• Economic Development and Commerce Committee (EDC) – States and the Economy – On the Road to Recovery
• Education, Early Childhood and Workforce Committee (ECW) & Health and Human Services Committee (HHS) – Recipe for a Healthy Future: Examining Childhood Nutrition and Obesity
• Natural Resources Committee (NR) – Capitalizing on America's Domestic Energy
• Special Committee on Homeland Security and Public Safety (HSPS) – Answering the Call: Interoperable Communications and Information Sharing
• 2009-10 Vermont Gov. Jim Douglas' Chair's Initiative: Rx for Health Reform: Affordable, Accessible, Accountable
• Plenary Session Discussion Subjects: Achieving a Sustainable Health Care System, Redesigning State Government, The Federal Budget Deficit: Risks and Challenges

Plenary Session Points of Interest:
To coincide with NGA Chair Vermont Gov. Jim Douglas’s yearlong initiative, Rx for Health Reform: Affordable, Accessible, Accountable, the 2010 Annual Meeting began with an opening plenary session dedicated to developing a sustainable health care system.

Sam Palmisano, chairman of the board, president and CEO of IBM, kicked off the first plenary session by describing his belief that the United States is at a critical turning point: its long-term global competitiveness is at stake and the real winners will be those who concentrate on repairing the current system. He continued by saying real opportunity can come from the current economic crisis, and leaders of states can use the crisis to take transformational steps to make states smarter. Palmisano explained the importance of looking at companies, organizations and states as parts of a broader system, rather than isolated entities, by breaking them down into four characteristics: clarity of the system’s purpose or goal; connection of elements; continually knowing the status of itself and its critical components; and a system that is adaptable to change. According to Palmisano, the problem with the health care system is that it does not function with these characteristics. He believes the focus should be on the data and what the data can tell. Palmisano noted how governors are improving the quality and delivery of care and emphasized the importance of their leadership. Palmisano closed by asking for governors’ help in four areas: establishing data standards for health care; building smarter systems by design; collaborating with other states; and thinking about policy and ethics. 

Gov. Douglas turned the program over to Dr. David Cutler, Otto Eckstein Professor of Applied Economics, Department of Economics and Kennedy School of Government at Harvard University. Dr. Cutler emphasized the important role governors play in making sure the health care system works. He outlined the tools at hand for pushing the system in the right direction. The tools include: collaborating with states; changing the way the system operates; and encouraging innovation. Dr. Cutler gave examples of things that are not working in the system, the common denominator always being the lack of organization in the health care system. Health care, he believes, will not improve until it is better organized, or at least until there is some central organization – ‘something that says our job is to take care of patients, do it in the right way and do it in a way that works for them.’ There are three things that can lead to this kind of success: getting the information right; making the compensation work; and empowering workers and the consumers to figure out how to do things better. Dr. Cutler closed by again emphasizing the importance of coordination and organization.

Gov. Douglas, along with fellow governors, closed the plenary session by presenting NGA’s Distinguished Service Awards and Corporate Fellow Tenure Awards.

The second plenary session focused on redesigning state government. Moderated by Alan Murray, deputy managing editor and online executive editor of the Wall Street Journal, governors were given the opportunity to have a conversation about the changes that are taking place in states to make government more efficient. Murray focused the discussion on decisions that governors have faced, are currently facing and will continue to face during the economic crisis. The conversation began with the topic of education. Incoming NGA Vice Chair Nebraska Gov. Heineman talked about modernizing economic incentive programs, lowering taxes, controlling spending and diversifying the economy. New York Gov. David Paterson discussed how the escalation in New York’s budget deficit forced education cuts. Maryland Gov. Martin O’Malley talked about how raising sales tax by a penny to close the deficit for education investment will pay off in the long run. Gov. Douglas spoke about reducing taxes on capital gains and increasing higher education spending because Vermont is among the lowest in the nation on a per capita basis for higher education. Massachusetts Gov. Deval Patrick took the opportunity to mention that, in times of crisis, opportunity presents itself. He went on to say that this is a good time to think about what it is government should and should not do.

The conversation then moved to health care. Illinois Gov. Pat Quinn began by declaring health care as a fundamental right.  He supported the notion that states need more help from Washington to protect against job cuts and health care cuts. Wyoming Gov. Dave Freudenthal countered that states need to figure out a way to pare back the public expectation of what government is going to pay for instead of repeatedly going to the federal government. Murray then asked what can be done to change the health care cost equation. Gov. O’Malley offered a few suggestions, including focusing on wellness and prevention and administrative costs. He followed by saying the most important thing to figure out is a replacement for the fee-for-service model, in which the entire health care system is compensated based on providing more procedures. Gov. Douglas explained that in Vermont, they succeeded in asking the federal government for a super waiver to give the state flexibility in how they administer the Medicaid program and a relaxation of the so-called maintenance of effort. Utah Gov. Gary Herbert expressed his dismay that states were not a part of the discussion from the very beginning. Colorado Gov. Bill Ritter spoke of data as a crucial component and about how states can pass legislation that requires an all peered database, like Colorado has done.

Murray then asked governors to describe one thing they have done that will get their state where it needs to be, five to 10 years from now. Kentucky Gov. Steve Beshear discussed what his state has done to create jobs through economic incentive packages and legislation that allows economic incentives. South Carolina Gov. Mark Sanford talked about unemployment security commission reform and workers compensation reform. Maine Gov. John Baldacci, Gov. Freudenthal, Washington Gov. Chris Gregoire and Gov. Ritter all talked about energy. Delaware Gov. Jack Markell described the importance of timely responses to constituents. Gov. O’Malley emphasized the value in investing in the innovative and creative capacity of people. Gov. Patterson explained the changes to the process of passing the New York budget. Gov. Douglas talked about restructuring how the state provides services. Arkansas Gov. Mike Beebe discussed the emphasis that was put on the link between education and economic development and how that thinking has moved Arkansas up to 10th in education rankings in the nation. Arizona Gov. Jan Brewer talked about balancing Arizona’s budget.

The final plenary session featured Co-Chairmen of the President’s Commission on Fiscal Responsibility and Reform Senator Al Simpson and Erskine Bowles. Sen. Simpson talked about the 18-person commission, describing the challenges they face and emphasizing the sentiment that people hope the commission fails. He outlined the challenges of stabilizing Social Security and explained that tax revenue goes only to Medicare, Medicaid and Social Security. The rest of the federal government’s discretionary budget is being financed by China and other countries.

Bowles described the national debt as a cancer that will destroy the country from within. He restated Sen. Simpson’s point that any money the federal government spends, besides money it spends on Medicare, Medicaid and Social Security, is borrowed from foreign countries. If the government continues on this path, he continued, by the year 2020, it will be spending a trillion dollars a year on interest alone. Bowles said that the federal government needs to do what governors do every day – cut spending or increase revenue, or some combination of both. He then offered the principles that will guide his own decisions on the committee: protect the disadvantaged; continue to invest in areas that make America strong and competitive; ensure America is safe and secure; reform the tax code; and eliminate, or sharply curtail, tax expenditures. 

Both Sen. Simpson and Bowles expressed their beliefs that the political consequences of these issues make the decisions really tough.

Gov. Beebe said that, for him, the gloomy picture painted hope. He stressed the importance of honest debate and collegial disagreement instead of rhetoric. NGA Vice Chair West Virginia Gov. Joe Manchin III asked why there is no urgency in this country to get its financial house in order and how it could be done. Bowles responded by saying that the commission is trying to get ahead of the economic crisis now, when the pain would be relatively small. Gov. Markell talked about creating a separate capital budget for infrastructure and paying for quality health care. Montana Gov. Brian Schweitzer asked about the process after the commission comes out with a recommendation. Bowles explained that if the commission can get 14 of 18 votes, then Sen. Reid will bring up the recommendation for an up or down vote and then move to the House for a vote. Gov. Herbert questioned if there was any way to get the actual debt number. Bowles responded that the commission would only be using the CBO numbers and that the administration’s numbers would not be used under any circumstances. Gov. Sanford questioned if it was too late, given the fact that the President is not engaged and that the issue has only reached the commission level. Bowles spoke from his experience of balancing the first budget in our generation and assured Gov. Sanford that something can be done. South Dakota Gov. Mike Rounds asked if there was a way to structurally change the make-up to make Congress accountable for the promises which they make that the next generation of Congressmen have to pay for. Bowles responded by stating that the whole problem is that people are promising more than can be delivered. Gov. Gregoire asked how governors can partner to ensure real reform. Bowles asked that governors be good resources by getting the commission’s message out.

Utah Gov. Gary Herbert said the following about health care implementation:  “I think that really states have a responsibility and an opportunity, in fact, to lead the way on health care reform, whatever the definition of health care reform is. I think it means different things to different people. For a lot of people in Utah, it’s just lower costs. For others it’s universal access, single-payer systems. There’s a lot of different definitions out there that are being wrestled with. And we come out of Washington, D.C., with a one-size-fits-all approach. Whereas, I would rather see 50 states out there, laboratories of democracy trying to find their own ways to solve those health care reform issues.  And in Utah, we do have one of the health care exchange windows that are out there that’s having some success in bringing competition in private sector setting with a defined contribution as opposed to a defined benefit for employers. Where employees can go to a portal on the web and match up their needs with what is available in the marketplace with a defined contribution. I don’t think it solves all of the problems, but it is a step down the right road. I think it will give us competition in a private sector setting. I think that will help us to keep costs down and help give us access to health care.”

Arkansas Gov. Mike Beebe said the following in response the presentation given by Sen. Simpson and Erskine Bowles: “Two or three observations: I don’t know that I’ve ever heard a gloomier picture painted that created more hope for me. I mean, you – if there is any hope, it’s the approach that’s been taken….but you two [Sen. Simpson and Bowles], and the whole team, and the objective and honest approach actually creates hope. At least it does for me. So, if – if it’s possible to tell us how bad things are and make us feel good about it, I think both of you have done that. And – I appreciate the fact that while you have plenty of other things to do, you’ve taken on this monumental task.”

Selected Policy Positions Adopted:
(1) Supporting entrepreneurs and state perspective on the federal role in economic development; (2) Encouraging the repeal of the Harbor Maintenance Tax on cargo that moves in short sea shipping; (3) Supporting national regulatory framework that enables private investment to spur innovation and competition and encourages state innovation; (4) Supporting changes to federal extended benefits programs to support state administration of the programs and to ensure that the federal programs act as automatic economic stabilizers during times of economic downturn; (5) Encouraging the opposition of federal mandates on paid school meal prices; (6) Providing states the option to coordinate federal education funds; (7) Encouraging Congress and the Administration to explore options for increased state flexibility in the use of Title IV-E funds and services provided within the child welfare system; (8) Encouraging more efficient federal review of renewable energy projects; (9) Encouraging federal funding for security of utility lines/pipes that often intersect with pipelines; (10) Supporting the federal government to increase direct actions to prevent the introduction of invasive species on federal lands; (11) Supporting the current status of federal programs and state concerns regarding juvenile crime and delinquency prevention; (12) Supporting the current status of federal programs and initiatives to combat and control substance abuse and illegal drug trafficking; (13) Encouraging Congress and the Administration to extend educational benefits through the Post 9/11 GI Bill to members of the National Guard.