The U.S. Supreme Court’s fall term, which began last month, looks to be a momentous one, with the justices expected to weigh such matters as whether there’s a constitutional limit to partisanship in the drawing of voting districts and whether the First Amendment right to religious freedom trumps state laws banning discrimination based on sexual orientation. The cases involving those issues and several others on the docket could have major implications for state and local governments.
After being shorthanded for over a year - as a result of the death of Justice Antonin Scalia and U.S. Senate Republicans’ unwillingness to consider President Obama’s nominee to fill that vacancy with less than a year left in the president’s term - the Supreme Court has returned to full strength. And in its first full term with President Trump appointee Justice Neil Gorsuch on the bench, the court has decided to take on several big cases.
One of the most significant is Gill v. Whitford, No. 16-1161. The case revolves around the redistricting plan for the Wisconsin Assembly drawn by that state’s Republican majority after the 2010 Census. Last year a three-judge panel of the U.S. District Court for the Western District of Wisconsin ruled 2-1 that the plan, known as Act 43, was “an unconstitutional political gerrymander.”
“We find that Act 43 was intended to burden the representational rights of Democratic voters throughout the decennial period by impeding their ability to translate their votes into legislative seats,” the majority wrote in its 159-page decision.
Although the Supreme Court has repeatedly ruled against racial gerrymandering, it has never ruled against partisan gerrymandering. The last time it heard a case dealing with that issue, however - in 2004 with Vieth v. Jubelirer - Justice Anthony Kennedy wrote in a concurring opinion that courts could provide relief from partisan gerrymandering if they had a “workable standard” for determining when a gerrymander imposed too great a “burden on representational rights.”
The plaintiffs in the case are seeking to establish such a standard: a new method of measuring how votes translate into victories known as the “efficiency gap.” Developed by Nicholas Stephanopoulos, an assistant professor at the University of Chicago Law School, and Eric McGhee, a research fellow at the Public Policy Institute of California, the efficiency gap in an election is “the difference between the parties’ respective wasted,” those either cast for the losing candidate or for the winning candidate in excess of what he or she needed to win, according to an article published in the University of Chicago Law Review.
The gap is calculated by totaling each party’s wasted votes, subtracting one sum from the other and dividing the difference by the total number of votes cast. The resulting percentage indicates how much more efficiently one party translated votes into seats than the other, presumably because it controlled the redistricting process, determining how the wasted votes were distributed among the various districts. The plaintiffs in Gill v. Whitford calculated “pro-Republican efficiency gaps of 13% in 2012 and 10% in 2014 - meaning that Republicans won 13% and 10% more seats, respectively, than they would have under a neutral map,” court documents indicate.
According to Annabelle Harless, a lawyer for the Campaign Legal Center, which is working with the plaintiffs in the case, the justices “could adopt the test plaintiffs propose, they could in theory come up with their own standard, or they could say it’s not justiciable [not an issue for courts to decide],” as Governing reported.
Given that four of the justices appear committed to the belief that partisan gerrymanders aren’t a judicial matter while four others seem just as convinced that they are, the court’s decision in the case may ultimately come down, as it often does in 5-4 rulings, to what Justice Kennedy decides.
“Justice Kennedy’s views,” Joshua Douglas, a law professor at the University of Kentucky, told Governing, “are really the whole ballgame.”
A ruling upholding Wisconsin’s map would likely encourage more aggressive gerrymanders. A decision affirming that there’s a constitutional limit to partisan gerrymandering, however, would undoubtedly spur legal challenges to other legislative and congressional remaps across the country and potentially lead to shifts in the partisan composition of some legislative bodies.
“Depending on how the court reaches its decision, we could see a significant, dynamic change in the makeup of state legislatures and Congress,” said Chuck Thompson, executive director of the International Municipal Lawyers Association, according to another report by Governing.
The justices have also agreed to hear another voting rights case of note for states this term, Husted v. A. Philip Randolph Institute, No. 16-980, concerning the constitutionality of Ohio’s efforts to clean up its voter rolls by purging inactive voters. The plaintiffs argue that federal law explicitly prohibits states from removing registered voters for failing to vote. But in a reversal from the Obama administration, the Trump administration has filed a brief with the court in support of Ohio’s position. And at least a dozen other states also purge inactive voters from their registration lists.
Another of the term’s biggest cases is Carpenter v. United States, No. 16-402, concerning the privacy of customer location data held by cellphone companies. Kannon Shanmugam, an attorney who heads the Supreme Court and Appellate Litigation practice at the legal firm of Williams & Connolly and who has argued 20 cases before the court, called it “the most consequential case currently on the court’s docket,” while Nathan Freed Wessler, a lawyer for the American Civil Liberties Union, which is representing the petitioner, Timothy Carpenter, in the case, said it was “the most important Fourth Amendment case we’ve seen in a generation.”
In 2013 Carpenter was convicted of taking part in a series of robberies based in part on evidence provided by location data from his cellphone. Carpenter appealed his conviction on the grounds that prosecutors had failed to obtain a search warrant for his cell phone records, violating the Fourth Amendment’s prohibition against unreasonable searches and seizures. But the appeals panel rejected Carpenter’s argument, reasoning that his Fourth Amendment right had not been violated because there is no “expectation of privacy” with location information that cellphone users knowingly expose to their service providers.
In 2014, however, the Supreme Court ruled in Riley v. California that a warrant was required to search a cellphone, and in 2012 in United States v. Jones it ruled that the use of a GPS device to track an individual’s movements constitutes a search entitled to Fourth Amendment protection. And as Justice Sotomayor stated in her concurring opinion in Jones: “it may be necessary to reconsider the premise that an individual has no reasonable expectation of privacy in information voluntarily disclosed to third parties....This approach is ill suited to the digital age, in which people reveal a great deal of information about themselves to third parties in the course of carrying out mundane tasks.”
The court will also consider a couple of major workers’ rights cases. In Epic Systems Corp. v. Lewis, No. 16-258, the justices will consider whether employers can use arbitration clauses in employment contracts to prevent their workers from banding together to sue them over workplace issues. The court has shown a preference for contracts that provide for the resolution of disputes through arbitration rather than litigation. It has also sanctioned class-action waivers in the arbitration provisions of consumer contracts, like those used by cell phone and car rental companies. The question is whether those inclinations will extend to employment contracts. The plaintiffs in the case argue that employment contracts are different because the National Labor Relations Act protects “concerted activities” by workers.
In Janus v. American Federation of State, County and Municipal Employees, No. 16-1466, the court will consider whether government workers who opt out of joining unions can be forced to support the unions’ collective bargaining efforts. If the court says no, millions of public workers spread across 20 states could opt out of making those payments, sapping unions’ power.
In 1992 Congress passed the Professional and Amateur Sports Protection Act, prohibiting state-sponsored sports gambling, except for the sports wagering legalized before that date in Nevada and a few other states. The constitutionality of that law is at the center of another case that will come before the Supreme Court this term: Christie v. National Collegiate Athletic Association, No. 16-476.
In 2014 New Jersey, which is not one of the states with a sports betting operation exempted from the federal prohibition against sports wagering, passed SB 2460, allowing sports betting at casinos and horse racetracks in the state. Last year the U.S. Court of Appeals for the Third District struck down that law on the grounds that it violated the Professional and Amateur Sports Protection Act. And earlier this year the Supreme Court agreed to hear an appeal of that decision, which Gov. Chris Christie (R) took to be “a very good sign for sports betting having a future in New Jersey,” according to the New York Times.
We’re not declaring victory, but at least we’re in the game, and that’s what we want to be,” he said.
Other states have been looking to get in the game too. Connecticut, Mississippi and Pennsylvania have all passed legislation this year that would allow sports betting within their respective borders if there’s a change in federal law permitting it, according to the Legal Sports Report. And with sports betting now nearly a $5-billion-a-year industry in Nevada, more states will undoubtedly do the same if the court strikes down the federal ban.
One of the most controversial cases the court will consider this term is Masterpiece Cakeshop v. Colorado Civil Rights Commission, No. 16-111. The case concerns a baker who refused to make a wedding cake for a same-sex couple, saying it would go against his Christian beliefs. That action violated the law passed by the state in 2008 banning discrimination on the basis of sexual orientation by any business “offering services, facilities, privileges, advantages, or accommodations to the public.” As of 2016 22 states had such laws, according to the National Conference of State Legislatures.
Which way the Supreme Court will go on the case is difficult to predict. As the New York Times reported, the court has consistently ruled in favor of gay rights in recent decades and declared a constitutional right for gay couples to marry in 2015 with Obergefell v. Hodges. But it has also shown consideration for business owners’ religious principles, as in Burwell v. Hobby Lobby in 2014, when it ruled that some companies did not have to comply with a federal regulation mandating that employers provide free contraceptive coverage for their female workers.
In addition to the major cases already on the docket, the court could also decide to hear a case from South Dakota that Lisa Soronen, executive director of the State and Local Legal Center, described as “the biggest state and local government case since I don’t know when.” The case involves a law passed by the state in 2016, requiring out-of-state retailers to collect sales taxes on purchases from customers located in the state. The law was actually intended to provoke a legal challenge with the ultimate aim of overturning the U.S. Supreme Court’s 1992 ruling in Quill Corp. v. North Dakota, barring states from requiring retailers without an in-state physical presence to collect and remit sales taxes.
Justice Kennedy issued an engraved invitation for that challenge in 2015, writing in a concurring opinion in Direct Marketing Association v. Brohl, “The legal system should find an appropriate case for this Court to reexamine Quill...” He also noted that e-commerce sales had grown dramatically in the 25 years since that ruling. NCSL reported that Justice Gorsuch “raised similar concerns” about Quill while serving on the U.S. Court of Appeals for the Tenth Circuit.
There has been speculation, however, that Kennedy, who is now 81, may soon retire. States will be hoping the court takes up the case before that happens. A study by the National Conference of State Legislatures and the University of Tennessee estimated that in 2012, states collectively missed out on $23.26 billion in sales taxes as a result of the Quill decision.
Since the U.S. Supreme Court struck down the federal ban on sports betting on May 14, four states have joined Nevada in allowing such wagering within their borders, according to the Legal Sports Report. Those states include New Jersey, where the sports ban case originated. Two other states are expected to begin allowing sports betting in the coming months. Nevada legalized sports betting in 1949.
Every four years, the world turns its attention to the winter or summer games, hoping to be inspired by stories of struggle and strife, triumph and personal success. This also means that global brands are ramping up to spend advertising dollars in the hopes of achieving a myriad of goals: better awareness, higher stock value, increased sales or improved reputation. But, investing in campaigns connected to the games doesn’t always produce results.
In fact, according to a recent study done by digital marketing agency Greenlight, sponsoring the games can be a mixed blessing for brands. According to the study, only 11% of those surveyed remember P&G’s “Mother” campaign from the 2012 games. In fact, there were companies considered significant sponsors who had zero recall. For instance, one of London 2012’s biggest sponsors, Acer, had zero recall for the UK consumers surveyed.
What does this mean if you’re tasked with any sort of research to help strategically determine the best path for sports sponsorship?
Know Your Audience
The study found that a younger audience—nearly half of 16-29 year olds—were receptive to sports sponsorships. Regardless of your industry—advertising, research, finance or fund development, realize that if your primary audience isn’t part of a younger, millennial demographic, you may be making a poor investment choice. By researching engagement levels, purchase patterns and other important business statistics over time, you can ensure you’re giving advice that helps clients meet their goals.
Provide Historical Context
Up-to-the-minute insight is always critical. But sometimes, it’s the look back that can improve decision-making. Access a robust archive of historical sources and data to uncover applicable insights. By looking back, you can uncover trends and patterns over time and ground your recommendations in winning strategies backed by context and proven results. What affects the success of sports sponsorships? Seasonality? Geography? The types of brands that sponsor? Only history can paint a picture of this clearly. Be sure you’re looking at historical articles, sources and reports. This way, you’ll be confident your recommendations provide a true 360-degree point of view.
Continually Gauge Financial Impact
Get ahead of the game by understanding the financial impact of the sports sponsorships. Set up alerts, receive aggregated reports, and take a deep dive into related industries so that you don’t miss any of the details whenever they happen. Get a snapshot of how other companies in the same category performed financially when they committed sponsorship money. By leveraging a solution that can pull the content and organize it into easy to digest charts, you can be confident your strategy is on track and you have the information necessary to react and adjust your plans as needed.
The two-week window on the winter games is a short one. For brands that invest in it, they are committing big budgets for a potentially uncertain payoff. Focused, deep research can be the difference between money well spent and money the brand may regret. Just imagine what deep research can do for longer-term strategic investments.
Interested in more?
1. Check out our Sports Analytics page.
2. Strike gold with research tips and tricks!
3. Learn about the research solution that has been on top of the podium for decades!
The MISSOURI House declines to take up an amended version of HB 90, which would have made the Show Me State the last in the nation to adopt a prescription drug monitoring system (KANSAS CITY STAR).
IOWA Gov. Terry Branstad (R) signs HB 524, a bill that expands access to cannabis oil to include patients diagnosed with Parkinson's disease, cancer, multiple sclerosis, seizures, AIDS or HIV, Crohn's disease, or Amyotrophic Lateral Sclerosis, as well as most terminal illnesses that involve a life expectancy of less than one year and untreatable pain (DES MOINES REGISTER).
The ALABAMA Senate approves HB 284, legislation that would require health insurers to cover treatment for autism disorders. It returns to the House (BIRMINGHAM NEWS, LEXISNEXIS STATE NET).
The NEW YORK Assembly approves AB 4738, which would implement a single-payer universal health care system in the Empire State. The measure moves to the Senate, which has killed similar proposals in each of the last two years (SPOTLIGHT NEWS [ALBANY]).
The CALIFORNIA Senate approves SB 794, which would require that all baked goods and candy containing pot will be marked with a universal symbol and wrapped in child-resistant packaging. It moves to the Assembly (SANTA CLARITA SIGNAL).
The PENNSYLVANIA Department of Human Services announces it will expand Medicaid to include coverage for treating hepatitis C. Driven by the opioid epidemic, cases of the disease have grown significantly in recent years. The new rule takes effect on July 1 (PHILADELPHIA INQUIRER).
One of Britain’s most famous art institutions has reversed a sponsorship deal after it was revealed that the sponsor’s owner had backed a ban on teaching LGBT issues. As art organizations, universities and non-profits become more reliant on sponsorship rather than government funding, they need to strengthen their due diligence procedures to mitigate reputational, financial and strategic risks.
A sponsorship U-turn
Last month, Britain’s biggest art prize excitedly announced that it had secured a sponsorship deal for a new exhibition with Stagecoach South East. It seemed a no-brainer for the prestigious Turner Prize to accept a large sum from a transport firm with no legal or financial red flags. Yet within twenty-four hours, it said the sponsorship deal would not go ahead after campaigners protested that the chairman of Stagecoach had backed a ban on teaching LGBT issues. It was pointed out that Sir Brian Souter backed a campaign to keep a law banning teachers discussing gay rights in schools 19 years ago.
This is a risk faced by more and more arts organizations. Public funding of the arts in the U.S., UK and many European countries has fallen in recent years, so these institutions are looking more to corporations and philanthropic individuals to support their work. But this brings greater due diligence requirements, and many organizations are simply not ready. The organizers of the Turner Prize, for example, admitted they did not know about Sir Brian’s views on gay rights when they signed the deal.
It is no longer good enough for these institutions to check the credentials of a company looking to sponsor them in a ‘box-ticking’ way. Indeed, the Turner statement pointed out that “the relevant legal and financial due diligence was observed.” Arts organizations must also ensure the personal values of a sponsor’s management and ownership are compatible with their own charitable objectives. This requires a detailed search of previous media coverage of the company, its ownership and management and, crucially, their social media accounts.
Universities risking their reputations
Another sector that should pay attention to the Turner Prize’s difficulties is universities because in the U.S. and parts of Europe they are also becoming increasingly reliant on philanthropy. Some of the biggest universities and arts institutions in the U.S., UK and France are currently facing significant media scrutiny for accepting gifts from the Sackler family, whose company Purdue Pharmaceuticals has been blamed for allegedly fueling the deadly opioid crisis in the U.S.
A recent article in the Washington Post called out the Sacklers’ beneficiaries, including Harvard, Cambridge, the Louvre and the Metropolitan Museum of Art, in its headline: “Why haven’t major institutions cut ties with the Sackler family?” Some of these institutions pointed out that the Sacklers have not been legally convicted of the alleged actions, and that the institutions have already spent the money they received from the family. But this decision to hold firm could cost them in other ways as they seek to attract young people to study or visit. That’s because surveys show that millennials want to work and study somewhere that shares their ethical values.
Globalization brings added risks
The globalization of philanthropy adds another layer of complexity to the due diligence requirements of arts institutions and universities. Twenty years ago, most of their donors were local companies and individuals, but today institutions receive major gifts from donors in China, Russia and other countries which require extra due diligence checks.
For example, British universities including Oxford and King’s College London and the Photo London Art Fair recently faced demands from politicians and media to sever their ties to the Sultan of Brunei after his regime introduced a law which could make gay sex and adultery punishable by stoning to death.
As a result of the ease of making global transactions, the art world in particular has come to be used for money laundering. For a wealthy individual looking to turn their ill-gotten gains into legitimate assets, spending £20 million on a painting in a reputable gallery in London or New York is seen as a way to wash money gained from corruption and crime. Auction houses and galleries must take AML regulations into account in their compliance procedures.
What can organizations do?
Consider taking the following steps to mitigate the rising risks involved in accepting donations:
Arts organizations, universities and non-profits often rely on modest budgets, so they might be reluctant to increase their spending on compliance. But as recent headlines show, the reputational, financial, legal and strategic impact of lax risk management can be even more costly.
Take Action:
The ‘60s saw the Summer of Love in San Francisco. But according to the political news website Utah Policy, we are on the verge of a “Summer of Power” in Utah, with Beehive State leaders enjoying a “vortex of power nationally” that is unprecedented in the state.
The article goes on to list exemplars of the state’s growing political muscle, including: U.S. Sen. Orrin Hatch (R), chair of the Senate Finance Committee; U.S. Reps. Jason Chaffetz (R) and Rob Bishop (R) chairs of the House Oversight Committee and the House Natural Resource Committee, respectively; Salt Lake City Mayor Ralph Becker (D) president of the National League of Cities; Gov. Gary Herbert (R), soon to become chair of the National Governors Association; state Sen. Curt Bramble (R), who will soon become president of the National Conference of State Legislatures; state Sen. Wayne Niederhauser (R), treasurer of the American Legislative Exchange Council (ALEC); and state Rep. Ken Ivory (R), chair of ALEC’s Federalism Committee, which promotes states’ rights initiatives.
“Our national leaders in Congress possess more opportunity to impact legislation than their peers, and our state leaders affiliated with ALEC, the National League of Cities, and the National Conference of State Legislatures, have a preeminent voice in crafting legislation and policy positions from those groups,” the article states, concluding, “We look forward to seeing what comes from all this influence.” (STANDARD EXAMINER [OGDEN], UTAH POLICY)
As of January of this year, 21 states had enacted legislation or regulations providing at least some direct consumer protection from balance billing, the practice among out-of-network healthcare providers of billing patients when the patients’ insurance doesn’t cover the full cost of the providers’ services, according to the Commonwealth Fund. That organization categorized the protections in six of those states as comprehensive and the protections in the other 15 as limited (for more information see SNCJ Spotlight). According to LexisNexis State Net, limited protections have been enacted this year in nine states, including seven - Arizona, Louisiana, Maine, Montana, North Dakota, Oregon and Utah - that were not already on the Commonwealth Fund’s list.
Source: Commonwealth Fund, LexisNexis State Net
‘Pink Wave’ Hits State Legislatures: As anticipated, given the record number of female candidates running for political office this year, women made significant gains in state legislatures on Election Day.
Preliminary analysis by the National Conference of State Legislatures indicates there will be at least 2,073 women serving in statehouses across the country next year, about 190 more than in 2018. Women will make up about 28.1 percent of the total number of legislators nationwide, almost 3 percent more than this year.
In several states, including Alaska, Iowa, Maine, Maryland, Michigan, Nevada, New Hampshire, New Mexico, Oklahoma, Oregon, Pennsylvania, Rhode Island and Utah, the percentage of female legislators will be 5 percent higher or more next year.
“There hasn’t been an increase in the share of women this large since another significant election,” in 1992, “when the nationwide percentage of elected women jumped from 18.4 to 20.5 percent,” said NCSL’s Katie Ziegler.
If initial results hold, women will actually constitute a majority of Nevada’s Assembly, occupying 22 of the chamber’s 42 seats. That has only happened once before, when 13 of the 24 members of the New Hampshire Senate were women in 2009 and 2010.
In Colorado, female legislative candidates also helped Democrats secure a state government trifecta, with the party controlling both legislative chambers and the governorship. And in Texas they were part of a surge that gave Democrats 12 more seats in the House.
Despite the “pink wave,” however, women will continue to make up a third or less of the elected officials in many states next year, even though they comprise more than half of the electorate.
“Some will be surprised at the results in that they expected more women to win,” said Kelly Dittmar, an assistant professor of political science at Rutgers University and a scholar at Rutgers’ Center for American Women and Politics (CAWP). “But we can use that to fuel further conversations about how we can accelerate women’s political gains.” (NATIONAL CONFERENCE OF STATE LEGISLATURES, GOVERNING)
As of May 12 drought was impacting every state in the nation but six, according to the U.S. Drought Monitor, a weekly measure of drought conditions produced by the University of Nebraska-Lincoln’s National Drought Mitigation Center and the U.S. Department of Agriculture and National Oceanic and Atmospheric Administration. California is facing the most severe drought, with nearly half of the state in “D4,” or “exceptional drought,” the highest level designated by the Drought Monitor. But a sizeable part of Nevada is also at that level, and areas of Idaho, Kansas, Oklahoma, Oregon, Texas and Utah are at D3.
Source: U.S. Drought Monitor
Key:
States with areas designated “D0 Abnormally Dry” to “D1 Moderate Drought”: Montana, Iowa, Missouri, North Dakota, Wisconsin, Illinois, Michigan, Indiana, Ohio, Arkansas, Tennessee, Nebraska, Mississippi, Georgia, Alabama, Florida, South Carolina, Maryland, Pennsylvania, New Jersey, New York, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire, Maine, Alaska, Hawaii 29
States with areas designated “D2 Severe Drought” to “D3 Extreme Drought”: Washington, Arizona, Texas, Oklahoma, Oregon, Colorado, Minnesota, Wyoming, South Dakota, New Mexico, Utah, Idaho, Kansas 13
States with areas designated “D4 Exceptional Drought”: California, Nevada 2
States with no drought: Kentucky, Louisiana, Virginia, North Carolina, West Virginia, Delaware 6
About once a year Davis, California resident Dave Adams drives to his doctor’s office at Kaiser Permanente and settles in for a long IV drip of a clear liquid he likes to call his “mouse juice.” Better known by its pharmaceutical name rituximab, or the brand name Rituxan, it is most often used to treat rheumatoid arthritis. But for Adams, rituximab helps in his ongoing battle with anemia.
Like all biologic medicines, rituximab is grown from living organisms, in this case the splicing of human and mouse DNA -- hence “mouse juice.” And because its patent is set to expire this year, it is also one of numerous biologic medications which may soon have competition from a cheaper “biosimilar” imitation. That possibility has lawmakers scrambling to develop oversight policies that protect patients like Adams who depend on biologics for their very lives.
The potentially rapid rise of biosimilars in the United States is directly rooted in the Affordable Care Act, which has as one of its many goals to help bring down the cost of prescription medications. The ACA aims to do that in part via a provision that eases the pathway for federal approval of drugs that “are demonstrated to be biosimilar or interchangeable” with powerful and very expensive name brand biologic medications like the rituximab Adams takes. In a 2008 report, the Congressional Budget Office estimated that speeding up the biosimilar approval process would cut spending on biologics by $25 billion over a 10-year period. Almost $6 billion of that would be reductions in direct government spending on drugs paid for by health programs like Medicare and Medicaid.
But while the ACA’s passage ensured a speedier path for biosimilars to get U.S. Food and Drug Administration approval, the FDA is not the only government agency with a say in the matter. As has long been the case with generic medications, the specific rules regulating drug substitutions are up to the states.
One of the major challenges facing lawmakers seeking to regulate biosimilars is that they are nothing like widely prescribed “small molecule” medications like statins, which are used to lower cholesterol. For those, generic copies are synthetized with compounds identical to those found in the original drug. In contrast, biologics are highly complex “large molecule” drugs that are grown from living organisms and are virtually impossible to duplicate in the exact same manner as the original. That not only makes a true generic impossible, it makes applying older state laws covering the distribution of generics the equivalent of using a screwdriver to hammer a nail.
Lawmakers are aware of this. According to the National Conference of State Legislatures, at least 23 states in the last two years have considered bills to regulate biosimilars. Most bills have focused on establishing the conditions under which a biosimilar could be substituted for an existing biologic drug, including rules requiring doctors and patients to be notified when a pharmacist makes such a substitution. Only eight states, however, have adopted those measures. Lawmakers in a ninth state, California, endorsed a notification bill (SB 598) last year, but Gov. Jerry Brown (D) vetoed it. In his veto message Brown said he supported the bill’s requirement that biosimilars be used where possible, but he noted the FDA’s failure to officially define what constitutes “interchangeability” for biosimilars, calling the bill’s additional requirement to notify doctors and patients of those substitutions “premature.”
Notification bills have been popular again this year. According to LexisNexis State Net, 19 states have introduced a total of 32 biosimilar notification bills since January. At least two, Colorado SB 71 and Georgia SB 51, are with the governor and expected to be signed into law. Most of the new bills would make subtle but key changes to previous notification requirements, like allowing pharmacists to notify doctors and patients after a drug has already been substituted rather than beforehand.
Biosimilars have been in use in Europe for years, but until recently none had been cleared for use in the United States. That changed in March when the U.S. Food and Drug Administration approved Zarxio, a biosimilar from drug maker Sandoz that mimics the effects of Amgen’s biologic cancer medication Neupogen, a drug that accounted for $5.7 billion in sales in 2014. But Zarxio’s appearance in pharmacies has been delayed. Amgen filed suit to block Zarxio’s market release, citing a handful of technical complaints centered on Sandoz’s licensing application. U.S. District Court Judge Richard Seeborg rejected those claims last month, but Amgen quickly filed an appeal. Sandoz could still release the drug “at-risk,” meaning it could be on the hook for significant fiscal penalties if an appeals court upholds Amgen’s patent claim. As of this writing, Sandoz has not announced its plans.
Drug makers are watching the case very carefully. In a recent post on the FDA Law Blog site, Kurt Karst, an attorney with Hyman, Phelps and McNamara, says the decision “could forever alter the biosimilars landscape in the U.S.” by negating the ability of patent holders like Amgen from using procedural technicalities to keep competitors at bay.
While the Zarxio case showcases the complexities -- and extremely high stakes -- involved with biosimilars, it has done nothing to slow the push by pharmaceutical companies to get in on the action. A growing number of new biosimilars are already in development by drug makers around the world. The industry is in fact preparing for something of a global tidal wave. According to the research firm IMS Health, biosimilars are expected to grow in value from about $400 million in global sales in 2011 to somewhere between $11 billion and $25 billion annually by 2020.
But there is yet another issue to be worked out before that happens. Responding to concerns raised by many pharmaceutical companies, the FDA has announced it will release new guidance this year in another key area: biosimilar labeling. Drug makers are adamant that biosimilars be labeled in such a way that they are distinct from the patented biologics they are replacing. This is both to ensure they are used properly and to make certain the blame for any ill effects associated with that biosimilar doesn’t fall on the original patented drug or its maker.
Tony Fox, a professor of pharmaceutical medicine at Kings College in London who has also worked for major pharmaceutical companies in the United States, believes those issues will be resolved and that biosimilars will become as critical a part of the U.S. drug market as they are now in Europe. He is less sure, however, they will produce the massive price savings of generics. While some generics are now priced as low as 10 percent of the original drug’s cost, he doubts most biosimilars will ever fall to more than 50 to 60 percent.
“These drugs are just so much more expensive to produce,” he says, noting that biosimilars have all the same stringent requirements to prove efficacy as an original biologic.
There are other concerns as well. Biological medications tend to have greater toxicity than small molecule drugs, and they stay in a person’s body longer. There are also fewer antidotes -- with some biosimilars none -- to treat someone when a drug causes a bad reaction. Fox notes there is also ample evidence that people are “dazzled” by biotech products, which “often makes them less likely to be as cautious and careful as they should be.” Even so, he believes biosimilars have major implications not only for cutting drug costs but for treating a wider array of illnesses.
“We are at the very beginning of this technology. Biologics now are used predominantly to treat the most serious illnesses, but we are getting to a point where we could use them to treat more common diseases, such as asthma. We’re just going after the low hanging fruit right now,” he says.
In short, the age of widespread biosimilar medication is undoubtedly here. But what that means for patients, insurers, doctors, pharmacists, drug manufacturers and state lawmakers is still far from determined.
-- By RICH EHISEN
Follow Rich on Twitter at @WordsmithRich
The NEVADA Senate approves SB 106, which would raise the Silver State minimum wage to $12 per hour by 2022. The measure, which would hike the wage standard by .75 cents every year for the next five years, moves to the Assembly (NEVADA APPEAL [CARSON CITY]).
The ALABAMA Senate approves SB 200, so-called “ban the box” legislation that would bar state agencies from asking job applicants about their criminal history until they make a conditional job offer. The measure is now in the House (BIRMINGHAM NEWS).
The TEXAS House approves SB 28, which would create a revolving loan fund to help Lone Star State ports deepen and widen their ship channels. It moves to Gov. Greg Abbott (R) for consideration (HOUSTON CHRONICLE).
The KANSAS Senate approves HB 2277, which would authorize Hawkeye State cities to establish “common consumption areas” – or entertainment districts – where people could move around freely with their drinks. The bill returns to the House (WICHITA EAGLE).
States have been offering tax credits and other financial incentives for the purchase of electric and hybrid vehicles since the 1990s. But at least seven states have recently repealed or exhausted the funding of their programs, or allowed the programs to expire, and Colorado is considering repealing its program as well (SB 188). Ten states, meanwhile, have imposed and at least 10 others are considering levying extra registration fees on owners of electric vehicles. Georgia both repealed its incentive program and levied a fee on electric vehicles in 2015.
Source: New York Times, Plug In America, National Conference of State Legislatures, Alternative Fuels Data Center, LexisNexis State Net
Lloyds Bank has set an ambitious three-year strategy to “digitize” the group. In its strategic review for 2018-20, Lloyds intends to use technology like data analytics and Artificial Intelligence (AI) to gain new insights which can transform key parts of its business. This is just the latest indication that financial services firms believe their future success rests on big data and AI.
In its strategic review for 2018-2020, Lloyds has pledged to make a strategic investment of more than £3 billion, of which more than half has been allocated to “digitizing the group”. It now defines its business model as “digitized, simple, low risk [and] customer-focused.” A key priority is “simplification and progressive modernization through targeted investment in technology, data, and innovation.” To support this change, it will to increase training and development by 50 percent by 2020. This training will include improving capabilities around data and applied sciences. It also aims to double its number of digital experience designers and engineers who specialize in robotics and AI. The bank predicts this strategy will have clear outcomes, including a positive effect on its bottom line. It anticipates that it will make efficiency improvements of up to 30 percent by 2020. The aim of the strategy is ambitious: it wants to be recognized as the best bank for customers, colleagues and shareholders, and to “help Britain prosper.”In a 68-page presentation on the strategy which was given to analysts and investors, Lloyds spelled out the myriad ways it aims to exploit new opportunities enabled by technology. The bank hopes to use data insights to improve customers’ experience of digital banking. Voice biometrics will reduce the time it takes for customers to verify who they are over the telephone. With intelligent automation, Lloyds expects to reduce manual compliance efforts by 20 percent by using automated speech to text and analytics. Automated voice and chat-bots will improve the capacity of telephone banking staff by a third. By using cognitive and machine learning and building an enterprise data hub, Lloyds plans to enhance business intelligence across the organisation. Automating processes, connecting cross-group and external data and using API architecture and applied sciences for sophisticated analytics will also improve the capacity of its relationship managers. When these individual innovations are added up, they demonstrate a clear commitment to digitizing the entire banking group and embedding technology in all aspects of the business.
Recent announcements from rival banks suggest that data and AI technology are becoming the key weapons in financial services firms’ armory. Earlier this year, HSBC announced that it would recruit 1,000 data scientists to grow its digital strategy. This month, Deutsche Bank launched a new enterprise analytics capability which collates and analyses millions of lines of data on securities transactions to identify opportunities for the bank and its clients. In a presentation to investors on 16 November, the Netherlands-based bank ABN AMRO said that innovation and technology would be “a critical enabler for efficiency.” A study by SNS Telecom & IT predicts financial services firms will invest $9 billion in big data this year, rising to $14 billion in 2021.But big data’s potential is not limited to the financial services sector. Academics are using big data to analyse millions of research papers to inform their own research. The manufacturing sector is using Robotic Process Automation (RPA) to automate functions which previously took up a large amount of staff time. Media outlets such as Xinhua and the Washington Post are using AI to generate news stories. Leaders in sectors like sales and marketing are also using AI-powered big data analytics to find new insights.
Companies have access to data about their own customers and operations. Lloyds, for example, has data on the transactions carried out by its tens of millions of customers. But this data by itself is not enough to provide insights which can be applied in its operations. Companies often benefit from external data sources—ranging from news and social commentary to company market and legal data—which can provide added context to their own data.
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Thirty-two states and the District of Columbia have expanded Medicaid, according to the Kaiser Family Foundation. Four other states - Idaho, Maine, Nebraska and Utah - will do so this year, as a result of voter-approved ballot measures. Maine Gov. Janet Mills (D) ordered the adoption, by Feb. 1, of rules mandated by the ballot measure approved there in 2017 but subsequently blocked by former Gov. Paul LePage (R). Effective dates for expansion in the other three states are yet to be determined.
Our latest Expert Q&A features Dr. Amy Ogan, an Associate Professor in the Human Computer Interaction Institute at Carnegie Mellon University. Her research project uses AI to improve teaching and learning methods, and her work could benefit many millions of schoolchildren in less economically developed countries. She explains how AI is changing the way research is done.
“One of the major things that we see actually transforming how schools work today is the idea of personalization and this is something that AI can do very well. It can adopt changes to the pace or the ability to provide help at the right point in time for individual learners so that they get exactly what they need.”
“The scope is enormous. One of the things that we’re looking at further in the future is to use AI to look with cameras and microphones and other sensors at what is happening in the physical environment. It means we could be able to provide all sorts of great feedback about when kids need more support, how teachers can change their practice in order to improve their own classrooms and all sorts of things that might be coming in the future.”
“One of the issues that we [as academics] have is in adopting our own technology, so this is something I am trying to transform. We are putting sensors in the classrooms in our own university throughout the teaching experience because it has been so hard for us to take the time out and to change the way that we actually work. We have a lot of knowledge about how AI can change education and now we’re trying to put it into practice in our own settings as well.”
“AI lets us look at larger and larger datasets and create something meaningful out of them in ways that were very difficult to do previously. So [in the field of research into learning] we can collect more data from more learners and understand scientific problems at a scale that was not previously possible.”
“We are only just now starting to think about data, where it’s coming from, what it means, how accurate is it and what are the results that we’re getting from it. Particularly in education, we cannot collect data only from upper class western learners who already have the benefits of technology and strong support systems, we need to make sure that the data we are collecting is representative of all learners in order to have equity in the technology that we are developing.”
“Big data, AI, data scientists, machine learning—these are all buzzwords that are now on millions of job applications and it’s really clear this is something that companies are looking for, sometimes even when they don’t know why they need it. However, when we’re training people to have these [digital] skills, they can go into those companies and use cutting-edge techniques to transform the way that industry is happening too.”
It turns out that AI is not just good for super-fancy high-tech situations, we use AI even on feature phones for kids to use at home in places where there is low electricity, and maybe where problems with illiteracy exist, we can use AI in those situations as well. We just need to have the right data collected and we need to think about the context and where we are using it in order to develop the right solutions.”
As of June, at least 32 states had introduced or were considering security breach notification bills this session, many of which were aimed at toughening existing security breach laws, according to the National Conference of State Legislatures. Fourteen states had enacted such measures. And only three states still hadn’t passed a law requiring consumer notification of security breaches.
Source: National Conference of State Legislatures, LexisNexis State Net
Legend:
Enacted security breach notification legislation: Connecticut, Montana, New Hampshire, North Dakota, Oregon, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wyoming
No security breach notification law: Alabama, New Mexico, South Dakota
On November 6, voters in 37 states will consider 158 ballot measures, just one more than the 157 propositions in 2016, according to the Initiative and Referendum Institute at the University of Southern California.
Among the issues on the ballot this year in multiple states, marijuana legalization continues to be one of the most prevalent. In 2016, initiatives aimed at legalizing marijuana for recreational use were on the ballot in five states - Arizona, California, Maine, Massachusetts, and Nevada - and medical marijuana initiatives were on the ballot in four: Arkansas, Florida, Montana, and North Dakota.
This year, there are two more recreational marijuana measures on the ballot, Michigan Proposal 1 and North Dakota Measure 3, which, if approved, would make those two states the first in the Midwest to legalize marijuana for recreational use. Medical marijuana measures will be also be considered in two states: Missouri (Amendment 2) and Utah (Prop. 2).
Healthcare is another issue on the ballot in multiple states this year. Voters in three states - Idaho (Prop. 2), Nebraska (Initiative 427) and Utah (Prop. 3) - will consider whether to expand Medicaid eligibility, in accordance with the Affordable Care Act.
California voters, meanwhile, will consider whether the price charged by dialysis clinics should be regulated. Supporters and opponents combined have spent over $130 million on the initiative, Proposition 8, making it the most expensive ballot measure contest in the country this year.
Among the most closely watched measures in individual states are:
Arizona Prop. 127, which would increase the percentage of electricity utilities would be required to obtain from renewable resources from 12 percent in 2020 to 50 percent in 2030
California Prop. 6, which would repeal the gas tax passed by the state’s Legislature last year and require voter approval for future gas taxes
California Prop. 10, which would allow more local government rent control
Colorado Prop. 112, which would establish minimum distance requirements for oil and gas development projects
Florida Amendment 4, which would restore voting rights to former felons
Massachusetts Question 1, which would limit patient loads for nurses
Massachusetts Question 3, a referendum on legislation (SB 2407) which would prohibit gender discrimination
Nevada Question 3, which would require the deregulation of the state’s electricity market
Ohio Issue 1, which would reduce prison sentences for non-violent crimes
Washington I-1631, which would establish a first-of-its-kind-in-the-nation carbon emissions fee. (INITIATIVE & REFERENDUM INSTITUTE, BALLOTPEDIA)
The TEXAS House approves HB 281, which would create a statewide database for DNA evidence from sexual assault. It moves to the Senate (AUSTIN AMERICAN-STATESMAN).
The IOWA Senate gives final approval to SB 444, which would require Hawkeye State drivers arrested for or convicted of impaired driving to participate in twice-daily sobriety monitoring as well as require some drivers to install ignition interlocks. It moves to Gov. Terry Branstad (R) for consideration (COURIER [WATERLOO]).
New ALABAMA Gov. Kay Ivey (R) signs SB 16, which strips Heart of Dixie judges of their authority to override a jury’s sentencing recommendation in a capital case. Alabama had been the only state where judges had such discretion (BIRMINGHAM NEWS).
ARIZONA Gov. Rob Ducey (R) signs HB 2477, a measure that, among several things, places a higher burden of proof for police to seize the property of private citizens (ARIZONA DAILY STAR).
Holiday traditions vary. Whether you festoon a Christmas tree with sparkly baubles and tinsel, light a menorah for Hanukkah or tackle feats of strength for Festivus, gift-giving and holiday parties are likely part of your tradition too. But these seasonal celebrations have a dark side—the risk of child labor or forced labor hidden deep in the supply chain.
In fact, according to the Global Slavery Index 2018 by the Walk Free Foundation, one in every 800 people in the U.S. is a victim of forced labor. Moreover, imports are a driving force behind forced labor, with an estimated $144 billion worth of at-risk products imported annually. Many of those at-risk products are part of the holiday season—both in the gifts that are given and received and the hors d’oeuvres at annual gatherings. Even coal is an at-risk product.
With greater awareness into the issue—and a robust due diligence and risk monitoring program in place—companies AND consumers can help bring an end to the corruption that traps people in dangerous, low-paid work situations.
Unwrapping the secrecy behind forced labor
After the Industrial Revolution, child labor was legal—and commonplace—in the United States. Then 80 years ago, the Fair Labor Standard Act made it illegal to employ children under 16 for most jobs and under 18 for dangerous jobs. Today, however, child labor is rife around the globe. The International Labour Organization estimates that 152 million children between 5 and 17 years old are victims of child labor with 73 million engaged in hazardous work. According to the data:
Forced labor also impacts 40.3 million adults. And it’s not just happening in emerging nations. While the U.S. has laws against forced labor—and, indeed, against the import of goods made with forced labor—the problem still exists.
Many companies are committed to eradicating forced labor from their supply chains, but it is an uphill battle given the complexity of global supply chains. Best practices for mitigating forced labor risk include:
Next Steps:
Wyoming has more government employees per capita than any other state, according to 2013 data from the Bureau of Labor Statistics. As The Wall Street Journal reported last year, more than 11.39 percent of the state’s total population -- or 114 people per 1,000 -- works at a local, state or federal government job. Nevada has the lowest government employee per-capita rate, at 5.2 percent. The Journal also noted the total number of government workers nationwide has been declining since its peak of 21,425,348 in 2009.
Source: Wall Street Journal, Bureau of Labor Statistics
States with largest government workforces per capita: Wyoming, Alaska, North Dakota, New Mexico, Hawaii
States with smallest government workforces: Nevada, Florida, Pennsylvania, Rhode Island, Michigan
After Republicans swept into control of 29 governor’s offices and 25 state legislatures in the 2010 elections, they moved aggressively to cut spending and taxes. The cuts continued the next few years in the wake of the Great Recession. But with revenue growth still only tepid and some Republicans feeling the limits of austerity have been reached, a few have even been willing to break the oath they took at the behest of anti-tax crusader Grover Norquist to oppose any tax increase.
“There’s a threshold, even for Republicans, where they don’t want to cut spending any further,” said Scott Pattison, executive director of the National Association of State Budget Officers in Washington.
Nevada Gov. Brian Sandoval (R) and the state’s GOP-controlled legislature approved the largest onetime spending increase in the state’s history this year - $1.1 billion - to provide funding for initiatives such as expanding full-day kindergarten.
Republican-dominated Kansas and Alabama have also enacted or are debating increases in sales, cigarette and other taxes, while six other GOP-led states have passed higher gas taxes. In Louisiana, meanwhile, Gov. Bobby Jindal (R) and Republican lawmakers, facing a $1.6 billion budget shortfall, engaged in what Bloomberg described as “a near-theological debate about what constitutes a tax increase.”
Some have approved of the tax hikes. In a June 8 report, Moody’s Investors Service called Nevada’s action “credit-positive” and said it would “stabilize the finances of the state and its school districts.”
But Norquist said states that increase taxes are “outliers” whose leaders aren’t capable of avoiding overspending.
“Raising taxes is what people do when they can’t govern,” he said. (BLOOMBERG, COLUMBUS DISPATCH)
Regulatory technology (RegTech) refers to technology that assists companies to meet growing regulatory requirements. Banks are set to invest more in RegTech in 2019, because they see it as a cost-effective and efficient way to respond to growing regulatory complexity around AML and KYC requirements.
Banks are investing more in RegTech year on year and this is likely to continue in 2019. Bloomberg predicts global investment in regulatory, compliance and governance software will reach nearly $120 billion by 2020. While G2 estimates a 500 percent increase in RegTech investment in the financial services sector between 2017 and 2020. RegTech’s rise is also reflected in the number of start-up companies who have formed to offer these services. A report by Alvarez and Marsal documented a recent “rapid increase” in RegTech start-ups, noting that many focus on specialist products for a single regulatory area, including regulatory reporting, KYC and market monitoring. “We believe that targeting cost reduction will continue to be a key driver of innovation in RegTech,” they wrote.
As more banks adopt RegTech, we can expect global financial authorities to pay more attention to the technology in 2019. The UK’s Financial Conduct Authority (FCA) and the Monetary Authority ofSingapore have already provided guidance to banks around the development of new technologies. We will see more regulators actively working with RegTech companies and banks to ensure the technology is helping them to meet regulatory requirements. The Australian Securities and Investments Commission have launched an innovation hub to engage with companies, and regulators in Singapore and Hong Kong have made similar moves. As Christopher Woolard, Director of Strategy and Competition at the FCA, said: “We will look to encourage innovation and adoption in technology through our RegTech work, working collaboratively to unlock the complexities and costs of regulation in new and creative ways”.
A major driver of the rise of RegTech is that regulatory requirements on financial services firms have grown since the 2008 financial crisis, leading to significant enforcement actions. The world’s 20 largest banks paid more than $235 billion in fines between 2008 and 2015. Banks were met with another layer of complexity in 2018 when the General Data Protection Regulation imposed new rules on managing customer data. In response to this trend, banks have invested more and more in compliance – JP Morgan and HSBC employed 7,000 extra compliance staff between them in 2013. But RegTech offers a more efficient way to respond to sprawling regulation.The UK’s impending departure from the European Union in 2019 could add another layer of regulatory complexity for banks operating in the UK and Europe. If the UK does introduce new rules affecting regulatory compliance in the banking sector, it is likely that more banks will turn to RegTech to streamline their processes. It is therefore unsurprising that UK RegTech companies occupied 30 places in this year’s RegTech 100 ranking of the top 100 most innovative RegTech companies in the world.
Another increasingly important factor driving the adoption of RegTech is the growing evidence that it offers an impressive return on investment. RegTech firms have shared case studies which demonstrate the cost-cutting power of technology. When FinTech firm Fenergo was engaged by a global investment bank, it found that the bank’s KYC client review process was done manually, taking thousands of hours of staff time to complete. When RegTech software was embedded in the KYC process, it led to a 37 percent improvement on case handling time and efficiencies. IBM had a similar result for HypoVereinsbank, delivering efficiency savings of 33 percent after automating its risk and control reporting processes. The Dutch bank Rabobank has used a RegTech risk management solution that reduced 15-minute compliance checks to only three minutes.As these case studies are more widely shared, we should expect more banks to follow. But efficiency savings are not the only benefit of RegTech. Automating processes and supplementing internal data with key compliance-related datasets, such as Sanctions and Watchlists, enables companies to gain new insights into risks, proactively manage threats and respond to regulators’ requests for information more easily. Will your organization be joining the RegTech crowd in 2019?
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As a young man, California resident Scott Kirchner was admittedly not concerned with saving money for retirement.
“Until I was probably 31, the idea of saving any money for anything was foreign to me,” he says.
Now, at age 56 and with the knowledge that he is far closer to the end of his working life than the beginning, he says thinking about retirement is a daily thing. But with barely two-thirds of one year’s salary currently in savings, he fears what that future may look like.
Kirchner is not alone. And while he understandably frets about his situation, he is actually better off than millions of Americans who have done far less to prepare for the eventual day when they can no longer work. According to a report from the National Institute on Retirement Security released in 2013, 45 percent of the current private sector workforce - some 38 million working age households - owns no retirement vehicle, such as a 401(k) or Individual Retirement Account (IRA), at all. Even those with retirement accounts are in a tentative position, with balances that average just a few thousand dollars. In all, American households with workers between the ages of 25 and 64 have a retirement savings gap of between $6.8 trillion and $14 trillion, depending on the financial measurement used.
That is almost sure to have grim consequences for future generations, according to research done by Notalys, a research company based in Provo, Utah. A study it released in January showed that 20 percent of all Beehive State workers will retire with more accumulated debt than savings, something that will ultimately cost taxpayers in that state $3.7 billion in additional public assistance. Conversely, even a 10 percent increase in retirement savings by those same workers would save the state and federal governments $194 million over a 15-year period.
There are many reasons why Americans don’t do a better job of stockpiling cash for retirement, but one of the primary roadblocks is not having access to a retirement vehicle through an employer. According to research done at Boston College, only about half of all households headed by a worker 55 or over in 2013 had access to a 401(k) plan. And while anyone whose employer doesn’t offer such a plan will find numerous IRA offerings for individuals on the open market, the reality is that relatively few make the effort to do so. According to the U.S. Department of Economic Analysis, Americans currently save on average less than 5 percent of their income, among the lowest in the industrialized world.
That can be dramatically improved via access to a work-sponsored retirement savings plan, says Sarah Mysiewicz Gill, senior legislative representative for AARP.
“The reality is that people are 15 times more likely to save for retirement if they have a retirement plan at work,” she said during a panel discussion on retirement security held at the National Conference of State Legislatures annual meeting in Seattle in August. “People want to save for retirement. They just don’t always know where to start.”
That situation is not lost on state lawmakers, who foresee a tsunami of retirees suddenly becoming dependent upon government programs to help them get by in what should be their golden years. As such, a growing number have in recent years taken action to implement some form of IRA- and 401(k)-like savings plans for workers without access to them through their employer. Under these “retirement security” proposals, workers would be able to have a certain percentage of their pay put into an investment pool created by the state but overseen by a professional private sector pension management company. In most – but not all – proposals, eligible workers would automatically be enrolled unless they choose to opt out. Employers would be able to match those deposits, though not be required to do so. Employers would, however, be required to use their payroll system to make the employees’ contribution but would bear no fiscal costs or any of the usual fiduciary responsibility that comes with offering a retirement plan.
Since 2012, lawmakers in at least 25 states have introduced measures to create such plans. California adopted the first that year (SB 1234), but it required that an extensive legal and market analysis take place before it could be implemented. That study – conducted and paid for by private sector companies - is ongoing, with a final report expected to be released to lawmakers before the end of the year. But, presuming the program is given the green light, lawmakers will still have to pass an actual implementation bill next year before the program can be put into effect.
That doesn’t concern SB 1234’s co-author, current Senate President pro Tem Kevin de Leon (D), who said last week he doubts the impending report will indicate a need for any significant changes to the proposal.
In the meantime, other states have since come on board. This year, governors in Oregon, Washington and Illinois have signed private sector pension bills into law, with all three set to take effect in 2017. Oregon’s and Illinois’ laws establish California-style plans that automatically enroll workers unless they opt out; Washington’s sets up a marketplace where eligible employers are connected with private sector pension plan operators, with participation strictly voluntary for both employers and their workers. The laws also vary on other key points, such as how many workers a company may employ to be eligible for the program: In Illinois and Oregon, the law applies to companies with at least 25 workers; in Washington companies with 100 or fewer workers are eligible. California’s plan would apply to companies with as few as five workers.
While momentum seems to be building for these programs, challenges remain. Private sector pension management companies, for instance, have resisted proposals in which the government maintained management of the new retirement accounts, insisting they do not want to compete with the state. But perhaps most significant is whether these measures would run afoul of the federal Employee Retirement Income Security Act (ERISA), which governs the management of private retirement plans. But advocates received a major boost in July when President Barack Obama directed the U.S. Department of Labor to clarify the ERISA rules to ensure that states would be able to move forward with their offerings. The new rules are expected by the end of this calendar year.
Washington Sen. Larry Springer (D), who also addressed the NCSL retirement session, said he and his colleagues are under no illusion that any of these plans will by themselves solve what many observers see as an impending retirement crisis. But their value is more than just in the dollars and cents they help some workers accumulate.
“This is only a start. It will not mean a secure retirement for every Washington worker,” he said. “What we’re hoping for is that it creates a culture of saving and planning for the future, particularly among young people.”
When Congress approved the Patient Protection and Affordable Care Act in 2010, the law was hailed as “momentous social legislation” that constituted “the biggest attack on economic inequality” in three decades (New York Times) and a “signature achievement” for President Barack Obama and the Democratic Party (Los Angeles Times).
Champions of the 906-page law, often called Obamacare, anticipated that it would quickly become embedded in the nation’s social fabric. When the court upheld most of the Affordable Care Act’s constitutionality two years later, Democrats celebrated. Even though polls showed consistent public disapproval for the law, Obamacare seemed unstoppable.
But after marking its fifth birthday in March, the Affordable Care Act (ACA) now seems frozen in time. The law faces another crucial ruling, expected in June, from the Supreme Court in a lawsuit known as King v. Burwell. Republicans still hope to repeal Obamacare, which they would have at least an outside chance of doing if they maintain control of Congress and win the presidency in 2016. Even defenders of the law acknowledge that its provisions for calculating federal health insurance subsidies are complicated and confusing.
It is King v. Burwell that poses the most pressing danger to the ACA. The law created on-line marketplaces known as exchanges at which uninsured Americans can purchase health care insurance. Those making less than four times the federal poverty level — about $24,000 for a single person or $94,000 for a family of four — qualify for subsidies to offset the cost of their insurance premiums.
Sixteen states and the District of Columbia opted to run their own exchanges; the subsidies in these states are not being challenged. In 34 other states, however, the exchanges are operated by the federal government. The ACA says subsidies should be available to people buying insurance on exchanges “established by the state.”
In King v. Burwell, four Virginians backed by conservative and libertarian groups contend that the high court should interpret the words “established by the state” literally and disallow subsidies for those who purchased health insurance on the federal exchange. This would impact more than 7 million people, most of whom would be unable to afford health insurance without the federal subsidies.
In their presentations to the Supreme Court both sides offered arguments that sound far-fetched to a non-lawyer’s ears.
The Obama administration contended that the phrase “established by the state” is a “statutory term of art” that includes the federal exchanges. The plaintiffs said meanwhile that the language was used as a means of pressuring states to set up their own exchanges. But there’s no evidence for this after-the-fact theory in the congressional debate over the bill. Obama always acknowledged that some states would not establish their own exchanges; it defies logic to believe that he would have punished those who bought insurance on the federal exchange by denying them subsidies.
According to law professor Abbe Gluck of Yale, the mundane truth is that the ACA is “a very badly drafted statute.” Gluck supports continuance of the subsidies for customers of the federal exchange, writing, “But although the statute is sloppy, I think its meaning is plain.”
Even if the court upholds the federal subsidies, the ACA is not out of the woods.
This year taxpayers are required for the first time to stipulate on their returns that they have health insurance. Those who don’t are required to pay a penalty: $95 or 1 percent of their income, whichever is greater.
Hundreds of thousands of taxpayers who received federal subsidies for their health insurance will have to refund money to the government because their income increased after the subsidies were calculated or for other reasons such as a change in marital status. According to estimates by the Kaiser Family Foundation, the average bill for those taxpayers will be almost $800 more than they expected.
Many experts say that the complex rules for calculating subsidies should be simplified. Better efficiency would also help. Thousands of taxpayers who tried to recalculate their insurance subsidies online were stymied by technical problems, recalling the disastrous rollout of the federal website in 2013.
Whatever Obamacare’s deficiencies, it has accomplished its main objective of significantly reducing the ranks of the medically uninsured. The Department of Health and Human Services (HHS) said in a March report that the number of Americans without health insurance fell 16.5 million in the past five years, a decline of 35 percent.
More than half the new enrollees were signed up for Medicaid, the federal-state program providing coverage for the poor and disabled, and the related Children’s Health Insurance Program. The Kaiser Family Foundation cited government data showing that the number of recipients on these programs increased by 8.7 million in a single year, from the summer of 2013 to the summer of 2014.
The good news in all this is that more Americans have health insurance than ever before. The less-good news is that nearly 12 percent or roughly 38 million people still lack coverage — and that doesn’t include 11 million unauthorized immigrants ineligible for coverage by the ACA because they are not U.S. citizens. There are many more persons without health insurance in the United States than in other industrialized democracies, in most of which health care is considered a right.
Some other changes influenced by the ACA are harder to quantify. An insurance company executive knowledgeable about the health care system anonymously told SNCJ that Obamacare has contributed mightily to hospital efficiencies and to moving medical care toward payments based on the quality and value of care rather than volume of services. This is one of the president’s goals, advocated by many health policy experts. Congress, in a rare bipartisan action, also recently went in this direction with a revised formula for paying doctors under Medicare.
The Affordable Care Act is often mentioned in the same breath with two historic laws that improved the well-being of Americans: the Social Security Act of 1935 that was a crowning achievement of President Franklin D. Roosevelt’s New Deal and Medicare in 1965, one of President Lyndon B. Johnson’s most significant accomplishments. Unlike these earlier milestones, however, Obamacare has never enjoyed majority public backing. A Gallup survey this month found that 50 percent of Americans disapprove of the ACA compared to 44 percent who support it.
Public disapproval of Obamacare reflects its partisan origins. Social Security and Medicare passed Congress with hefty bipartisan majorities, but the Affordable Care Act did not attract a single Republican vote in either house of Congress.
Blame for this partisanship is in the eye of the beholder. Republicans say that Barack Obama as president did not practice the bipartisanship he preached as a candidate and also complain that Democratic congressional leaders refused to incorporate any ideas from GOP members in the legislation. Democrats counter that Republicans were adamantly opposed to health care reform from the outset and have mostly used the ACA as a political cudgel against Obama.
Take your pick in the blame game, but it’s clear that excessive partisanship has damaged health care reform. Congress, for instance, could if it chose end the dispute about federal subsidies raised in King v. Burwell with a one-line amendment to the ACA. Congress could also simplify the perplexing tax calculations required for people receiving subsidies. Neither change is in sight.
Instead, most Republicans continue to campaign against the ACA and call for repeal of the law. Most Democrats defend the law in its entirety and have shown no inclination for improving it.
Whether the Affordable Care Act survives will depend first on the Supreme Court and ultimately on the voters. A ruling for the plaintiffs in King v. Burwell would be an enormous setback for Obamacare, reducing the rolls of the insured and probably driving up insurance costs for everyone.
Whatever the high court decides, the 2016 election could determine the future of the Affordable Care Act. If Hillary Clinton (or another Democrat) wins, the law would be safe for another four years and probably become a permanent fixture of the health care system. But if Republicans capture the White House and hold the Congress, Obamacare could be replaced by an alternative that substitutes tax credits for subsidies and abolishes the requirement that all have health insurance.
Five years after it came into being, the battle over the Affordable Care Act goes on.
-- By Lou Cannon
This year’s statehouse elections offer opportunities for both Democrats and Republicans to shift majority control of legislative chambers, according to Tim Storey of the National Conference of State Legislatures. Democrats are eyeing Republican-controlled senates in Colorado, Maine, Nevada, New Hampshire, New York, Washington and West Virginia, and GOP-led houses in Iowa, Minnesota, New Hampshire and New Mexico. Republicans are targeting Democrat-led senates in Iowa and Minnesota, and Democrat-controlled houses in Colorado, Kentucky, Maine and Washington.
Source: Tim Storey of National Conference of State Legislatures
States with chambers Democrats targeting in 2016: Colorado*, Iowa*, Maine*, Minnesota*, Nevada, New Hampshire, New Mexico, New York, Washington, West Virginia
States with chambers Republicans targeting: Colorado*, Iowa*, Kentucky, Maine*, Minnesota*