August 2007 Archives

Maine is aging rapidly. In 2005 the median age was 41.2 years, up 6.7 percent from 2000 when the median age was 38.6 years. This increase is twice the increase at the national level--6.7 percent versus 3.1 percent. As a result, Maine is not only getting older, it is getting older faster than the rest of the country.

This will have serious economic consequences. A new working paper published by the Federal Reserve Bank of Boston finds that older workers will face a number of challenges. From the paper's conclusion:

"These results imply that older workers will face increasingly unfavorable relative labor market conditions as their ranks become crowded by the baby boom generation in the near future. Although the slowing of labor force growth may create tight labor markets, the pecuniary benefits of labor market tightness will disproportionately accrue to younger, less experienced workers. Loss of defined benefit pensions and increases in Social Security's normal retirement age may result in baby boomers retiring at older ages than did the birth cohorts that immediately preceded them, but the boomers will suffer from the same cohort crowding effects on wages, as they consider retirement that they did earlier in their careers."

My interpretation of all that is that future retirees will not only have to delay retirement but will also have a hard time making ends meet since there will be a glut of peers also looking for jobs thus depressing wages. Since Maine has fewer young workers and more older workers, the economic implications of this is that Maine's economic performance will continue to lag behind the rest of the nation.

Our friends at the Ellsworth American were gracious enough to print a column of mine on school consolidation:

In Education, Bigger Is Not Always Better

Written by Stephen Bowen
Wednesday, August 29, 2007

This Friday marks the first major deadline in the state’s quest to merge Maine’s many small local school districts into large regional ones. School units are required to share with the state’s education commissioner by that day how they intend to comply with the new school district consolidation law.

One hopes that the districts will draw inspiration from Brig. Gen. Anthony McAuliffe, commander of U.S. Army forces inside the besieged city of Bastogne during the WWII Battle of the Bulge, who famously replied to a German request for his surrender of the city with one word: “Nuts!�

Indeed, with many districts finding consolidation to be more costly, rather than less, with at least one school district, SAD 61 in Cumberland County, reportedly informing the commissioner that it does not intend to merge with anyone, and with efforts already being made to repeal the law through citizens’ referendum, it appears as though resistance to the latest great idea from Augusta is beginning to mount, and with good reason.

In January, the Maine Heritage Policy Center published a report challenging the very notion underlying this effort, which is that larger school districts necessarily do their jobs better or even cheaper than smaller ones. Analysis of evidence from other states demonstrated that in many cases, school system consolidation led to increased levels of administrative spending and bureaucracy. As a result, school districts became less, not more, accountable as they got larger.

Our newest research indicates that we needn’t have looked outside the state to find ways that school and school system consolidation can make the situation worse. A half century ago, another Maine legislature taken in by the “bigger is better� mantra passed a law that became known as the Sinclair Act. A review of what happened as a result of that law gives us a pretty good idea what to expect if current consolidation efforts continue.

Read the rest of the column on the Ellsworth American website.

Looks as though East Machias, which is one of the few towns to ever withdraw from an SAD, is pushing back against consolidation as well...

By Diana Graettinger
Thursday, August 30, 2007 - Bangor Daily News

EAST MACHIAS - They’re ready to do battle with a state they say is wrong.

Their weapon: the court system.

Their objection: a statewide school consolidation plan they maintain is going to "injure" their school.

This community of 1,000 residents is "damn mad" about the state’s plan to consolidate school districts, which they say will do more harm than good, and they plan to sue the state to stop it.

"This just burns me up," school board Chairman Bucket Davis said Tuesday.

He, along with Principal Tony Maker, school board member Pete Rensema, and Union 102 Superintendent Scott Porter met Tuesday at the Elm Street Elementary School on Route 191 to talk about the state plan.

School communities have until Aug. 31 to file a formal notice of intent to merge or consolidate their administrative offices with neighboring schools. The consolidation law, enacted earlier this year as part of the $6.3 billion state budget, seeks to reconfigure the existing 290 school units into a maximum of 80 new regional school units.

"I plan to fight this until my damn death," Davis said.

Read the rest here.

A recent Boston TV news story highlighted that some health plans are paying doctors to switch their patients to generic medications, without disclosing the kickbacks to the patient. The Blue Care Network in Michigan paid 2,400 doctors $2 million to switch patients from Lipitor to the generic Zocor. Similar payments were made to Massachusetts physicians.

The story quotes Harvard Business School Regina Herzlinger, who recently lectured for MHPC. "Without saying to the patient, 'I have a financial incentive in making this decision, which goes along with my professional incentives to do what's right for you,' it's unethical. It's a clear conflict of interest."

She's right.

While mandatory generic substitution is standard practice in Medicaid for more than 30 states, private insurers should not undermine the physician-patient relationship with such kickbacks. Physicians should prescribe what is in the best interest of the patient - medically and financially. That conversation should happen openly in the doctor's office with the patient, not through some covert contract with a private insurer.

As reported this past week, former State Legislator and Deer Isle/Stonington school board member Skip Greenlaw has proposed a repeal of the new school consolidation law. His letter to the state's school boards is available here.

Key lines:

"Since the majority of our elected Senators and Representatives did not represent our views in opposition to school consolidation as expressed at the public hearing in Augusta on February 5, 2007, I hold little hope that they would be disposed to vote against future amendments to the school consolidation law. Hence, the time has come for Maine people to be heard on this issue by repealing the law through the initiated referendum process."

It will be interesting to see what kind of response he gets...

At least one school district has voted to tell the commissioner that they will not merge with surrounding districts. Can't wait to see how this turns out.

'We will go it alone'

By David Harry
Editor-The Citizen

CASCO (Aug 23, 2007): Crooked River Elementary School in Casco will no more be confused for a Charleston, S.C., shore battery than the Maine Department of Education resembles Fort Sumter.

As school boards in SADs 55 and 72 convene Aug. 29 to vote on consolidating, it seems likely the cannonade against the reorganization plan passed by the Legislature in June will continue.

Read the full article here

Seems competition is not working out for one of Portland's high schools. Solution? Take away student choice.

Portland newcomers won't pick high school
In order to even out enrollment, new students will be assigned to either Portland High or Deering.

By TREVOR MAXWELL Staff Writer August 23, 2007

When Portland schools open two weeks from today, about 100 high school students will be affected by a new policy aimed at reducing the enrollment gap between Deering and Portland high schools.

That means families with children in King Middle School, for example, can still choose a preferred high school. But a family who moved here over the summer or during the school year will not have that choice.

Was NCSL trip for 32 Legislators a Conference or a Junket?

Well, The 2007 NCSL Conference has finally come to an end. The 9,700 attendees have finally recovered from 4 days of being wined and dined, and have likely returned to their home states.

If you remember, a few weeks ago, I suggested (to the Press Herald’s Paul Carrier) that our 32 legislators signed up for this taxpayer funded trip should rather stay in Maine and figure out how to lower our tax burden – instead of going on this junket.

Within 24 hours, the Kennebec Journal editors took to the opinion pages to chastise me for labeling this educational experience for our legislators as ‘a junket’. In fact, their editorial’s title defined the NCSL event as follows: “It’s a Conference, Not a Junket�.

I was intrigued. So, I purchased my non-taxpayer-funded $799 registration fee, and drove to Boston this past week to participate, listen, and learn about NCSL and their 2007 event.

In the days and weeks ahead, I’ll share my perspective about NCSL, how much Maine taxpayers annually contribute to this organization, and I’ll let you decide: Conference or Junket?

Bill Becker

It seems everyone in Maine is hopping on the "tax tourists more" bandwagon. Its only "fair" they argue. But before we talk about raising taxes, Maine should first stop subsidizing tourism. According to the Maine State Government Annual Report, the Maine Office of Tourism spends almost $8 million a year. Keep in mind that a subsidy is the same thing as a negative tax.

Here is how the Office of Tourism describes their mission--sounds like a subsidy to me.
PURPOSE:
The Office of Tourism was created by law to serve as a single, official spokesperson on State tourism policy with the authority to implement marketing, management and research programs. The Office's broad directive is to promote Maine as a four season destination to both consumers and the trade. The Office includes the Maine Film Office which is responsible for the promotion of Maine as a location for film and video production.

To accomplish its mission, the Office is authorized to: conduct research to determine market demand; implement public relations and promotional programs designed to market Maine's travel-product; print materials as needed to fulfill requests for information about Maine by consumers and the travel trade; encourage the development of travel-product facilities and attractions; operate tourist information centers; serve as a liaison between private industry groups and local, state, and federal agencies involved in tourism promotion and development; and provide basic support and discretionary grants to regional tourism agencies.

In addition, eliminating the Office of Tourism would solve another problem. As Jason Fortin blogged a few day ago, the legislature is looking for $10 million in general fund reductions. The elimination of the Office of Tourism gets you 80% of the way there . . . probably more when you factor in the long-term savings from eliminating several state positions and their unfunded actuarial liabilities.

Interesting pair of articles in the BDN today, one on how the districts are "falling into line" on reorganization, the other on at least one guy's attempt to the repeal the bill.

First, on how the districts seem to be complying without much complaint, a telling couple of lines from the piece:

"[Maine DOE spokesman] David Connerty-Marin said that while the department encountered resistance to the proposal when it first came before the Legislature, most communities have fallen in line now that it is state law. "Regardless of where they stood before the law was passed, school units and municipalities are stepping up. They are not fighting back. They may not like it, but they are working with it."

I love that. They don't have to like it, they just have to do it. Read the rest here.

The other article reports on a possible repeal attempt coming from Hancock County. Interesting to see where it all goes!

Today, the WSJ reported on new plans from WellPoint, Aetna and Humana reaching out to two groups of individuals - young immortals aged 19 to 34 years old and near retirees aged 50 to 64 (pre-Medicare).

The article has a some interesting facts:

* Tonik plans by WellPoint are for those 19 to 34, starting at as little as $100 a month (available in 11 states this year). Plans have three different levels with corresponding deductibles - "Thrill Seeker, with a $5,000 deductible, Part-time Daredevil, with a deductible of $3,000, and Calculated Risk Taker, which has a $1,500 deductible. Rates can vary by state, ZIP Code, age and gender. In Los Angeles, a 25-year-old male or female can buy a Tonik plan with a $5,000 deductible for as little as $77 a month. A 50-year-old male or female can buy the same plan for $244 a month."

* "In two of the states where Tonik was rolled out this year, 20% of WellPoint's new sales are coming from the plans."

* Simply Blue plans sold by Blue Cross and Blue Sheild of Minnesota, with premiums from $70 to $150 a month (exclusive of maternity benefits). From 5,000 to 10,000 have been sold since December 2006.

* Most people can find coverage in the individual market - just 11% of applicants 18 to 24 years old and 30% of those 60 to 64 years old are rejected.

* [My own note] A functional high risk pool protects those rejected for individual insurance with access to an affordable (and subsidized) comprehensive plan. 34 states have high risk pools, with the addition of North Carolina.

This article is a great example of how the private health insurance market is innovating. While politicians with little understanding of health insurance debate universal health care proposals, the private sector is delivering coverage options that people want and will pay money out of pocket for.

For comparison, Tonik Plans in New Hampshire cost from $132 to $163 a month, for a deductible of $5,000 to $1,500. A 29-year-old in Maine would pay from $598 to $244 for Anthem plans with similar deductibles. Maine insurance regulations do not allow Tonik Plans to be sold in Maine, as they are in New Hampshire, Connecticut and other states.

Tax bills never arrive at a good time. Some taxes arrive at the worst of times. The death tax is the classic example--that tax bill arrives immediately after your death. Now comes another taxable catastrophe--home foreclosures. According to this article in the New York Times, many taxpayers are discovering they own taxes on some, or all, of the value of their foreclosed house. This occurs when a lender forgives part, or all, of the mortgage on the foreclosed house. Depending on the value of the house, the loan forgiveness is taxable under the income tax--it's called a 1099 shortfall. It is ironic that politicians are now clamoring for new laws to protect consumers from aggressive mortgage lenders, but they will not do the same for taxpayers from aggressive IRS agents.

In June, the Maine Legislature passed the FY 2009-2010 General Fund Budget, and in the process increased government spending by over $470 million. However, now the folks in Augusts seem to be having some “buyers’ remorse� or are attempting to wash their hands of the huge spending increase.

The Associated Press is reporting that the Legislature is soliciting the public for ideas on potential reductions in the General Fund budget. Their goal is to achieve $10 million in savings.

That’s right, a mere two percent reduction in the increase just passed in June. Call me cynical, but this certainly appears to be more of a public relations exercise than a genuine effort to help the Maine taxpayer. While $10 million in reductions is a step in the right direction, it really pales in comparison to the growth in spending.

In March, The Maine Heritage Policy Center provided the Legislature with over $600 million in potential budget savings. Those suggestions where outlined in the 2007 Maine Piglet Book.

Hopefully during their summer recess the Legislature will take the time to go over the suggestions in the Piglet Book and enact them. The Piglet Book provides legislators with enough spending reductions to completely eliminate the new spending increase—and still have enough savings to achieve the $10 million in reductions that they are soliciting from the public.

Hancock County appears to be the hotbed of the rebellion against the new consolidation law. This week yet another editorial blasting the plan from the Ellsworth American:

"Just say ‘no.’� For years, in public service messages heard throughout the country, that’s been the advice given our young people about how to respond when offered a cigarette or drug. We suggest that voters across the state give the same response when it comes to a vote on the formation of new school administrative districts as required by an ill-conceived new Maine law.

We do not share Spencer’s view that we have an obligation to make a bad law work, and we would like nothing better than to see voters across the state repudiate the mistake made by a cowed Legislature.

Read the full editorial here.

In this day and age of high-stakes politics it is difficult to find a former two-term governor who remains popular in the polls, has a list of policy achievements, and continues to be heralded for their leadership. However, Jeb Bush the former governor of Florida experiencing all of the above.

As a result of his accomplishments, The Maine Heritage Policy Center has chosen Governor Bush to give the keynote address at the think tank’s 2007 Freedom and Opportunity Luncheon being held later this month. Mainers will have the opportunity to hear first-hand about how Governor Bush successfully achieved policy victories, even if doing so meant challenging status quo government institutions.

Through effective leadership Bush, Florida’s 43rd governor, proposed and signed into law meaningful education, fiscal/taxation, health care, environment, and government reform policies that have set a transformative course for the state.

With all the pontificating in DC about how SCHIP must be expanded to reach uninsured children, the recent experience of Tennessee is enlightening. TN's SCHIP program covers families up to 250 percent of poverty (almost $52,000 a year for a family of four). With an estimated 130,000 uninsured kids in TN, only 3,400 have signed up for the new program. TN will distribute one million applications at the start of the school year to try to get more kids enrolled.

Maybe the solution is not to expand a government-run health care program that people clearly don't want. Maybe the solution is expanding awareness of affordable private health insurance options.

Indeed, any family can buy SCHIP coverage in TN (called CoverKids) for $210 a month per child, if they earn too much for the no premium option.

According to EHealthInsurance.com, a family living in Memphis has 63 different private individual health insurance plans available for their child/ren. These plans start as low as $25 a month. A $1,500 deductible child-only plan costs only $62 a month, with no copay for medical expenses over $1,500, including prescription drugs. That means a child in TN with this plan and $20,000 in medical expenses would only pay $2,244 in both premiums and out-of-pocket health expenses (the deductible). That same family would pay $2,520 for CoverKids, the SCHIP plan from the state, if they paid full price as a result of their income.

What would you want for your child?

Maybe TN families are not so different. CoverKids may be more aptly named CoverSomeoneElse'sKids.

Recently the Wall Street Journal ran a story on how some companies are just giving employees a health insurance allowance (rather than a particular health plan) with which they can buy the plan of their choice in the individual market. Here is an example from the article:

"Helen Griffin, owner of IT Pros in Overland Park, Kan., was fed up with soaring premiums her insurer was demanding. The technology firm this year began offering a $100-a-month HRA [Health Reimbursement Arrangement] allowance, plus an additional $200 a month for workers with a spouse and children.

Ms. Griffin says all five of her full-time employees were able to find individual coverage. She and her husband paid a combined $330 a month for their policies, down from $800 a month paid by the company when the business had a group plan. Businesses with only a handful of employees often pay high group premiums, because insurers must accept all employees and they keep rates high to protect against large claims."

With guaranteed issue and community rating in Maine's individual market, such options are not feasible here. However, if Maine's individual health insurance market were reformed and functional, as is the case in most states, this option would be available and likely attractive to the 100,000 employees working at the 23,000 Maine small businesses with less than 10 employees.

MSNBC recently ran a story about an Indiana hospital system that will fine employees who make poor health choices (BMI over 30 will cost $10/week; smoking, cholesterol, blood pressure, and glucose levels will cost $5/week for each), beginning in 2009. That means certain employees could pay up to $30 a week or $1,500 a year as a result. This is a variation on employers with a CDHP that allows employees to buy down the deductible for each good health choice or outcome. Such plans are now available to small businesses in many states.

For all the talk on the left about CDHC not taking off, plans like this will likely be the standard in a few years.

NEW YORK TIMES
By SAM DILLON
Published: July 24, 2007

LOS ANGELES — Steve Barr, a major organizer of charter schools, has been waging what often seems like a guerrilla war for control of this city’s chronically failing high schools.

Educators and policy makers from Sacramento to Washington are watching closely because many believe Green Dot’s audacious tactics have the potential to strengthen and expand the charter school movement nationwide.

Seacoast Online
By Jeffrey W. Pelletier
July 29, 2007 12:59 PM

Editor’s note: The writer is chairman of the Kittery School Committee.

The state of Maine has given school districts until the end of August to inform them whom they intend to enter into negotiations with, not with whom they intend to merge. There’s more than semantics in that statement, but what’s important is this: Kittery is meeting with her neighbors and intends to file the pertinent information with the state by the deadline. While I can understand that some could imply that not enough is being done, the schedule set by the Legislature is an aggressive one, and school committees are doing their best during these summer months to get the work done.

I will only speak for myself and not for the committee. While I am a strong proponent of efficiency and of small government, I don’t like this consolidation. There, I said it. This law is poor legislation crafted by a state government that can’t control its own spending, let alone Kittery’s.

Read the rest here

Jason and I have received numerous comments on our report "The State Government 'Gravy Train'" I recently received a very thoughtful email that I thought would be useful for me to post as well as my response. MHPC performs this type of research as a service to the public. As such, feedback is always welcomed.

In April, MHPC released a Maine View report outlining how the introduction of Charter Schools might be a way to improve school performance in Maine, which is one of only ten states in the nation that outlaws such schools. Seems as though the success of the charter school model is overwhelming in New Orleans:

Charter schools lead way on LEAP
Some improve in every grade; Recovery District campuses lag
Wednesday, August 01, 2007
By Darran Simon
New Orleans Times-Picayune

At Sophie B. Wright, one of many New Orleans charter schools that outperformed most traditional public schools on this year's LEAP test, the faculty makes academic achievement a daily competition.

In scores released this week, charter schools such as Wright posted higher scores at every grade level, with some showing vast improvement over their pre-Katrina, pre-charter performance under the Orleans Parish School Board.

At Wright, a Recovery District charter school, children on the honor roll get T-shirts with their names embroidered on the back, a color signifying each marking period. Teachers get a monetary bonus when their students perform well on the state's high-stakes assessment test.

Students at the school, once one of the system's lowest-performing campuses, posted far better results this year, with 71 percent of fourth-graders scoring "basic" or higher on the English portion and 80 percent meeting that standard in math. Though eighth-graders didn't do as well, they scored far better than past eighth-grade classes there.

In the first test scores offering a meaningful comparison between charter and traditional public schools in New Orleans, charters clustered near the top of the rankings, while traditional schools -- particularly those run by the state-run Recovery School District -- in some cases had more than half their students fail the test. At many Recovery District schools, fewer than 20 percent of students scored basic or above.

Read the entire article here

The Maine activities of the Proteus Fund, the Maine Blueprint Project, were leaked to the Portland Phoenix last year. Now, it appears that the former head of the Maine Democratic Party is taking over the project.

While most may not recognize the Proteus Fund by name, they certainly will recognize one of their billionaire financiers, George Soros. The group is incredibly well-funded and apparently targeting Maine as a state in which to dump buckets of out-of-state liberal money. One has to wonder what motivates these rich out-of-stators.

Not only does Washington DC often seem removed from reality, but it seems to have an acronym fetish. The latest SCHIP (State's Children's Health Insurance Program) debate shows this. The House SCHIP bill is called CHAMP (Children's Health and Medicare Protection Act). The House bill also changes SCHIP to CHIP, who needs "State" when Washington will dictate everything.

There has also been much attention on states using SCHIP funds for adults. My friend Adam Brackemyre of the National Association of Health Underwriters (health insurance brokers/producers assn), forwarded other possible acronyms for this child-adult SCHIP programs:

* SCHIP and SALSA (Some Adults Living in Some Areas)
* SCHIP and DIP (Dual Income Parents)

Sadly, today's joke is tomorrow's new costly government program.

Despite Maine being the state with the smallest share of its population under age 18, the SCHIP expansion debate in Congress has received a lot of attention. Recently, Scott Moody and I wrote a brief on SCHIP and Maine highlighting some keys facts:

* Almost every Maine child (under age 18) has health coverage or is eligible for Medicaid/SCHIP.
* Of all 277,000 Maine children, only 16,900, 6.1 percent, are uninsured and only 7,300, 2.6 percent, are uninsured and not already eligible for retroactiveMedicaid/SCHIP coverage (up to 200% of poverty).
* Three-quarters of children who become uninsured will be re-insured within a year.

Even with these low, almost non-existant uninsured rates, there is still talk of expanding Maine SCHIP. Expanding Maine SCHIP to 300 percent of poverty would cost $20 million—a 60 percent increase in SCHIP spending over current levels. Additionally, evidence shows that states with SCHIP income eligibility levels at 300 percent of poverty have similar rates of uninsured children, but many more children on Medicaid/SCHIP. Put simply, SCHIP crowds-out private sector health insurance. Maine's SCHIP/Medicaid underpayment causes a 13 percent increase in private insurance premiums - far above the 1.3 percent premium increase due to uncompensated care for uninsured kids.

In addition, we recommend some policy reforms

* Do not expand SCHIP income eligibility beyond the current 200 percent of poverty, despite any increase in federal CHIP funds.
* Allow child-only individual health insurance plans to be sold on a non-guaranteed issue basis (Right now an individual insurance child-only plan in Maine costs $700 a month compared to $46 a month in DC, as a result of our guaranteed issue and community rating laws)
* Institute monthly premiums at four percent of family income for all Medicaid/SCHIP recipients (children and parents) earning more than 150 percent of poverty.
* Simplify SCHIP income eligibility. Make $42,500 the eligibility level for all Maine families, regardless of family size (this is about 200% of poverty for a family of four). This would remove the SCHIP/Medicaid fertility bonus where the more kids you have the more you can make and qualify for medical welfare. This hurts single moms and helps married upper income families.
* Educate people about private health insurance availability, its costs, and facilitate enrollment in private plans if the families so desire, as part of any Medicaid/SCHIP outreach.

Right now, Maine spends $210 per month for every child on SCHIP (state and federal funds). Private individual insurance plans for a child in DC run about $46 a month for a $1,000 deductible plan or $77 a month for $0 deductible HMO.

SCHIP is not the solution and should not be expanded.