Phil Hauck's TEC Blog

Saturday, January 8, 2011

The H/C Question We Have to Answer Very Shortly, and Loudly!

Therese Pandl, the CEO of the St. Mary’s/St. Vincent’s hospital group, said we need to ask and answer this question very, very shortly … in a talk to the St. Norbert CEO Breakfast & Strategy session in December:
What do you want from your Health Care system?
Consider it from two extreme viewpoints … As a Social/Public Service, and as a Business … and see where your answers (plural!) lie somewhere in the middle.

Iraq: Maybe a Model for Economic Devel. Policy!

A foreign company can own 100% of an Iraqi company (investment opportunity?), will pay only a 15% flat tax on profits (like all businesses), and can patriate 100% of the remaining profits back to the U.S.! That’s great economic development policy!

Wisconsin: The U.S. Leader in Medicaid Insurance!

Recently, from several sources, I’ve learned that Wisconsin has the highest percentage of citizens enjoying Medicaid, health insurance for the poor, than any other state. Fully 20% of Wisconsin citizens are covered by it. Says one health system leader, Medicaid is not just the “safety net” for the low income, it has become the “low cost, high benefit insurance option” in the state. The last two years, the percentage increase of Medicaid users has been the highest or second highest in the nation … last year almost 22%, vs. a national average of 8%.
Another fact: Fully 45% of births are financed by Medicaid.
Another fact: Medicaid funding by the state will probably be LESS this year because the federal grant that supports it is decreasing. Since 2000, the dollar outlays have jumped from $2.9 billion to an estimated $6.4 billion in 2011. Result: Providers will be paid even less … and it’s already their biggest cost loser. That will propel rates for private payers even higher.
Another fact: While Medicaid has increased, employer-sponsored insurance has decreased 9% since 2000 because of its too-high cost for small businesses. Any guess where these people are going?

'The Right Way to Balance the Budget,' WSJ, 12/29/10

The numbers are striking. Our research shows that the typical successful consolidation allocates 38% of the spending cuts to entitlements and 25% to reductions in (payroll). The rest comes from such areas as subsidies, infrastructure and defense.
Why is reducing entitlements and government pay so important? One explanation is that lower social transfers spur people to work and save. Reducing the government workforce shifts resources to the more productive private sector.
...While tax hikes slow revenue growth, policies that credibly reduce government spending in the long run boost economic growth by more than their simple effects on deficits might imply. Any attempt to address the federal government's budget shortfall that relies on less than 85% spending cuts runs too large a risk of failure. The experience of so many other countries shows that it's critical for the U.S. to get this right.

About Pres. Obama's Critique of 'Sending Jobs Overseas'

A recent WSJ article by Harvard finance prof. Mihir Desai states:
The data do not support the crude, fixed-pie intuition that firms either invest abroad or at home.
Ten percent growth in American firms' foreign investment is associated with 3% growth in their domestic investment. And when firms grow abroad, their domestic exports and R&D activities grow especially, contrary to Mr. Obama's rhetoric.

Two More Great Books ...

"The Company That Solved Health Care: How Serigraph Dramatically Reduced Skyrocketing Costs While Providing Better Care, and How Every Company Can Do the Same," by John Torinus Jr. John grew up in Green Bay as part of a newspaper family, but has run Serigraph since 1987, always with an evil eye on the soaring health care cost P&L line item. Unlike most company CEOs, however, he decided to pay personal attention to understanding what was driving it, how it was impacting both his employees and their families and the company ... and through that understanding to try to take control of the costly elements, instead of letting the system drive them. He has been very successful by being very proactive.
Actually, this is a MUST READ book for all company leaders ... because it lets you know much of what's possible. It will change the conversation you are having with your HR/Benefits people, as well as with the insurors and providers. It's is certainly time to take control ... at the grass roots since Congress isn't going to do their part even though they now have put more than a third of the system under government control.

"Start With Why: How Great Leaders Inspire Everyone To Take Action," by Simon Sinek. His premise that most of us, including me, which may be why I like this book so much, tend to explain/promote ideas by talking about How we do things, and What the result is. I do this constantly. What he says, with myriads of examples of successful CEOs and companies, is that the successful ones start (and often end) with Why the topic/idea is important. The 'Why' is almost always emotional and captivating, whereas the How and What are nowhere near as such. Check out a more complete explanation on

More on the 'Tax The Rich' Debate ,,

I’ve read lots of tax and economic research articles recently that support the argument that tax rates have consequences … and that significant tax increases actually reduce revenues, not increase them. (This obviously flies in the face of Administration and others’ arguments that consumers don’t react and a rate increase does result in increased tax payments, the so-called “static” scenario.)
The latest: Oregon has already gone and done what President Obama wishes … two years ago raising its state income tax rate on the wealthiest … to 10% on joint-filer income between $250,000 and $500,000, and 11% above that. Only New York City’s tax is higher.
Result: A year later it collected $50 million less than it had the prior year … $130 million vs. $180 million. The wealthy have alternatives … moving out of the state, which happened in Oregon, developing alternative investments that have lower tax rates, leaving investments alone so there isn’t income, etc.
As we all know, the base reason for “taxing the rich” is a fairness/equality argument … sharing the wealth from those who have accumulated it to those who have not. Raising revenue to lower the deficit is a secondary reason. But how much is “too much”? The top 1% already pay 20% of total taxes, and the top 2% 40% … the highest progressive rate situation in the world. When will our Congressional reps be gutsy enough to tackle the spending side in the ways it needs to be, and tell it to us straight?