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No Paid Family Leave or Lowering Drug Costs In SotS – What’s It Mean?

January 30, 2024

Missing from the governor’s State of the State (SotS) address Wednesday evening were her calls for paid family leave and prescription drug affordability – both items she wanted to see get done before the end of last year.

Gov. Gretchen Whitmer’s August 2023 “What’s Next?” Address highlighted proposals she wanted moved in Lansing during the first year of a Democratic-led House, Senate and executive office in 40 years.

The “clean energy” by 2040 proposal and the elimination of numerous state abortion regulations were both endorsed by the governor in her August speech and passed before mid-November. Whitmer’s priorities for paid family leave and a prescription drug affordability board were left behind, and didn’t make her vision for 2024 either.

Instead, she prioritized things like a $5,000 debut “Caring for MI Family Tax Credit” for a family’s caregiver expenses, two years of tuition free community college for high school graduates and a revamped pot of business incentive tools.

For economic development, Whitmer wants more renaissance zones – where businesses and entrepreneurs are awarded a period of tax exemptions – and a new “Innovation Fund” to deploy state investment into “high-growth startups” projected to boost significant career attraction and retention in the state.

Whitmer didn’t say anything about a prescription drug affordability board (PDAB) consisting of governor appointees responsible for reviewing – and possibly setting a state cap – on drugs with distinctly high costs. Also, she didn’t mention her uncompleted goal to set a $50 cap on insulin expenses, which she advocated for in her 2022 SotS address.

The absence of a shout out for completing 15 weeks of paid family leave – with the present-day proposal having a state-run “family leave optimal coverage fund” paid for by payroll contributions – could make pundits believe the idea is in uncertain waters.

Michigan Strategic Fund President Quentin Messer Jr. argued that paid family leave shouldn’t be ruled out and invited legislative discussion on the idea.

“I am confident that when you make it easier for men and women to work and not worry about their children or elder care, you’re going to have a much more engaged workforce. You’re going to have people who are going to be able to fully focus and be incredibly more productive,” Messer told MIRS. “People will come together, work out the details…and that’s just the Democratic process.”

Meanwhile, MoReno Taylor II – the executive director of the Fund MI Future coalition – said the idea that the governor’s proposed caregiver tax credit indicates that paid leave couldn’t be pulled off is a “very astute analysis.”

“It also makes me wonder if because of the damage done to some residents because of the no fault reform, maybe this (is) also a way to kind of soften that blow, as well,” Taylor told MIRS, referencing the 45 percent reduction in insurer-provided reimbursements for the long-term care of catastrophic car crash survivors – that was part of the 2019 auto insurance reform.

Taylor doesn’t believe the governor needs to beg – “in any way, shape or form” – for the business community’s forgiveness, but views the lack of paid family leave, and the promotion of economic development,  as “an olive branch” in her speech.

“I look at it as business as usual,” Taylor said. “The fact that the governor has already mentioned she’s not going to consider tax changes to the corporate income tax rate or anything like that . . . despite knowing how much money we need to raise to equitably fund education and invest in communities and residents . . .I think they’re pretty much on the same page, in lockstep, at this point.”

Taylor’s coalition would like to see legislators explore increasing the state’s corporate income tax in order to secure more money for public services.

While looking at leaks of the governor’s remarks earlier Wednesday, Taylor said he was reminded of something his mom used to often say – “sometimes you have to rob Peter to pay Paul.” Taylor now questions who will be the losers bankrolling the larger inventory of economic incentives and tax exemptions.

On the other side of the discussion, Vice President Mike Johnston of Government Affairs for the Michigan Manufacturers Association (MMA) described his organization as being “very optimistic” about the expected economic development suggestions.

Johnston’s group was opposed to paid family leave and anything that would constrain the marketplace for prescription drugs. When asked if those two proposals not being featured Wednesday night suggest that they’re on life support, Johnston said “We’re focused on our agenda and we would hope those things are not debated.”

Johnston said the MMA is encouraged that Wednesday marked there being more focus and concentration on growing the state’s manufacturing economy.

But What About PDAB And Drug Costs?

For Sen. Mark Huizenga (R-Walker), the minority vice chair of the Senate Appropriations Subcommittee on Labor and Economic Development, the lack of PDAM commentary in Wednesday night’s address shows, based on his guess, “most people know that it doesn’t work.”

Huizenga did not vote on the PDAB bills when they were approved, on a party-line vote, in the Senate because of conflict of interest concerns. Outside of the Legislature, Huizenga has worked as a healthcare consultant involved with advising the development of new biologic drugs and their delivery cycle.

“Rent controls, price controls . . . they are things that sound good, but that means that the government is going to subsidize it,” Huizenga said. “Picking and choosing drugs and saying ‘we’re only going to charge this much for it . . .’ The reality is, what’s that going to do for Medicare patients? Those are fixed prices that the (federal Centers for Medicare and Medicaid Services) makes a determination on. If you look at the other states that have tried to develop PDAB models, they haven’t been successful.”

Overall, he said it’s a really strong talking point that sounds great ideologically, “but we have to be able to operationalize that and make it work functionally.”

On the other hand, Rep. Carrie A. Rheingans (D-Ann Arbor) views the SotS address as being a relatively short speech by design, and is hopeful that things like her own legislation to prohibit copay “accumulators” – restricting copay assistance from drug manufacturers to patients – can be worked on this year, as well as the PDAB bills and proposed insulin price caps.

She also argues that the idea that prescription drug legislation limits the desire from pharmaceutical companies to come to Michigan is “a false kind of argument” as the House has already approved the governor-endorsed research and development (R&D) tax credit.


Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter

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