State must address rising health care costs, experts say
Wisconsin Economic Summit IV panel offers outlook to solving health care crisis
MILWAUKEE—Emphasizing that “health care costs are threatening the vitality of businesses in Wisconsin,” Don Davis, chairman and CEO of Rockwell Automation, opened a provocative, in-depth discussion of health care costs at Wisconsin Economic Summit IV.
Davis was one of 12 presenters who offered their insights on the crisis as members of a health care workgroup called together to analyze and assess the subject.
As explained by John Torinus, CEO of Serigraph, Inc. and the panel moderator, the workgroup was brought together under the auspices of the Wisconsin Idea by University of Wisconsin System President Katharine C. Lyall to “bring forward the best thinking on the subject of health care” and to try to “move these ideas toward resolution.”
The group soon realized, Torinus observed, that the health care costs crisis is “maddening in its complexity.” Still, as each of the panelists indicated, ignoring the health care costs crisis is not an option.
Panelist Al Jacobs, executive director of WEA Trust, told the audience that the crisis is severe.
“If ignored, the health care costs crisis will severely hamper our ability to care for our citizens, grow our economy and improve the quality of health care,” Jacobs said. As an example, national health care expenditures per person increased by 24 percent in just three years, from 2000-2003.
Subsequent panelists, while admitting that the workgroup was not able to articulate the “silver bullet” solution to the health care costs crisis, noted that the workgroup was able to come to consensus on the extent of the crisis, the primary “drivers” that are causing health care costs to escalate, and some suggested ways to address the situation.
“During our deliberations, a consensus developed about how our ideas could help inform a solution, or series of solutions,” noted panelist David Riemer, state budget director. “The unifying thread of our deliberations is that Wisconsin must tackle the health care crisis now, ask the right questions, bring all competing interests to the table and try to put workable models for change and reform into action.”
Included among the workgroup’s shared notions was agreement that:
Finally, panelists Chris Queram, CEO of Employer Health Care Alliance Cooperative and Dr. Robert Phillips, medical director of the Marshfield Clinic, outlined several important workgroup recommendations, including:
This later point was reiterated by panelist Linda Reivitz, UW-Madison nursing faculty associate: “If our workgroup agreed on anything, it was the that the misalignment of incentives is the biggest problem associated with the health care cost crisis.”
Read the panel’s report: "The Health Care Cost Crisis in Wisconsin: An Economic Development Prognosis"
Governor Doyle promotes “Grow Wisconsin” plan
Gov. Jim Doyle used Wisconsin Economic Summit IV on Tuesday to promote his “Grow Wisconsin” plan and emphasized that the UW System is being viewed as a key partner in his economic development initiative.
"The UW System is the producer of two of the state’s top commodities—knowledge and graduates—and we will need an abundance of both if we are to remain competitive, and prosperous, in the 21st century,” Doyle told summit participants.
Doyle praised the university’s economic summits for identifying challenges in and solutions for Wisconsin’s economy.
"The UW summits have been particularly valuable, and have helped build consensus about what needs to be done,” the governor said. “And now the time has come for action.”
Doyle announced Tuesday that his administration, working in partnership with other state leaders, educators and the private sector, has already accomplished 35 initiatives in his “Grow Wisconsin” plan.
In particular, he noted his signature of a bill last week to update the state’s financial laws. The changes will free up hundreds of millions of dollars for investment in Wisconsin start-up companies. The governor also mentioned his efforts to streamline the regulatory process for approving new power plants, air permits and water permits while not compromising environmental safety.
Overall, “Grow Wisconsin” will infuse more than $1 billion in public and private investment in Wisconsin’s economy, Doyle said.
The governor specifically noted the need for more venture capital in Wisconsin, adding that his economic development plan would generate more than $300 million for start-up companies.
Doyle pledged to work with the Legislature, as several lawmakers have introduced other economic development initiatives. He said the final plan must be affordable; target resources for seed capital and early stage companies; focus on creating high-end, high-paying jobs; funnel money to capital markets and job creation, not administration and overhead; and leverage private sector resources.
“The Legislature is giving a lot of attention to venture capital, investments in business, and regulatory reform. That’s good. But let’s never forget what’s at the heart of Wisconsin’s economy now, and will be the key to our future—our hardworking people,” Doyle said.
The governor also challenged legislators to focus more on job creation and less on ideological issues, such as the proposed legislation to allow citizens to carry concealed weapons.
“Would we be better off with 400 guns in this room, or 400 more entrepreneurs?” he asked. “I think the answer is obvious.”
The governor concluded his remarks by highlighting that the overall goal of economic development is create more opportunities for Wisconsin residents and businesses and make the state a better place to live. Doylestated that if Wisconsin’s per capita income was at the national average, it would have reduced the state’s deficit last year by $1.1 billion.
“Our children deserve a strong, vibrant economic future, full of opportunity for all those willing to seize it,” Doyle said. “Our challenges may be great, but our potential is limitless. It’s time to grow Wisconsin.”
Baird Excellence in Teaching Economics and Financial Literacy Awards
Doyle also took part Tuesday in the annual presentation of statewide awards given to Wisconsin high school teachers who teach business and economics. The awards are sponsored by Robert W. Baird & Co. of Milwaukee.
The winners of the Baird Excellence in Teaching Economics and Financial Literacy Awards are Karen L. Ray of Good Hope Christian Academy of Milwaukee, first place; Frank Wood of Arrowhead High School of Hartland, second place; and Mike Nerbovig of Chippewa Falls High School, third place.
Fred Kasten, chairman of Robert W. Baird & Co., and Jim Guenther, president of Economics Wisconsin, thanked the award winners for their commitment to teaching financial literacy.
“We are the world’s leader, but we won’t be for long if our young people don’t understand why,” Kasten said.
Cisco executive recommends cross-talk and business 'spirit'
Nurturing an entrepreneurial spirit will be one of Wisconsin’s biggest challenges as it tries to stimulate economic growth, John P. Morgridge, chairman of the board of Cisco Systems, Inc., told participants at Wisconsin Economic Summit IV.
But it can be achieved by regular "cross-talk" with other businesspeople, including one's competitors, Morgridge said during his keynote speech Tuesday morning.
"It's hard to keep a secret in Silicon Valley," where Cisco Systems is headquartered, Morgridge said. "And if that's not natural in your culture, you need to create opportunities for it to happen."
Morgridge, who holds a BBA from UW-Madison and an MBA from Stanford University, endorsed the clustering of like industries to foster growth, but warned about exclusively aiming for high-wage jobs.
"Those are not the high-wage jobs of even five years ago," said Morgridge, who was also the keynote speaker at the first Wisconsin Economic Summit. "They're new high-wage jobs, so the work force may need retraining."
Other must-haves Morgridge mentioned for Wisconsin include:
Workforce training is vital, Morgridge said. "And it's not a one-time job or degree I'm talking about. It's a lifetime of training, because change is a given," he said.
Businesses should look to universities for research, he added, because they offer a risk-free environment for development of ideas.
Beside the cluster model prevalent in the Silicon Valley, Morgridge outlined two other economic growth engines nationally: the Research Triangle Park in Raleigh-Durham, N.C., which originally drew its support from state government and university research; and the Route 128 corridor near Boston, which was initially fueled by federal defense research funds.
University leaders describe importance of economic development
Economic growth is the most important issue facing the state today, and the UW System remains committed to helping state leaders find solutions, Board of Regents President Toby Marcovich said during welcoming remarks Tuesday at Wisconsin Economic Summit IV.
“It is important because much of Wisconsin’s professional workforce of tomorrow is enrolled on our campuses today,” Marcovich said. “It is important because our faculty and staff are doing the research and public service work that is shaping the knowledge economy and helping to improve the quality of life for all our citizens.”
Marcovich introduced Summit co-chair Jay L. Smith, a former president of the Board of Regents, as a dynamic advocate for the university.
Smith said the economic summits have become an annual meeting for leaders of Wisconsin’s government, business and education sectors.
“We know that these are the three key elements that must work together to achieve economic success,” Smith said.
Smith said Wisconsin’s economy has recently hit a “speed bump,” but the state can overcome its economic challenges.
Smith said he hoped the fourth summit would again demonstrate the value of the Wisconsin Idea, lead to new approaches and effective responses to economic challenges and opportunities, and stimulate serious commitment from attendees toward collaborating on future activities.
“If we face the brutal facts, and keep unwavering faith – a great Wisconsin economy is in front of us,” Smith said. “We must confront and deal with the facts of our current reality.”
Smith introduced UW System President Katharine C. Lyall, whom he described as a principal partner in the state’s economic development efforts.
Lyall compared Wisconsin’s economy to the growth cycle of bamboo plants. While the plants require much nurturing, little growth is detected in the first four years, she said. But, when growth begins in the fifth year, it is dramatic.
“I like to think that each of these summits has nurtured Wisconsin’s growth, moving it toward the essential transition to a globally competitive economy by investing in people and ideas,” Lyall said. “I hope you will be inspired and challenged to go back to your office, laboratory or classroom and set your shoulders to the wheel of transforming Wisconsin’s economy for the future.”
Regional approach draws on Wisconsin’s diversity for economic growth
By leveraging the unique resources found within Wisconsin’s diverse regions, the state may be able to employ regional economic development strategies to improve its ability to compete on a national level, a panel of experts said Tuesday.
“Regionalism can be a powerful engine for economic growth,” said Julia Taylor, president of the Greater Milwaukee Committee, who moderated the session. “We are falling behind our sister states in important economic areas, and we can’t let this continue.”
The state, due to population and natural resources, is already divided into distinct regions, panel members said.
“I’m struck by how different areas of the state are from each other,” said panelist Terry Ludeman, chief economist for the Wisconsin Department of Workforce Development. “More than anything else, our economic forces and resources are very different.”
The key to regional economic development is to pool these resources and collaborate with other areas on common goals, according to the panel’s white paper, “A Regional Economic Growth Strategy: Does it make sense for Wisconsin?”
By concentrating efforts from different regions of the state, panelists said Wisconsin has the potential to:
The panel outlined several ways in which Wisconsin could be divided into regions, but noted that there are barriers keeping Wisconsin from fully implementing a regional approach to economic development, such as lack of a clear vision or strong political willingness.
However, the approach can work for Wisconsin if there are more incentives than drawbacks to participation, said panelist Debbie Mahaffey, vice president of the Wisconsin Technical College System.
“To get enthusiasm and buy-in, we need to get people to see how their work will be recognized – that it’s not just another flavor-of-the-month,” Mahaffey said.
Specifically, the panel proposed that several steps could encourage regions to more seriously consider how a regional approach could improve economic development. They include:
“We think all kind of taxes should be on the table to facilitate discussion,” said panelist Kevin Reilly, chancellor of UW-Extension.
The panel advised that the state must rely on some level of institutional support to assist local organizations, whether formal, informal, or centered around a particular issue.
Such support may be best provided by existing organizations, such as UW-Extension’s Center for Community Development or the Department of Commerce’s Division of Community Development, the panel said.
“First, we must have a vision for the future,” said panelist Jan Alf, president of the Wisconsin Economic Development Association. “Everything that follows will be based on that.”
Panelist Ed Huck, executive director of the Wisconsin Alliance of Cities, said the panel’s findings demonstrate the need for such regional collaborations, and having learned about Wisconsin’s projected future, summit attendees are well equipped to stem the trend of falling behind the economic status of neighboring states.
“Even though we have to compete with these areas, they can also be our partners for the future,” Huck said.
Officials outline progress of industry clusters
Wisconsin is one of two finalists as the potential location for two key printing industry research/development organizations. That accomplishment is one concrete example cited at an update on the progress of the clusters project at Tuesday’s Wisconsin Economic Summit IV.
Cory Nettles, secretary of the Department of Commerce, gave an overview of what the state is doing to support the efforts of industry clusters. Nettles and panel moderator Don Nichols, chair of the La Follette School of Public Affairs at UW-Madison, outlined Wisconsin’s cluster strategy – a collaborative effort involving government, industry and the universities to attract research and development and geographic clusters of related-growth industries with good-paying jobs.
The cluster project focuses on supporting both existing “mature” industries where Wisconsin already has a strong competitive advantage nationally and helping develop emerging industries, said Nettles. Examples of mature Wisconsin industries include printing, paper, plastics, dairy, small engine manufacturing and tourism. Emerging industries include biotechnology, medical device manufacturing/development and information technology.
John Torinus, CEO of Serigraph, Inc., outlined the accomplishments of the printing cluster council. The council has worked with the universities to establish needed four-year programs in printing management at three Wisconsin colleges and universities, and worked with government on streamlining permits and developing more collaborative approach to regulation.
In mid-November, Gov. Jim Doyle will join industry representatives in a presentation to the Graphics Arts Technical Foundation and the Printing Industries of America, key printing industry research/development organizations that are considering a move from their current Pennsylvania location.
Ron Kuehn, executive director of the Wisconsin Biotechnology Association, said the biotechnology and medical device clusters are currently working together on a number of projects. Some key efforts included establishing a more visible presence in Madison with an office on Capitol Square; working to educate legislators and the public about biotechnology; developing an ethics committee to review and advise on scientific and moral issues; and working on ways to make university libraries and resources more available to the commercial industry.
Pat Schillinger, president of the Wisconsin Paper Council, noted that the paper industry cluster has identified and begun work on a number of key goals, including streamlining regulation, tax reform and supporting efforts to make sure energy, a key factor in the paper industry, is low-cost and reliable.
Panel reviews Wisconsin’s business climate
Members of Wisconsin’s government and state Legislature understand the importance of working together and responding to concerns from the private sector in recovering the state’s economy, panelists said Tuesday.
During a panel discussion titled “Wisconsin’s Business Climate: A New Commitment to Growth and Expansion – Working With Our Officials,” Cory Nettles, secretary of the Wisconsin Department of Commerce, said Gov. Jim Doyle’s administration is working to take solid, meaningful steps in creating economic opportunity.
“This stuff isn’t rocket science,” Nettles said. “This is basic block-and-tackle kind of stuff.”
Assembly Speaker John Gard said Wisconsin’s taxes are too high and regulations are too onerous, and both create barriers for businesses in the state.
“We spend a lot of time trying to say no to businesses instead of saying yes,” Gard said. “The answers don’t need to be changed. The way the government enforces them does.”
John Shiely, CEO of Briggs and Stratton, said there seems to be little talk about keeping the businesses Wisconsin does have, and more concentration on attracting new businesses, what Shiely called a zero-sum outlook.
“You need to understand the businesses we have and what it is about that those businesses that create value,” Shiely said.
Marc Marotta, secretary of the Wisconsin Department of Administration, acknowledged that taxes in Wisconsin are too high, and noted that the state budget deficit was addressed without raising taxes.
“That was one of the things business leaders urged us to do a long time ago,” Marotta said.
Recent changes in the single-sales factor were of benefit to Harley-Davidson and many other Wisconsin-based businesses, said Harley-Davidson CEO Jeff Bleustein.
“It helped us and will keep others from ruling out Wisconsin as a place to locate,” Bleustein said. “I think there’s a lot of reason for optimism.”
Reforming state regulations can be an effective way to encourage companies to create jobs in Wisconsin, said state Senate Majority Leader Mary Panzer.
“This is the one thing we can do, totally here, and make it happen,” Panzer said. “It’s the one thing we can do for businesses big and small.”
Tim Hoeksma, chairman, president and CEO of Midwest Airlines, Inc., said recent cooperation from state agencies resulted in reduced property taxes for the company, which allowed business expansion.
“That spirit of cooperation between the public and private sector is extremely important in economic development,” Hoeksma said.
State Senator Julie Lassa agreed that members of the Legislature can and do work in a bipartisan manner.
“We’re all going for the same goal – and that’s job growth,” Lassa said.
In concluding Wisconsin Economic Summit IV, UW System President Katharine C. Lyall said she hoped the ideas and proposals presented at the summit will become prominent elements in future public policy debates and decision making.
She said the state’s future rests in large part on the futures of students currently enrolled in the UW System, as well as the students at the state’s private colleges and universities and technical colleges.
“The heart of economic development is investment in the state’s human capital,” Lyall said. “Investment in every Wisconsin citizen through education and training. Investment in great ideas that will result in new products and services that, in turn, will fuel the next generation of globally successful Wisconsin businesses.”
In his closing remarks, Smith challenged government leaders, educators and the private sector to all commit to more involvement in economic development.
For government leaders, Smith encouraged them to set aside partisan differences and deliver a comprehensive economic development plan for the state. Smith asked the state’s educational leaders to further develop a seamless PK-16 system for Wisconsin. And he suggested that business leaders get more involved, especially in creating and supporting economic clusters.
“If these three sectors deliver on these challenges, we will have economic growth in Wisconsin,” Smith said.
— Produced by UW System University Relations, with assistance from Laura Hunt and Kathy Quirk, UW-Milwaukee.
— Photos: Alan Magayne-Roshak, UW-Milwaukee.