New Senate Health Care Bill An Improvement for Employers

The U.S. Senate appears to be gearing up for another health care vote, with a measure from Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC) headed to the floor as soon as the middle of next week.

At its core, the Graham-Cassidy proposal creates a block grant program, taking much of the funding provided in the Affordable Care Act (ACA) and sending it to the states for them to set up their own health care systems and determine where to direct the funds.

It also does away with several pillars of the ACA, including the mandate for individuals to have insurance or pay a penalty. The true ramifications of that are uncertain, but could mean higher premiums for those in the health care exchanges (aka those who don’t have insurance through their workplace).

From the standpoint of employers, the Indiana Chamber believes Graham-Cassidy is an improvement over the ACA. This is primarily due to two changes:

  1. The removal of the employer mandate to offer coverage. If that goes away, so too does the ACA’s definition of a full-time employee as someone working an average of 30 hours per week; this has negatively impacted businesses and workers – many of whom saw their hours reduced.
  1. The permanent elimination of the medical device tax, which is detrimental to vital Hoosier employers like Cook Medical in Bloomington, Zimmer Biomet in Warsaw and many others.

Overall, those in favor of increased state control are more receptive to the Graham-Cassidy effort.

As Vice President Mike Pence put it on Fox News yesterday: “…The question that people ought to ask is, who do you think will be more responsive to the health care needs in your community? Your Governor and your state legislator, or a congressman and a President far off in the nation’s capital?…”

 What has opponents worked up is two-fold: affordable coverage for pre-existing conditions isn’t specifically guaranteed; and population size will determine the amount of the block grant, which will reduce funding for a number of states – including some in the Rust Belt and more rural states in general.

Republican Sen. Jeff Flake of Arizona told MSNBC on Thursday he has absolute faith that governors will keep pre-existing condition protections, because of the severe political cost if they don’t. Opponents are less convinced.

At this point, Kentucky Sen. Rand Paul is the lone Republican who has sworn opposition to the Graham-Cassidy bill publicly – in part because his state appears to be set to lose funds in this model.

Likewise, Indiana is expected to see less federal dollars, but the Hoosier state has been preparing for what it saw as an eventuality for several years – setting aside hundreds of millions of dollars to subsidize its Healthy Indiana Plan (HIP) 2.0.

The HIP model is unique in the country; it requires participants to have “skin in the game” with their health care decisions and allows for capping the number of participants. Both of these make it an inherently more nimble program. And ultimately, the state Legislature can also determine to put more funds into HIP 2.0, if it’s deemed necessary.

These facts and the lure of more state control were likely factors in Gov. Eric Holcomb’s decision to sign a letter supporting Graham-Cassidy; he was one of 15 state executives to do so. The reality is other states may not be as fiscally prepared for a possible funding reduction as Indiana is.

That leads us to who may end up being the pivotal figure in the floor vote: Sen. Lisa Murkowski of Alaska. She joined Sen. Susan Collins (Maine) and Sen. John McCain (Arizona) in voting no on the last health care reform measure. Collins is seen as a likely “no” again, joining Paul, while McCain is a predicted (or at least hoped for) “yes.”

As a result, the bill authors are pulling out all the stops and making special accommodations for Alaska in the bill to woo Murkowski’s vote – because they can’t lose her and have the bill survive for Vice President Pence to break the tie. If no specific provisions for Alaska are made, the state would be a big loser in the bill in funding because of its size vs. population and geography.

The Indiana Chamber plans to talk about health care reform with Sen. Joe Donnelly, who has announced his opposition to Graham-Cassidy, and Republican Sen. Todd Young during Wednesday’s D.C. Fly-in event.

UPDATE: This afternoon, McCain announced he would oppose the Graham-Cassidy bill, making passage of the bill seemingly very difficult.

Chamber Submits List of Federal Rules That Need Repeal to VP-Elect Pence

The Indiana Chamber is championing the repeal of “the most egregious rules, regulations and executive orders that occurred in recent years.” These targets for the Trump administration were submitted to Vice President-elect Mike Pence this week, just ahead of the inauguration.

The list, per Indiana Chamber President and CEO Kevin Brinegar, contains “issues we have repeatedly heard about from our member companies because they hinder their ability to prosper and provide more jobs for Hoosiers.”

These issues include increased EPA air quality standards leading to much higher energy bills with minimal environmental impact, the overtime rule that would jeopardize jobs and business growth, costly rules related to Obamacare, misguided workplace safety regulations and a fear that the FCC’s net neutrality position could stifle innovation.

“It was all too common for President Obama to circumvent Congress by issuing executive orders and to encourage federal agencies to overreach their authority and diminish economic growth,” Brinegar says.

“The Indiana Chamber is very hopeful this troubling pattern will change under President-elect Donald Trump, and we have encouraged his administration to take action to undo many of the detrimental measures enacted in this manner and to get our economy moving again.”

The 17 suggestions for repeal and their impacts are available at www.indianachamber.com/federal.

The Indiana Chamber also made the state’s congressional delegation aware of these priorities.

Future Road Funding: Smooth or Bumpy?

36601064This summer, as we wander Indiana for work or pleasure, motorists experience both how good and bad Indiana’s road infrastructure is. The real issue is Indiana’s road funding mechanisms are in need of modernization to keep up with today’s demands.

To address the issue short and long term, several months ago the Legislature passed and the Governor signed two important bills on road funding, HB 1001 and SB 67. Combined, the bills did the following:

  • Provided a total of $689 million of additional funding over the next four years to Indiana’s local governments for their road funding needs.
  • Provided an additional $228 for state road funding in 2017. (Funding for this and the above came from a combination of using some of Indiana’s budget surplus, providing revenue from local option income tax collections and directing some of the sales taxes collected on fuel to road funding.)
  • Provided Indiana counties the option to double their wheel tax and for municipalities with a population over 10,000 to establish a wheel tax. If eligible local governments choose to do this, they can raise up to an additional $376 million a year.
  • Established the FIRSST (Funding Indiana’s Roads for a Stronger and Safer Tomorrow) Task Force to develop a long-term plan for state and local roads and bridges, and develop funding mechanisms for the various components of the plan.

The FIRSST Task Force has a lot of work to do before the end of this year. The goal is to present a plan that will set the stage for what might take place during the 2017 legislative session. Its 16 members will verify the costs of road maintenance needs, look at current revenue streams and determine what current and new ideas are viable for the future. This is important given that the primary funding mechanism, the 18-cent-per-gallon gas tax, is not keeping up with the cost to maintain state and local roads, let alone build new ones.

In a recent Chamber infrastructure policy committee meeting, Senators Luke Kenley (R-Noblesville) and Brandt Hershman (R-Buck Creek) indicated their commitment to achieving a solid and sustainable long-term solution during the 2017 session. Given the Indiana Chamber’s Indiana Vision 2025 goal area of “Superior Infrastructure”, we will play an active role in this discussion.

Secretary of State Launches INBiz Portal to Help Hoosier Businesses

inbizGov. Mike Pence and Secretary of State Connie Lawson recently announced the launch of INBiz, a web portal for Indiana businesses. The following is a release from Sec. Lawson:

INBiz is aimed at streamlining the steps a business takes when registering with the state, including registration, filing, reporting, and making payments. This first phase of the project includes business services within the Secretary of State’s office, and will include services from the Department of Revenue and Department of Workforce Development later this year. As the portal continues to grow, INBiz will become the single point of contact for businesses as they do business with the state.

“From day one of this administration, we have been focused on cultivating a more business-friendly environment that encourages investment and opportunity for all Hoosiers,” says Gov. Pence. “We’ve cut taxes and red tape, invested in our classrooms, our workforce and the infrastructure that makes Indiana the Crossroads of America. In just the last three years our state has added 130,000 new jobs, and we set a record for private sector employment. With the launch of INBiz, we’ll be able to build on this momentum, increase efficiencies and make it easier for businesses to start up, operate and grow within the state of Indiana, saving owners time and money that can be reinvested into growing and operating their companies.”

INBiz furthers Indiana’s position as one of the nation’s most pro-business environments. The site modernizes the current business registration system and enables businesses to open their doors faster. INBiz also utilizes state-of-the-art security features so businesses can feel safe about inputting business information into the system. Ten years ago, Indiana became a leader in business services when it began offering an online filing system.

“INBiz will be the most comprehensive one-stop resource in the nation,” said Secretary Lawson. “It will streamline and expedite the registration and compliance process, reducing the cost of doing business with the state. Today’s launch is just the beginning, and we will continue to add as many services as business owners demand. I am very thankful for the Governor’s collaborative approach on this project. Partnerships like this benefit all Hoosier businesses. INBiz is another significant step in making Indiana a state that works.”

INBiz is available at INBiz.in.gov.

The $9.1 million in funding for the initiative was included in the most recent biennial budget. In March 2014, Governor Pence signed into law House Enrolled Act (HEA) 1198, which mandated executive agency participation in the Business One Stop (now INBiz) online portal.

Indiana Chamber Assesses Impact of State’s Early UI Loan Payoff

Kevin 51916 UI Loan Payoff Quote

Indiana Chamber President and CEO Kevin Brinegar assesses the impact of the early payoff of the state’s federal unemployment insurance (UI) trust fund loan which occurred in November 2015:

“Employers now have $327 million in additional funds available for other workplace priorities. They can further invest in their organizations and employees, as well as add more jobs, instead of sending that money to Washington as an ongoing penalty for the loan being in place.

“This early payoff, strongly supported by the Indiana Chamber, was a common sense step taken by lawmakers and Gov. Pence to help employers and their employees. It has had among the greatest impacts of any public policy over the last year on the business community.”

Background
The early payoff was accomplished by temporarily borrowing from Indiana’s reserve funds. The Governor announced today that the funds have now been paid back by employers through their regular state UI payments.

Bill to Boost Teacher Pay Dies

96631972Due to significant misinformation from the teacher’s unions and lack of support in the Senate and Governor’s office, Chamber-supported SB 10 died in the House Thursday when it was not called for a vote.

Senate Bill 10 would have allowed school corporations to provide supplemental funding in excess of a teacher’s salary; this would have been extremely helpful in filling high-need positions.

The Indiana Chamber has always supported paying good teachers more. Being able to give administrators the flexibility to provide additional funding on top of salaries is an important step toward recruiting teachers in areas such as STEM subjects and special education. We believe this flexibility would have helped add another incentive to assist with Indiana’s teacher shortage.

The Senate killed a similar provision in HB 1004 last week and Senate President Pro Tem David Long (R-Fort Wayne) publicly asked House Speaker Brian Bosma (R-Indianapolis) to follow suit. The Governor’s office also had tepid support for the bill. In the end, due to the significant concern that the bill might not be signed by the Governor, Bosma decided not to put his caucus through a difficult vote.

We are very disappointed that a pro-teacher, pro-superintendent flexibility bill was not able to pass the Legislature this session, but still thank Speaker Bosma for his overall assistance on HB 1004 and SB 10.

Road Funding Bills, Regional Cities Funding Headed Down to the Wire

?????????????????????????????????????????????????????????????Several bills attempting to address Indiana’s transportation infrastructure and regional economic development are headed toward eleventh hour conference committee deliberations where differences in approach between House Republicans and Gov. Pence/Senate Republicans will need to be hashed out. It is a high-stakes game in an election year.

House Bill 1001 is the House Republicans’ original effort to create a long-term, sustainable and dedicated funding source for Indiana’s roads, highways and bridges. It attempts to address a near $1 billion annual maintenance shortfall through indexing existing fuel taxes to inflation, dedicating the sales tax on fuel sales to infrastructure (vs. the state’s general fund), increasing taxes on cigarettes to refill the state’s general fund coffers (which support the state’s Medicaid program), imposing fees on alternative fuel vehicles, and supplying local units of government with expanded fiscal tools and taxing authority for roads. The Indiana Chamber worked with legislators on this bill and supports this comprehensive, data-driven approach.

Senate Bills 67 and 333 (as they started in the Senate) reflect Gov. Pence’s and Senate Republicans’ desire to avoid any tax increases for roads this year and delay any major decisions on road funding until the 2017 budget year, while also giving some money and tools to local units of government. At best, these proposals are short-term fixes to a long-term problem and the Chamber prefers the House Republican legislation.

Add to this mix Gov. Pence’s request for an additional $42 million for a third Regional Cities grant award, and you have plenty of fodder for lengthy, contentious negotiations with a March 10 deadline looming. Leadership from both chambers has been meeting with the Governor and his staff to hammer out a compromise proposal. As of this writing, negotiations are occurring behind closed doors and in caucus discussions with both sides remaining far apart. Meanwhile, Democrats in the Legislature watch as Republicans battle among themselves over the “right” compromise package.

We anticipate that the third Regional Cities grant will be funded in some way and that some short-term road funds and expanded authority for local governments will emerge. Whether or not the tax increases in HB 1001 survive the negotiation is an open question. The Chamber will work with all parties to address the state’s road-funding needs in the most rational and comprehensive way possible.

Cook: Governors’ Races Unique, More Difficult to Handicap than Federal Races

Cook_CharlieCharlie Cook is editor and publisher of the Cook Political Report and a political analyst for National Journal magazine. Cook is considered one of the nation’s leading authorities on American politics, and The New York Times has called him “one of the best political handicappers in the nation.”

Cook will be the keynote speaker at the Indiana Chamber’s 2016 Legislative Dinner on February 9. (Get your tickets now!) I recently spoke with Cook for an evaluation of this very turbulent time in American politics.

Below is my final question (see his other responses about political surprises, Donald Trump and Bernie Sanders, and America’s infatuation with presidential politics) :

Indiana is already gearing up for the 2016 gubernatorial race – a rematch from 2012. Gov. Pence has been under heat on some social issues, and lately for the state’s stance on accepting refugees. John Gregg’s supporters have seen these as benefits to their chances. What do you expect in this race, and do you think Pence could be vulnerable?

Cook: I tend to delegate governors’ races to our senior editor Jennifer Duffy, so I’m not doing deep dives into these races. But I’ll say that Indiana went through a period where Democrats were very competitive and did well – like Evan Bayh, and Obama carried it in 2008.

But in 2012, Indiana wasn’t even in the top 10 to 12 competitive races presidentially. While governors’ races tend to be more independent of national politics and less straight party than Senate and House races, I think Indiana has reverted more to type and back into the pretty Republican column. It doesn’t mean a Republican governor is unbeatable and a race can get relatively close, but for a Democrat to get over the finish line, that’s awfully hard in Indiana.

It’s one thing to cover Senate and House races from Washington, but governors’ races have their own unique sets of issues and rhythms, so it’s hard for anyone from out of state to understand it.

Four Areas Where Gov. Pence’s State of the State Address Missed the Mark

?????????????????????????????????????????The 2016 session of the Indiana General Assembly may be short in time but, as usual, there is a long list of important issues. In outlining his priorities in the State of the State speech, however, Gov. Mike Pence fell short in four key areas.

First is civil rights expansion. After appropriately listening to Hoosiers since last spring’s public relations crisis, the Governor failed to articulate a clear vision. His words, depending on interpretation, bordered on telling legislators to do nothing at a time when action is needed.

The Indiana Chamber went through a similar lengthy listening process as public policy committees, the executive committee and the full board of directors (all comprised of representatives of member companies) debated the issue. Once a final determination was made, the Chamber communicated the decision that the members had voted to support the expansion of civil rights to protect sexual orientation and gender identity. Although not popular in all circles, similar clarity was needed from the Governor.

In the critical area of infrastructure funding, the Governor advocated against the only long-term solution presented thus far because it included several responsible revenue increases. As an organization that works each day to create and maintain the best possible business climate, the Indiana Chamber does not go looking for tax hikes. But in this case, they are necessary.

Third, on education, the “let’s take a step back on ISTEP” remark goes too far. Indiana already has a new test that measures our new, stronger standards. The test needs rebranded, not revised, and administered correctly to achieve the desired results.

Finally, there was no mention of work share, a common sense program to support employers and employees in an economic downturn. It will be needed at some point and the best time to implement it is now.

The Indiana Chamber has and will continue to communicate with the Governor and his staff our positions on these issues, which we believe are in the best interest of the state’s economy, employers and workers.

Student Scores: ISTEP and ‘National Report Card’

The Indiana State Board of Education (SBOE) met last month with the plan to set cut scores and finalize ISTEP grades from the 2014-2015 school year. As a reminder, setting cut scores is done by a panel of educators that determines the passing score for that year’s test. However, during that meeting, questions were raised regarding the differences between the online and paper-pencil versions of the exam. This was identified in a report submitted to the Indiana Department of Education in early October – yet that report was not provided to the test’s Technical Advisory Committee or the SBOE until right before the meeting. The SBOE then requested a comparison study done by its own test experts to determine any discrepancies. Sarah O’Brien, vice chair of the SBOE, had originally made this request back in July.

SBOE – after the comparison studies were in hand – set pass-fail benchmarks for the latest ISTEP scores. What’s anticipated is that a notable increase in students will see drops in their scores, with a portion falling below the pass line. While no one wants to see test scores go down, it is explainable as students and teachers were adjusting to the new, more rigorous academic standards and a new assessment that were adopted for the same school year. In other words, this drop is expected, and many other states have experienced similar decreases. In fact, Indiana’s scores were either on par or higher than other states that have recently adopted new standards and/or a new assessment. While the news of dropping ISTEP scores is disappointing, it is important to note that the changes to the standards will benefit students as they will be more prepared for college and career in the future. The Indiana Chamber appreciates all of the hard work of Indiana teachers and students.

Due to this somewhat turbulent transition year, Gov. Pence released a letter to Superintendent of Public Instruction Glenda Ritz and SBOE members recently stating that he is working with leadership in the Indiana General Assembly to have legislation drafted to ensure that the 2014-2015 test results would not negatively impact teacher evaluations or performance bonuses this year. The Chamber has a longstanding policy to support accountability and transparency for students and teachers but understands that unforeseen circumstances with ISTEP delays and testing issues would allow the need for this pause.

Positive news:

The recently-released National Assessment of Educational Progress (NAEP) scores – aka a “National Report Card” – shows that Indiana is achieving more than other states in all four categories:

  • Fourth grade math: Indiana 248; national average 240
  • Eighth grade math: 287; 281
  • Fourth grade reading: 227; 221
  • Eighth grade reading: 268; 264

Indiana is actually widening its advantage over other states. We commend our teachers and school administrators for their important role in helping our students reach these higher levels of achievement.

While our ISTEP scores are lower as expected, these NAEP scores reinforce that our students are achieving at a higher overall level than many of their counterparts. We expect that to accelerate going forward with the enhanced college and career ready standards in place.