Governors Attending:

Guests:

Discussion Subjects:

• Economic Development and Commerce Committee (EDC) – The Value of State Economic Development Tax Incentives
• Education, Early Childhood and Workforce Committee (ECW) –Federal Federal-State Early Childhood Education: State Innovation
• Health and Human Services Committee (HHS) – Healthcare Information Technology
• Natural Resources Committee (NR) – Domestic Energy Production, Energy Prices and the Public Response; and A New Approach to Reforming the Endangered Species Act
• Other Sessions – special session on Medicaid; and special session on communications legislation for the 109th Congress
• Winter Meeting Plenary Session Discussion Subjects - health care costs and coverage

Points of Interest:

In conjunction with the Governors' Winter Meeting, NGA and Achieve, Inc. sponsored a two-day summit on redesigning American public high schools, attended by the nation's top government, education, business, and philanthropic leaders. The conference was the fifth national summit on education but the first devoted to high schools. The summit's keynote speaker, Microsoft CEO Bill Gates, called the American high school system obsolete and addressed its racial imbalances, noting that millions of students in disadvantaged school districts are falling behind because of failed schools. Underscoring the gravity of the crisis, he pointed out that only 68 out of every 100 ninth graders graduate from high school on time, and` only 28 of the original ninth-graders reach their sophomore year in college.

The summit also focused on the deterioration of U.S. scientific and technological superiority due to the failure of the American educational system to prepare students for a 21st Century world. In short, the domestic supply of workers with the skills needed to keep the U.S. economy competitive simply does not meet demand.

Summit participants vowed to raise standards, provide more opportunities for poor students, invest financially in school redesign, and undertake a public relations campaign to place high school reform at the forefront of the national debate about education. Six philanthropic organizations announced a joint pledge of $23 million to help states launch high school reform efforts, of which $15 million was pledged by the Bill and Melinda Gates Foundation.

In addition, thirteen states announced the formation of a coalition aimed at boosting standards, requiring students to take rigorous courses in preparation for college and work, testing students regularly to measure their progress in meeting stringent state standards, and holding high schools accountable by publishing more data on dropout and graduation rates. Participating states, which together serve 35 percent of total U.S. high school students, included Arkansas, Georgia, Indiana, Kentucky, Louisiana, Massachusetts, Michigan, New Jersey, Ohio, Oregon, Pennsylvania, Rhode Island, and Texas.

Winter Meeting Points of Interest: Governors met with President George W. Bush at the White House, where a key subject of discussion was Medicaid reform and the President's proposal for $40 billion in Medicaid program cuts. In place of cuts, governors pressed for more freedom to manage and reconfigure Medicaid to achieve savings and for greater leeway to pay for community-based long-term care in place of nursing home care.

At the closing plenary session of the Governors' Winter Meeting, Mike Leavitt, former Governor of Utah and now Secretary of the U.S. Department of Health and Human Services, spoke to the Governors about the crisis in health care coverage and spending. He noted a number of areas of potential common ground between the states and the federal government, including recognition that: (1) immediate action was required to ensure that no current Medicaid recipients would lose coverage, (2) block grants would not solve the health care spending crisis, (3) expenditures for prescription drugs were too high, (4) Medicaid should not be an asset protection plan (i.e., that it should not be possible to transfer assets from child to parent for the sole purpose of ensuring that the parent would not have to spend down assets in order to qualify for nursing home care under Medicaid), (5) governors should have the same capacity as any other large health care system managers to charge co-payments, (6) the State Children's Health Insurance Program (SCHIP) could be used by more optional populations, (7) greater emphasis should be placed on home and community long-term care as an alternative to institutionalization, (8) payment to care-giving facilities should be based not just on quantity but also on quality of care, (9) greater emphasis should be placed on electronic health records, and (10) tax credits could be used to establish state pools through which to provide health care coverage to those whose employers could not afford the cost of health care coverage as a benefit.

Following Secretary Leavitt's presentation, two experts in the field of health care coverage and costs—though coming from two different ideological perspectives—jointly recommended the means by which a bi-partisan, federal-state partnership effort could be undertaken to extend health insurance coverage to those with minimal or no coverage and to improve the quality of health care and its cost effectiveness. Henry Aaron of the Brookings Institution outlined the components of such a plan as follows: (1) The federal government would define a standard of adequate health insurance coverage; (2) the federal government would provide grants to states based on their measured progress in increasing the number and proportion of state residents covered by such health insurance; (3) the plan would include a "first do no harm" standard prohibiting states from materially eroding coverage for the current Medicaid population; and (4) states would be encouraged to pursue virtually any approach that increased the proportion of state residents with health insurance coverage, including—but not limited to—refundable tax credits, facilitation of new insurance groups such as churches and unions, and extension of Medicaid and/or SCHIP. Stuart Butler of the Heritage Foundation elaborated on the idea being co-presented with Dr. Aaron, referring to it as a "super-charged" form of federalism. And he added that the fourth component of the plan would require bipartisan congressional legislation that enabled—not mandated—states to increase health care coverage by means of a range of ideas and proposals "representing the left, the right, and the middle."

During discussion, Governor Doyle of Wisconsin asked if in fact there was anything wrong with a large share of gross national income going toward health care. He noted, for example, that Wisconsin is a major producer of high-tech medical equipment as well as being the home of stem cell research, both of which benefit the economy but also contribute to the calculation of health care costs. Dr. Butler responded that the amount being spent on health care is less important than the unevenness in the spread of health care resources in favor of some people and to the detriment of others.

Memorable Quotes:

Bill Gates, Chairman of the Microsoft Corporation, said: "Our high schools were designed 50 years ago to meet the needs of another age…Until we design them to meet the needs of this century, we will keep limiting, even ruining, the lives of millions of Americans every year…In district after district, wealthy white kids are taught Algebra II while low-income minority kids are taught to balance a checkbook."

Governor Mark Warner of Virginia said: "We all know that health care costs continue to skyrocket…Medicaid alone exceeds, in many states, 30 percent of our state budgets. What the country spends on health care overall by all sectors truly is staggering. Today we spend about $1.7 trillion or almost 15 percent of our gross domestic product on health care. That translates to about $5,300 per person…far in excess of any other industrialized nation…[T]he system…we know needs substantive reform…we also have to look at related health care questions. We've got an overall sick health care system…We continue to see issues regarding the expanding of life expectancy, issues regarding infant mortality, cancer rates, the increasing problems that come about from obesity and related, inappropriate lifestyles. We must do a better job. The fact is we've been talking about health care reform…for over a decade. We've got to look at some…new solutions."

Selected Policy Positions Adopted:
(1) proposing increased federal funding to surface transportation programs and supporting the creation of a study commission to address the nation's overall transportation needs; (2) establishing a framework for governors to participate in the negotiated rulemaking addressing the security and integrity of state-issued driver's licenses and personal identification cards as required under federal intelligence reform legislation; (3) noting the governors' support for aligning federal education laws while maintaining maximum state flexibility and discretion; (4) reflecting the NGA Chairman's initiative on redesigning the American high school; (5) calling for the federal government to pay for services to undocumented immigrants; (6) emphasizing the governors' priorities for reauthorization of the Temporary Assistance for Needy Families (TANF) program, to include continued state flexibility in program design and a provision to relieve states that are making progress toward new work requirement goals from being penalized; (7) calling on Congress and the Administration to work with states to address the problem of the uninsured; (8) expressing the governors' support for prisoner reentry programs based on the principles of reducing recidivism, enhancing public safety, saving taxpayer dollars, consideration of ex-offenders' health, housing, employment, mentoring, and social adjustment needs, providing for smooth transitioning to support services in the community, understanding the unique needs of juveniles, and strengthening families and promoting family reunification; (9) expressing the governors' support for reforms that would reduce the nation's reliance on Medicaid as the primary source of long-term care services, including increased utilization of long-term care insurance programs or the removal of incentives for individuals to transfer assets in the hopes of becoming Medicaid-eligible; (10) expressing concern about a recent U.S. Supreme court decision questioning the authority of the owner of a contaminated site that is participating in a voluntary state cleanup program to seek financial contribution from previous owners; (11) calling for a strong and meaningful participatory role for states and territories in any new national ocean policy; (12) adding commercial and recreational fisheries as a sector that should be protected in fisheries management, and calling for a federal recommitment to a strong state-federal partnership with greater respect for the special circumstances faced by states and the effect of regulations on their coastal communities; and (13) recognizing and supporting the efforts of states in implementing the Streamlined Sales and Use Tax Agreement (SSUTA).