly lost in 2007<br />Example: “Bush tax cuts”<br />40<br />
    49. 49. SenateProblems with Reconciliation<br />Lack of bipartisanship<br />Reconciliation version could be too far right for the House, because some Democrats are excluded to get nominal Republican support<br />Reconciliation version could be too far left for the House, because moderate Democrats and all Republicans are excluded<br />Limited to “budget” matters, would exclude major aspects of reform (e.g. insurance market reforms)<br />41<br />
    50. 50. Show Me The Money!<br />42<br />
    51. 51. House – H.R.3962<br />$891 billion over 10 years<br />Net $138 billion deficit decrease over 10 years<br />Permanent reductions in annual Medicare FFS rate updates<br />Setting payment rates in the Medicare Advantage program based on per capita spending<br />Changes to Medicare Part D<br />Income tax surcharge on high-income<br />Cancels ~21% reduction in Medicare physician payments (separate bill)<br />Fees on medical device manufacturers<br />43<br />
    52. 52. Senate – H.R. 3590<br />$848 billon over 10 years<br />$130 billion deficit decrease over 10 years<br />Permanent reductions in annual Medicare FFS rate updates<br />Setting payment rates for Medicare Advantage program based on average of the bids<br />Excise tax on ”Cadillac” insurance plans<br />Fees on medical device manufacturers<br />5% tax on elective cosmetic surgery<br />Reduction in DHS payments by $45 billion<br />Maintains scheduled ~21% reduction in Medicare physician payments<br />44<br />
    53. 53. Compare - Impact on the Number of Uninsured and Cost: 2019 Projections<br />Senate<br />$848 million<br />Net deficit reduction $130 billion<br />Uninsured reduced to 15million<br />45<br />House<br /><ul><li>$891 million
    54. 54. Net deficit reduction $138 billion
    55. 55. Uninsured reduced to </li></ul> 10 million<br />Currently there are 46 million uninsured with projections to reach <br />53 million by 2019 if no plan is enacted<br />
    56. 56. Legislative Process – Next Steps<br />
    57. 57. Path to the President<br /><ul><li>Combine committee bills, introduce on floor</li></ul>DONE<br /><ul><li>Pass bill in each Chamber</li></ul>One down, one to go<br />House Amendments will continue to be debated <br /><ul><li>Combine bills in conference committee</li></ul>What leadership will be chosen?<br /><ul><li>Vote on chamber floor for combined bill</li></ul>No additional amendments allowed<br />47<br />
    58. 58. Potential Impact on Health Professionals<br />
    59. 59. Impacts on Health Professionals<br />Workforce development grants to recruit new nurses into the profession<br />Loan repayment for nursing programs<br />Nurse Practitioners recognized as primary care providers <br />Prevention and Wellness grants<br />Grants for state, local, and tribal health departments to support core public health infrastructure and activities (House)<br />Maintained or expanded payment for teaching hospitals including FQHCs<br />49<br />
    60. 60. Impacts on Health Professionals<br />Grants for alternative dental health care providers pilots (House)<br />Grants for oral health training<br />Provisions for children’s oral health<br />Money for oral health prevention campaigns<br />Grants for effectiveness of research-based dental caries <br />Tax on “Cadillac” plan may impact dental coverage (if dental and health combined)<br />50<br />
    61. 61. Impacts on Health Professionals<br />Increased funding for primary care services<br />New residency training slots geared toward primary care medicine and general surgery<br />Increased funding for National Health Service Corps (recruitment, loan repayment)<br />New grant for community-based residency training<br />Grants program to fund pharmacist-delivered medication therapy management services<br />Pharmacists included in medical home models<br />Changes to Medicare Part D (doughnut hole)<br />51<br />
    62. 62. Impacts on Health Professionals<br />Increase in demand may mean strain on providers (particularly primary care) <br />Increase in comparative effectiveness research may impact practice patterns (long term)<br />Changes to Medicare payment rates<br />Undocumented immigrants are not eligible for federal benefit, some verification required<br />52<br />
    63. 63. 53<br />Outlook for Reform…<br />
    64. 64. Open Questions<br />Will a comprehensive reform bill be able to secure 60 votes in Senate?<br />Will it sick with a scheduled 21% physician payment cut and risk losing AMA support?<br />Will agreed upon subsidies make health care “affordable” ?<br />Will some type of public option survive?<br />Will pro-choice democrats vote for a health bill that excludes federal dollars for abortion?<br />What is achievable through Reconciliation?<br />Is reform possible when limited to finance only?<br />Is reform stable if it sunsets?<br />54<br />
    65. 65. Democrats can’t achieve 60 votes in Senate, rely on reconciliation<br />Vastly limited reform:<br />Coverage expansions, including subsidies<br />Medicare payment reform<br />Tax “high cost benefit plans”<br />Reduce DSH (Medicaid and Medicare)<br />Pay for comparative effectiveness studies<br />Create tax credits for small businesses and others<br />Workforce development grants<br />This would exclude, mandates, insurance market reform, creation of exchange<br />The less-controversial initiatives could be included in a companion bill<br />55<br />
    66. 66. Democrats Achieve 60 Votes<br />Most likely a “moderate” version of reform<br />Coverage expansions with low federal price tag<br />No public option, unless with limited trigger<br />Establish federal benchmark for qualifying plans<br />Individual mandate (softened)<br />Employer mandate (softened)<br />Insurance market reforms<br />Some Medicare spending reductions<br />Likely need both high income surcharge and excise tax<br />56<br />
    67. 67. My Two Cents<br />Timeline will continue to push out<br />A high-level framework will be passed, but will be phased in over time to allow for recovery of economy <br />Reform is not likely to bend the cost curve<br />Issues like payment reform and quality will be tackled in the next phase<br />This will be a corner stone for continued health reform in the future<br />57<br />
    68. 68. Contact Information<br />Elizabeth Lukanen, M.P.H<br />elukanen@umn.edu<br />State Health Access Data Assistance Center<br />www.shadac.org<br />University of Minnesota<br />School of Public Health<br />Division of Health Policy and Management<br />2221 University Avenue, Suite 345 <br />Minneapolis, Minnesota 55414 <br />(612) 624-4802<br />58<br />

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