Olympia Business Watch

Happy Fourth of July

I'm off next week. No blogging from me. Perhaps some of my colleagues can keep OBW going in my absence.

Smoking Contributes to Better Health

Well, not exactly, but the sin taxers have always looked to tobacco to fund health care projects. Perhaps they've enjoyed the irony, which has always escaped me. Our state's Basic Health Plan receives substantial tobacco funding. But the practice of tying a regressive and declining tax base to rapidly rising health care costs has never worked.

Along comes a new Tax Foundation report looking at the issue, pegging off a proposal by  Oregon Senator Gordon Smith to boost cigarette taxes for an expansion of the State Children's Health Insurance Program.

In economic terms, Senator Smith is suggesting that the federal government more than double its most "regressive" tax, that is, the tax that hits the poor hardest, from 39 cents per pack to $1. Perhaps to mitigate this hit on the poor, he suggests that the government spend the funds on one of its most "progressive" programs, that is, a program originally designed to funnel money to low-income households with children. However, because states make their own SCHIP policies, the poor in some states will face the higher cigarette tax but receive little in extra SCHIP spending.

Proponents of this kind of thing often argue that discouraging cigarette use is a good thing in its own right and the higher tax will cause some folks to stop smoking. Fine, I guess. But it's awfully cynical to create expanded entitlement programs backed by a funding source all concede is inadequate.

San Francisco Health Care Scheme

San Francisco has decided to go it alone, adopting its own peculiar universal health care strategy.

As the national debate rages over how to fix the country's broken health care system -- with 2008 presidential candidates offering up their solutions and Michael Moore's documentary "Sicko" opening Friday -- San Francisco will become the first city in the country to actually try to solve the problem itself.

They're starting slow, with an initiative called Healthy San Francisco, according to the San Francisco Chronicle.

It will start with just a few hundred patients in Chinatown but is designed to ramp up to full citywide coverage within 18 months.

Here's a problem:

In January, the city intends to throw open the program to all uninsured city residents. That's also when the city will require employers who don't already offer health insurance to their employees to start contributing to the program.

City officials say the program, estimated to cost $200 million a year, cannot work without that component -- but it is being challenged in court. The Golden Gate Restaurant Association has filed a lawsuit in federal court to block implementation of the employer mandate. Both sides are due before a judge Aug. 31.

Kevin Westlye, executive director of the association, said Wednesday the program can work without the contributions from employers and that many small-business owners simply cannot afford them. His group is proposing a quarter-cent sales tax increase as an alternative, which he said would add $40 million annually to the system.

While it's doubtful that they'll make the thing work, there's no doubt that some folks will try to get a lot of political mileage out of the effort. Bears watching.

Washington's Presidential Primary

I know folks like to vote. And the presidential primary has some popular appeal.

My column in the Spokesman-Review takes a skeptical view.

Puget Sound Leadership Council Gets New Members

The Puget Sound Partnership, created last session in ESSB 5372, will be governed by a seven-member council chaired by Bill Ruckelshaus. The governor yesterday announced the appointments of the six councilmembers. Ruckelshaus accepted the chairmanship in May.

The Seattle P-I story frames it this way and gives Kathy Fletcher room to critique.

Gregoire has made restoration of Puget Sound a centerpiece of her administration, saying she wants to make the entire Sound healthy enough for swimming and fishing by 2020.

Kathy Fletcher, executive director of People for Puget Sound, an environmental group, reacted cautiously in a news release.

"The easy things have been done. The rest of the job requires courage and toughness," said Fletcher, who ran the state's first save-the-Sound agency in the 1980s but left after bruising battles with business interests. "This is probably our last chance to save the Sound, and this new partnership will need to be bold and results-oriented."

The group has until September 2008 to come up with a plan and a proposed budget for the Legislature.

The Olympian points out:

The Puget Sound Partnership is a government entity that lacks regulatory power. But it can recommend how money is spent and who gets it, based on how well government agencies and local governments perform.

That's enough to get everyone's attention.

US DOL To Release Survey Report on FMLA

The AP reports today that the US Department of Labor is releasing its long-awaited report on issues surrounding the Family and Medical Leave Act of 1993 (FMLA).  (The report itself does not appear to be available online as of this writing).  FMLA, in general, provides up to 12 weeks of unpaid leave in a given year for a worker at an employer of more than 50 employees to care for his own serious health condition or that of a family member.  The great "compromise" of FMLA is that the leave is unpaid. 

The New York Times reports on the survey that, not surprisingly, it found "the public likes the law, but corporate America has big problems with it."  In a nutshell, those problems stem from a very loose definition of what constitutes a "serious health condition" and the widespread use of "intermittent leave" -- taking leave in as small as 15 minute increments here and there rather than big chunks of leave.  Nationally, employers have long complained those features of the law are susceptible to enormous fraud and abuse by workers gaming the system, leading to productivity and morale problems amongst the rest of the workforce.

In 2006, labor advocates were convinced (now, it turns out, without any basis) the DOL's survey process was intended to enact limitations on paid family leave, so it was argued that Washington must codify all of the current federal protections in state law.  And we did, with the passage of Senate Bill 6185.  This year, Washington employers were saddled with an additional challenge -- the passage of Senate Bill 5659 in 2007 establishing a five-week paid family leave mandate on all employers.  The details of funding and administering this huge new entitlement-cum-benefits-mandate were kicked ahead to be resolved in the 2008 legislature.  We called it a step in the wrong direction.

Stay tuned.    

 

Brunell on How Vietnamese Are Rebuilding Community in New Orleans

Don's column in today's Columbian takes off from an NBC Dateline special  report on how a Vietnamese community in New Orleans recovered from Hurricane Katrina.

Those who escaped the Communist takeover in 1972 and settled in New Orleans show the same determination in the wake of devastating Gulf Coast hurricanes.

It was anything but easy for them. It's no surprise that in the wake of that disaster government wasn't much help. But it's a bit surprising to see the obstacles local officials put up in their path.

First, city officials wanted to turn their neighborhood into open space. Located on a peninsula surrounded on three sides by canals, city officials worried that the area could be flooded again when the next Katrina rolls in. ...

Second, in order to restore power, they had to convince the electric company they would have a sufficient customer base. They made their case, and the lights came back on.

Third, the city created a huge landfill in their neighborhood for the disposal of Katrina debris.

The crux:

he Vietnamese in New Orleans are what America is all about. Their determination, hard work and ingenuity are what make our nation the greatest country on earth.

This story demonstrates what resilient and creative people can accomplish if government creates the right environment.

It's an inspiring story and a good column. You may also want to click onto the 12 minute videol

Health Care Costs Moderating

Here's some good news: A new report from PriceWaterhouseCoopers (registration required) indicates health care cost increases will slow. Here's how Business Insurance reports on the study.

Private insurers expect 2008 medical costs to increase an average 9.9% for preferred provider organizations and health maintenance organizations and 7.4% for consumer-driven health plans, according to PwC. This compares with increases of 11.9% for PPOs, 11.8% for HMOs and 10.7% for CDHPs this year.

PWC identifies four factors working to moderate costs.

The deceleration in the medical cost trend is influenced by a number of short- and long-term factors. For 2008, our research has identified those factors as:

• Slower spending growth for prescription drugs

• Increased transparency and cost sharing with employees

• Total-health-management approach to benefits

• Broadening of the digital backbone in healthcare

Health management, increased transparency and cost sharing have been a major theme of business groups in recent years. It's nice to see such a clear, positive payoff.

Speaking of health, Andrew Sullivan's blog today has a great rundown of the latest Michael Moore fantasy (no, I haven't seen it - perhaps someone will loan me the DVD). I do like this.

Moore is both a practiced liar and not-too-smart. The implication that "free healthcare" run by the government is somehow immune to the laws of economics is classic Moore boilerplate...

Read it all. And follow the link to Reason.

Finally, The News Tribune has a good editorial on the higher-than-(some)-expected costs of expanded subsidized health insurance for children.

A good fiscal argument can be made for covering undocumented children. Legal or illegal, they still get sick. Hospitals are required to treat everyone who shows up with serious illnesses, so uninsured children of any origin typically rack up large bills that either get paid by the taxpayers or wind up indirectly shifted to people with private insurance. ...

But the concern about poor adults is not misplaced. It seems odd that the new subsidies will be extended by 2009 to households earning as much as $62,000 – three times the poverty level for a family of four – while adult Washingtonians with much lower incomes are frozen out.

That upper range also seems questionable in light of the way it is expected to entice many families to drop private insurance for cheaper state-subsidized coverage.

Right.

Card Check Checked

ShopFloor.org, the National Association of Manufacturers blog, just reported that the Senate failed to reach cloture on card check legislation.

This is a major achievement for employers and employees alike, for everyone who believes union membership should not be forced upon the unwilling, especially through coercion and the destruction of the secret ballot.

Good news. At least for now. The AFL-CIO blog makes it clear this isn't over.

But the momentum for this bill is growing. Sixteen governors and nearly 1,300 state and local elected officials expressed support for the legislation in all 50 states. Seven presidential candidates also back the bill.

Don Brunell explained why this is a bad idea in a column last March. And Kris Tefft looked at the governors' letter here.

Roundtable Continues to Push Sustainability

Consistency counts. And the Washington Roundtable has promoted the ideal of a sustainable state budget since well before the 2007 legislative session got underway. In the Spokesman-Review, Bert Caldwell reports on the Roundtable's continued commitment.

"It's an uphill climb," says Steve Mullin, president of the Washington Roundtable, a group that includes many of the state's top business executives, the publisher of The Spokesman-Review among them.

Sustainability is a Roundtable priority. The group met in Spokane last week to discuss how the organization and its members might have more success keeping public officials  mindful of the long-term effects of budget decisions made with just a one- or two-year time frame in mind. In other words, the election cycle.

While some may quarrel that sustainability is a difficult concept to grasp, Mullin identifies a deceptively simple solution to the state's growing operating deficit.

"At some point, you need to stop spending," Mullin says.

That works.