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Business-related columns and commentary
11:38 AM
Taking pot shots at angels: Federal regulation could kill investing

By Tom Still
George Bernard Shaw, the Irish author, wrote that "in heaven an angel is nobody in particular."
Sadly, the same appears to be true in Congress these days.
In the rush to punish Wall Street for sins real and imagined, Capitol Hill may also precipitate a fall from grace for a class of Main Street financiers essential to America's innovation economy: angel investors.
The financial sector reform bill being pushed by U.S. Sen. Christopher Dodd, D-Conn., takes direct aim at the wings of angel investors for reasons that defy explanation. If passed, this "Washington-knows-best" attempt to regulate some of the nation's most productive risk-takers could destroy the entrepreneurial economy.
Angel investors are often entrepreneurs who hit a home run in their own start-up businesses and who want to reinvest in other young companies. Angel investors are generally strong business executives with an eye for innovation, and they're not afraid to take a calculated gamble on companies that are too new to get financing from venture capitalists or too risky for banks.
They usually invest close to home and most often as individuals or within a family, but increasingly angels invest as members of angel networks or angel funds that offer some safety in numbers and more partners to screen potential deals.
In Wisconsin, angel investors have been in the vanguard of fostering the state's early stage economy. Five years ago, there were only a handful of angel networks in Wisconsin. Today, there are nearly two-dozen networks and funds -- and they're not shy about rolling the dice on Wisconsin companies in sectors such as biotechnology, information technology, medical device, advanced manufacturing and "cleantech."
In 2009, when most economic indicators were headed south, angel investors in Wisconsin actually took part in more deals and invested more money than in any previous year. Preliminary data from the Wisconsin Angel Network shows that while venture capital investing was down in 2009, as it was nationally, angel investing here increased.
But if Dodd has his way, these individualistic investors will be regulated out of existence.
The Restoring American Financial Stability Act, of which Dodd is the chief sponsor, would tighten regulation of the nation's financial system in ways large and small. It contains three provisions that would effectively kill angel investing in the United States:
* It would require start-up companies to register with the federal Securities and Exchange Commission, and wait at least 120 days for SEC review, before trying to raise money. Currently, fledgling companies can raise money from accredited investors without regulatory approval. Four months is an eternity in the life of a start-up company, and most would die in the vine before they ever get a chance to grow.
* It would redefine who is an angel. Accredited investors, who are people deemed wealthy enough to invest in start-ups, would be limited to those individuals with more than $2.5 million in assets (up from $1 million today) or a personal income of $450,000 per year (up from $250,000). This will dramatically decrease the supply of angels, which the University of New Hampshire's Center for Venture Research estimated at 259,000 in 2009. Those angels invested $17.6 billion in about 57,000 deals.
* It would subject investors and start-up companies to state-by-state rules versus a single set of SEC standards. Along with the new SEC filing requirement, that would add red tape, time and cost to the investment process.
In its frenzy to clamp down on Wall Street, Congress is threatening an investment community that fosters innovation, mentors young companies and generally cares about how the economy is faring where they live. Angels have helped to create some of today's biggest companies -- Apple, Amazon, Google and many more -- usually without putting anyone's money at risk other than their own.
Angel investing isn't perfect; the average return on investment proves that. But it's precisely the kind of bottom-up, largely self-regulated economic activity the nation needs as it struggles to create new companies and jobs. Only those federal lawmakers intent on a top-down, command-and-control economy would think otherwise.
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1:46 PM
Wisconsin's 'race to the top' in education will always begin at home

By Tom Still
Wisconsin's bid for federal "race to the top" education grants got a mediocre C-minus from the reviewers at the U.S. Department of Education, who said the state's application fell short in some crucial ways. Most notably, the feds said, Wisconsin needed more robust plans for improving student achievement as well as the effectiveness of teachers.
Wisconsin will get a chance to score higher in the second round of the federal competition, but it will take lots of homework to whip the state's application into shape.
The idea of federal challenge grants to reform elementary and secondary education is commendable, given the importance of education to a secure, prosperous nation, but it's important to note Washington has historically played a limited role in how states and communities run their schools. In fact, well over 90 percent of all funding for local schools comes from the states and communities themselves -- and Wisconsin is typically ranked among the bottom five states in receiving federal aid.
In short, the "race to the top" in Wisconsin will likely be won or lost on the strength of decisions made here -- by parents, teachers, school officials, policymakers and students.
That begins with a commitment to excellence and recognition that Wisconsin needs a better educated workforce to compete in the global economy. Let's take science and technology education as an example.
A generation ago, the United States was third per capita in the world in producing engineers -- a key indicator of science and technology dominance. Today, the nation is 17th in the world. In part, that's because emerging nations are catching up. But it's also because fewer students are getting turned on to science, technology, engineering and math at an early age.
Wisconsin doesn't need a federal grant to know what works in that arena. Many school districts are revising their science and technology curricula with the help of proven private strategies such as Project Lead the Way, Science Olympiad and First Robotics. These programs are helping entire districts, schools or individual teachers do a better job of exciting students at a critical age.
Such innovation comes at a critical time -- and amid signs of some progress. National math scores released last October have risen 20 points for eighth graders and 27 points for fourth graders since 1990, according to 2009 test results. That means fourth graders knew about two-and-a-half years' more math than 1990 fourth graders. But in the most recent period, from 2007 to 2009, math scores failed to rise much, according to the National Center for Education Statistics.
There's pretty good evidence about what works. High-quality early childhood programs help many kids from falling behind. Intensive efforts in the ninth grade -- sometimes called education's "Bermuda Triangle" -- work when core classes such as math are made more challenging. Career academies and other efforts to link employers into the classroom also work, especially with science and math programs.
While Wisconsin students perform ahead of the national average in many ways, segments of the state's K-12 population are failing to gain the science, technology, engineering and math skills they need to become successful workers in a global economy. Many students, particularly young women, lose interest in science and math by the time they've completed middle school. Too many students are not exposed to careers that may not require a four-year college degree -- but which require a strong working knowledge of science and math.
Some people mistakenly believe there are only a few science, technology, engineering and math jobs out there. The state Department of Workforce Development has estimated that one in 10 Wisconsin jobs is a so-called "STEM" job. It has also predicted that STEM jobs will be among the fastest-growing occupations in the state.
The "race to the top" for education excellence in Wisconsin begins at home, no matter what transpires over time with the federal grant. The real prize is a stronger economy driven by a well-educated workforce.
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12:41 PM
Economic development follows the whistle of passenger rail

By Tom Still
The Marquette interchange in Milwaukee cost more than $800 million to rebuild between 2004 and 2008, and few people seriously questioned whether that "subsidy" of Wisconsin's highway transportation system would pay for itself many times over.
Milwaukee's Zoo interchange, the mix-master for I-94, I-894 and Highway 45, could cost $2.3 billion to rebuild once work begins in 2012. Again, most people familiar with the volume of statewide commerce passing through that intersection can agree reconstruction is a much-needed investment.
But suggest a relatively tiny $7.5 million per year subsidy for a high-speed rail line that could redefine Wisconsin's connections to Chicago and the Twin Cities, and the same folks who barely blink at billion-dollar concrete projects turn into raging fiscal hawks.
That penny-wise, pound-foolish approach should be questioned. Wisconsin has a chance to build a high-speed rail line, with hard-to-get federal money, that will change the economic destiny of its largest cities and many of its smallest communities. Yet this promising track for economic development is being opposed by those who claim a small state subsidy will somehow break the bank.
Before the political debate gets too overwrought, let's examine the economic reasons why Wisconsin should embrace building a Milwaukee-to-Madison rail line and improving the existing Milwaukee-to-Chicago connection.
The Obama administration announced Jan. 28 that 31 states would share in about $8 billion in stimulus dollars targeted for high-speed rail, with the biggest chunks ($5.5 billion) marked for projects in four states: California, Florida, Illinois and Wisconsin. Unlike most states, Wisconsin received the full amount of its grant request, $810 million for high-speed rail, in part because of the quality of the state's plan and its cohesiveness with neighboring states.
As Tom Hefty and John Torinus Jr. noted in a recent Wisconsin Interest column, Wisconsin ranks 48th among the 50 states in overall federal spending on a per capita basis. While Wisconsin sends $45 million in taxes to Washington each year, only 86 cents of each $1 is returned here. The rail money is an opportunity to change that dismal dynamic.
In other American cities and regions with passenger rail, economic growth has taken place within a short distance of the line and its stations. One recent study noted there are more than 100 "transit-oriented developments" in the United States, mostly within walking distance of passenger rail stations.
In communities such as Brookfield, Oconomowoc and Watertown, which are proposed stops along the Milwaukee-to-Madison route, public and private leaders are hustling to persuade planners to build stations in their towns. Why? They expect a mix of commercial, retail and residential development to follow the trains like a caboose.
Studies in states such as Texas, California, Florida and Ohio have shown passenger rail can help lure tech-based businesses and investment.
That's a sector where Wisconsin is poised to compete. The proposed line to the Twin Cities would tie together the major hubs of the "I-Q Corridor," which extends from Chicago through Wisconsin and into Minnesota. A distance of only 400 miles separates two dynamos of the Midwest economy -- Chicago and Minneapolis/St. Paul. That's a shorter distance than what separates San Diego from the "Silicon Valley" in California. Within the region are some of the nation's leading research universities, federal labs, financial centers, tech companies and talent pools. High-speed rail will help bring them closer together.
It will also help rural Wisconsin, Iowa and Minnesota. There are 15 rural counties with nearly 550,000 people with 50 miles of La Crosse. These people would gain access to Chicago, Milwaukee, Madison, and the Twin Cities with a stop in La Crosse.
The Milwaukee-to-Madison route won't start running until 2013, planners say. It will take that long to rebuild tracks, renovate or build stations, roll out satellite navigation technology to prevent collisions and much more.
In other words, there's ample time to manage operating subsidies, which could appear much smaller in the scheme of things if gasoline prices continue to rise due to global demand for oil.
Virtually every form of transportation in the United States is subsidized to one degree or another, but all offer a return on investment. High-speed rail has the potential to pay for itself in Wisconsin for generations to come. Let's not miss the train.
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2:54 PM
In most ways, the national health-care debate is only beginning

By Tom Still
The passage of the health-care bill in Congress marked the end of one political debate and the start of a different struggle that will play out in the fall elections, in court challenges, in state legislatures and through continuing clashes between the nation's largest interest groups.
As a result, what this bill means to businesses, individuals and the health-care industry itself is still largely up for grabs, depending on how the bill is enacted over time.
Under the bill, most Americans will be required -- beginning in 2013 -- to have health insurance or pay a fine. Larger employers will be required to provide coverage or risk financial penalties. Lifetime coverage limits for individuals covered by insurance plans will be banned, and insurers will be barred from denying coverage based on gender or pre-existing conditions.
The bill also allows young people to stay on their parents' health plans until they are 26, reduces federal support for private Medical Advantage plans but spends more on Medicare prescription drug benefits, and provides small businesses with tax credits if they offer insurance plans. Those are among the provisions that take effect first.
But what worries opponents is the bill's long-term effect on insurance premiums, the specter of more deficit spending, unintended consequences within the practice of medicine itself and the extension of the federal "nanny state."
It's the latter point that is likely to be challenged specifically in court. Attorneys general in about a dozen states have already said they will file lawsuits to test the constitutionality of the bill's requirement that individuals must purchase insurance. They contend Congress does not have the power to impose such as mandate -- or to require states to enact the federal plan.
The fall elections and the campaign for control of Congress is another battleground. Republicans will portray Democrats who voted for the bill as big spenders and advocates of big government; Democrats will paint Republicans as naysayers who failed to come up with a better idea for fixing health care.
The lines are drawn between major interest groups, as well. The president of the United States Chamber of Commerce has pledged to oppose the bill "through all available avenues -- regulatory, legislative, legal and political," and the National Federation of Independent Business has called it "a tax bill wrapped up in health-care paper."
But other business groups range from muted to supportive. Hospitals, the American Medical Association and trade groups representing the biotechnology and pharmaceutical industries have found reasons to cheer many of the bill's provisions, which they think will cover more Americans, encourage preventive care over expensive emergency room care, foster more research and make life-saving drugs more available.
For example, the Biotechnology Industry Organization applauded the bill's creation of a regulatory pathway for the approval of "biosimilars," which are generic biotech drugs that are substantially similar to the original but not precisely so. The bill helps to protect the intellectual rights of inventors while making such drugs safely available in time.
And while the largest trade group representing health insurance companies strongly opposed the plan, some industry analysts believe those insurance companies that survive may actually prosper under the new model. Why? More people will be covered.
A group to watch in Round 2 of the health-care debate is owners of small businesses, who create a disproportionate amount of the jobs in the United States and whose survival can be threatened by regulations that add costs and force them to think twice about expanding.
In the WisBusiness.com Tech Leaders Survey released in January, tech company executives across Wisconsin said they were worried that health-care costs will get worse instead of better under a reform bill. Now that the bill is passed, those same executives and others like them across the United States will ask how costs will be controlled -- as President Obama and the Democrats contend -- and not increase over time.
Passage of one bill, however massive and far-reaching, won't end the debate over health care quality, cost and access in America. The debate will quickly move from Congress to voters, business owners and others with a direct stake in the long-term results. And in a representative democracy, that's as it should be.
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11:20 AM
Business Plan Contest provides snapshot of entrepreneurism in Wisconsin

By Tom Still
If you want to know where entrepreneurs smell opportunities, take a look at this year's list of semi-finalists in the Wisconsin Governor's Business Plan Contest.
The 52 semi-finalists in this year's contest, who were selected from a competitive field of 284 entries, are a microcosm of innovation trends reshaping the economy. Their ideas, which range from the deceptively simple "Why didn't I think of that?" to complex marriages of different sciences, demonstrate that entrepreneurs have a knack for moving to where the action is in the marketplace.
The contest's broad categories -- advanced manufacturing, business services, information technology and life sciences -- haven't changed since the BPC was launched in 2004 as the nation's first statewide, tech-based business plan contest. But the trends within those categories have shifted over time to reflect changes in major sectors.
For example, the contest's early years generated a number of life science entries in the diagnostics and "toolkit" arenas. That was no surprise: Wisconsin's biotech industry was known for producing analytics and products for other researchers. It's the modern equivalent of selling picks and shovels to California gold miners in 1849.
Over time, however, the life sciences category attracted more ideas for drug discovery and medical devices as the state's health sciences economy matured. The last two years have produced more entries involving bioproducts and uses of biotechnology outside of medicine, such as food production and handling.
Eight of this year's semi-finalists have tech-based ideas related to food, including converting waste to energy, producing "no-cook" natural foods, processing food-grade soybeans for foreign markets, raising cool-water fish in a more sustainable way; an antimicrobial coating for metal fixtures such as door knobs; and using natural antimicrobial proteins to control pathogens that can harm plants and crops.
Energy generation and management and other "cleantech" ideas were barely on the list in the contest's first few years but are a recurring theme today as society struggles to better manage its use of energy, water and other resources.
Spread among all four categories, about 15 cleantech ideas include: a renewable energy system for small businesses and mid-sized industries; a water-saving flow-control valve for showers and faucets; a portable lighting kit designed for the video industry; a process for the green "deconstruction" of buildings; an anaerobic digester that generates biogas from waste in one-fourth the average time; less expensive geothermal heat pumps; a capacitor for high-power applications that use nanotechnology to increase power and reduce waste; a process to recover metals from fluid waste streams; and an intelligent, programmable power strip.
Other cleantech ideas include a "solar window" that can power day-lighting and solar-heating system for indoor pools; a process to convert corn oil syrup from ethanol plants into biodiesel; a free online marketing and networking service that connects green businesses and shoppers; and a product that can restore many failed septic systems.
Wisconsin is still a leading manufacturing state, and many ideas reflect the fact that tomorrow's manufactured products may be created or improved with the help of technology. From papermaking to wheelchairs, from snow-throwers to advances in micro-tool cutting performance, the list includes entries that could transform how things are made.
Sometimes lost in Wisconsin's life science prominence is the fact that software, internet applications and information technology networks are an emerging strength. Some of those ideas include virtual network infrastructure management for small businesses; software that can help manage health-care costs or quality, electronic medical records; and ways for students, businesses and consumers to get -- and manage -- better information.
And some ideas make you wonder why someone else didn't do it first, such as a "live" school yearbook that integrates social media; a game-based way to teach boys about history; and a device that helps bicyclists see what's behind them without losing sight of what's ahead.
This year's semi-finalist plans were entered by entrepreneurs from some of Wisconsin's largest cities and smallest communities. Also, there are a handful of ideas from entrepreneurs outside Wisconsin who have signaled they want to move or expand here, which is a testimony to the state's growing entrepreneurial reputation.
The contest won't end until winners are selected in June, but the semi-finalists already provide a sense of market trends that could lead to new products and processes -- as well as incubators for the next generation of jobs.
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10:55 PM
Debate over Clean Energy Act rests on how far Wisconsin should go on its own

By Tom Still
Steve Pintar grew up in Milwaukee and earned an engineering degree from the UW-Madison. He also led the design teams for the 2008 Ford Focus and, most recently, the 2011 Ford Fiesta, another "global" vehicle due for release this spring.
One might think the guy who is redefining Ford's tough-truck image through fuel-miser cars with big-car features would applaud state efforts -- such as those proposed in Wisconsin -- to set tougher emissions standards than those required by the federal Environmental Protection Agency.
Not so. While Pintar gives states credit for pushing the envelope on emissions, alternative fuels and other climate-change strategies tied to transportation, he thinks a hodge-podge of state standards can slow innovation among carmakers and make life more complicated for dealers, customers and cross-border economies.
"Obviously, we work to meet all the California requirements and we have a product line right now that does. But my personal opinion is, after having been on the product development side, that when a state has its own regulations, the system is less efficient in total," Pintar said. "For the total (auto) industry, the maximum technology deployment, customer acceptance and industry efficiencies will be best with better regulatory alignment."
Pintar, who toured Wisconsin this month to promote Fiesta's release, is not alone in his belief that states can overreach when they set standards that move beyond federal rules. Business and trade groups in Wisconsin have lined up to oppose the transportation goals from the Governor's Task Force on Global Warming for that very reason.
The task force report, largely embodied in the Clean Energy Jobs Act now being debated in the Wisconsin Legislature, would tie the state's vehicle emissions standards to those adopted by California. The EPA itself has refused to accept California's tougher standards, which critics say have created another layer of state bureaucracy and costs.
The vehicle emissions standards are not the only parts of the bill that could set Wisconsin apart -- in ways supporters insist will better position the state as a haven for "green" economic growth, and which opponents fear will cost thousands of jobs.
The bill seeks to dramatically reduce greenhouse gas (largely carbon dioxide) emissions in Wisconsin over time by a combination of strategies. On the electricity generation side, renewable energy sources would need to reach 10 percent by 2013, 20 percent by 2020 and 25 percent by 2025. While some state utilities have hit the 10 percent mark already, most are still well short of that mark, which current law would not require until 2015.
The bill anticipates new federal limits on carbon emissions due to global climate change and seeks to give Wisconsin a "green economy" edge over other states.
"When you see a train coming, you need to get ready," said Roy Thilly, co-chair of the task force and president of WPPI Energy in Sun Prairie. "The scientific consensus (around global climate change) is really quite strong, and it would be imprudent not to act based on that science. In fact, there are serious long-term costs for Wisconsin if we fail to act."
Speaking to a recent meeting of Competitive Wisconsin Inc., Thilly said conservation always comes first but Wisconsin must pursue other strategies to reduce its "carbon footprint" in anticipation of new federal standards. Absent steps now, he argued, Wisconsin won't be able to compete with other states and nations for green jobs.
Opponents claim the bill won't create jobs -- but will instead cost Wisconsin jobs because it puts the state too far ahead of the pack, creates new burdens for business and increases costs for everyone from electricity users to owners of cars and other vehicles.
"I don't think I have ever seen a bill that has a broader reach to all the citizens of this state," said James Buchen, vice president of Wisconsin Manufacturers and Commerce. "Increasing the cost of electricity, increasing the cost of gasoline and taking $1,000 per year out of the pockets of each Wisconsin citizen to pay for this (legislation) will not create jobs."
Scores of business groups such as WMC insist the market, combined with reasonable federal standards, will prove far more effective in the long run. With the recession only now beginning to ease, they worry that stand-alone rules will harm the state's competitiveness.
"I don't think there's any benefit to get too far out ahead," Buchen told the Competitive Wisconsin board of directors.
Whether lawmakers act on the bill remains to be seen, but Gov. Jim Doyle has already signaled he's ready to talk about changes. Because Wisconsin is so dependent on coal-fired electricity plants, the state doesn't want to get caught flat-footed if federal standards demand a sudden conversion. Likewise, it doesn't want to stick out like a sore thumb among other states.
"California has caused people to push harder, and that's good," said Ford's Pintar, "but technology can only be shoved so far, so fast. More alignment is a better way."
Finding an energy-use "alignment" that better positions Wisconsin for the long run without harming competitiveness now won't be easy, but it will be necessary.
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10:57 AM
Nuclear power must be part of nation's alternative energy future

By Tom Still
If you were surprised to learn President Obama supports building the first nuclear power plant in the United States in nearly three decades, you may not have been listening closely during his run for the White House.
"Nuclear power represents more than 70 percent of our non-carbon generated electricity," Obama said during his 2008 campaign. "It is unlikely that we can meet our aggressive climate goals if we eliminate nuclear power as an option."
Of course, Candidate Obama said a lot of things that may or may not happen on President Obama's watch. That's politics. But he has repeatedly backed nuclear power as a way to ease American dependence on foreign oil and to curb use of other fossil fuels blamed for global warming.
Now, if only more members of Obama's party would come around to the same conclusion.
Obama will support a loan guarantee to build two Southern Co. reactors in Burke, Ga., where site preparations are under way but construction is still years off. The Southern Co. has applied to the Nuclear Regulatory Commission for a construction and operating license for the plant, one of 13 such applications under NRC review. It will likely take two years before the first is approved.
Even with that lengthy horizon, federal money to guarantee loans must be budgeted now, and that's precisely what Obama wants to do. In his Jan. 27 State of the Union speech, Obama called for a "new generation of clean, nuclear plants," and the Georgia reactors would fit that mold.
Two of the nation's 104 nuclear reactors are located in Wisconsin -- but they will be the last unless the state lifts what amounts to a moratorium on building new plants.
Wisconsin's Three Mile Island-era moratorium no longer makes sense. If you believe global climate change is the single largest environmental threat to the planet, you should embrace energy sources that don't emit greenhouse gases. If you believe there will be millions of new plug-in hybrid vehicles, all getting recharged while idle, you should want power sources that can reliably handle the load without generating more carbon.
Solar and wind power will be a part of the answer, but those alternatives can't measure up to nuclear energy when it comes to steady and massive production of electricity. Today, those alternatives account for about 2 percent of electricity generation.
Language in Wisconsin's proposed Clean Energy Jobs Act could relax the state's ban on building nuclear generation. That same act also includes a controversial mandate that 25 percent of Wisconsin's energy come from renewable power sources by 2025 -- a goal that will be difficult to meet without more nuclear power.
The problem with the moratorium language is that it appears to defy the interstate commerce clause of the U.S. Constitution, as well as the laws of physics. The bill decrees that any new nuclear plant built in Wisconsin must serve Wisconsin consumers only. That's not physically possible because of how electricity flows from a power plant through transmission lines. Electricity is dispatched regionally across the Midwest according to needs as well as high-voltage ebbs and flows across the power grid.
Supporters of Wisconsin's nuclear moratorium have moved from arguing that nuclear power isn't safe (coal kills thousands of people each year around the world, while the U.S. nuclear industry has yet to kill anyone) to insisting it's too costly. Since 2005, according to the Wisconsin Public Research Group, the projected cost of building a reactor has tripled. But other sources say the cost per kilowatt for nuclear energy is falling, which may explain why the NRC is reviewing so many applications to build reactors.
There's nothing to lose by ending Wisconsin's 26-year-old moratorium, and it should be done without strings that challenge the constitution and science. Safe, reliable nuclear power plants can be built today, and they can help reduce greenhouse gases while curbing reliance on carbon-based fuels.
Lifting the moratorium doesn't mean Wisconsin will be build a new plant tomorrow or even within this decade. But removing the ban could give the state's ambitious alternative energy goals a fighting chance of actually being met.
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4:54 PM
Technology has made it easier to donate after a disaster -- and more efficient

By Tom Still
Record-breaking numbers of people have text-messaged $10 pledges to the American Red Cross to help the relief effort in Haiti. Companies and other large groups have coordinated sophisticated deliveries of cash, goods, equipment and even volunteers through the Internet, also to help that earthquake-ravaged nation.
In ways large and small, technology is taking some of the disaster out of disaster relief.
Anyone who has watched a National Football League playoff game since a series of Jan. 12 earthquakes devastated Haiti has seen the "Text 'Haiti' to 90999" program of the Red Cross, which has worked with mGive.com and a dozen mobile carriers to raise tens of millions of dollars.
That's an example of how technology has made it easier for small donors to give -- and people have responded. Another avenue with strong Wisconsin ties is a prime example of how technology has also made it more efficient for larger companies and groups to give, and for recipients to effectively make use of a wide range of donations.
The Aidmatrix Foundation ( http://aidmatrix.org) has become something of an eBay for the charitable and disaster-relief worlds. It uses the power of the Internet to get the right aid to the right people at the right time -- mainly by connecting willing donors with recipients and, sometimes more important, the right transportation channels.
Led by former Wisconsin Gov. Scott McCallum and powered in part by servers managed by Madison-based Supranet, Aidmatrix works with more than 35,000 partners each year to mobilize $1.5 billion in donations. Its supply-chain management system offers a virtual one-stop shop for donors and end users, whether those groups are involved in disasters such as the Haiti earthquake or the everyday crisis of feeding hungry people through America's food pantries.
McCallum, who joined Aidmatrix as its chief executive officer five years ago, said the system has been busily connecting donated resources to Haiti, ranging from large supplies of water to food, fuel and medical supplies. It is working directly with the U.S. military's Southern Command, which is providing military support capabilities to civil authorities to help stabilize and improve the situation in Haiti.
Last week, the U.S. Agency for International Development announced it will use Aidmatrix's network. Aidmatrix is also working with Project HOPE, the International Society of Transport Aircraft Trading, the American Logistics Aid Network and others to post needs, accept donation offers and to help match those offers to needs. As McCallum explained, that's done without Aidmatrix physically handling goods or equipment.
"We never take control of any product, nor do we make the decision where things go," he said. "We don't control the system. We help it function more efficiently through technology and the marketplace itself."
For example, Aidmatrix can pinpoint supplies that may be located in a warehouse in Spain, which can be directed to Haiti through volunteer transport services that may come from one of 8,000 providers. Emergency care workers and government or non-profit "allocators" at a disaster site decide what donations they need most.
"It might be a case of, 'Please send more water; hold the clothing and Teddy Bears for now,' and that message can be relayed throughout our system," McCallum said. "It helps others fill their most urgent priorities. If nobody needs a certain product, it never moves."
But even hard-to-move donations sometimes find a home. McCallum noted that a donation of carpet remnants from California eventually found its way to Iowa following flooding there in 2008.
Aidmatrix is the network for virtually handling most donated food in the United States, all without owning a single warehouse or truck. America's Second Harvest, the United Nations Food Programme, the National Association of Free Clinics and First Book are among major partners.
It also works with 46 states and the U.S. Federal Emergency Management Administration, and the 50-person organization is competing to become the technology hub for food pantries in one of Europe's largest nations.
"My goal is pretty straightforward," McCallum said. "We want donated goods from across the world to move through our network to find a home. If we can do it better and faster through our partners, donors and recipients alike are winners."
It's a goal that could make a life-or-death difference in Haiti, or the next inevitable place where disaster might strike.
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2:27 PM
Attracting more venture capital is a priority for Wisconsin

By Tom Still
Wisconsin entrepreneurs and researchers do a world-class job of coming up with ideas that will transform health care, energy, manufacturing and other industries. Finding the investors who can move those ideas forward is too often the problem.
While Wisconsin's angel capital investments have climbed steadily, the state continues to lag in the next stage of private equity investments -- venture capital. These rounds of investment, which begin around $2 million and build upon smaller investments by individual "angels" or networks of such investors, can help turn a start-up into a thriving company.
Look for 2010 to be a year in which there will be more private and public efforts to build Wisconsin's venture capital supply.
At least three private funds that intend to invest in Wisconsin and the Upper Midwest are busily raising funds now. Two are funds with roots in Wisconsin; the third is a Midwest fund that targets health care and biotech investments. At the same time, large companies with strategic investment arms as well as foundations with investment funds are looking to invest in the Midwest.
An effort to build a 'fund of funds' similar to what is working in Indiana, Ohio and elsewhere is gaining momentum, thanks to public and private cooperation. Ohio established the $150 million Ohio Capital Fund several years ago to co-invest with private venture capital firms. The state requires that 75 percent of the Ohio Capital Fund's investments be in Ohio-based venture funds and that half of all money invested must be pumped into young Ohio companies.
That is unlikely to be the Wisconsin approach, in part because state leaders have been hesitant to invest any serious money in a venture fund -- beyond investments already made by the State of Wisconsin Investment Board. Over time, SWIB has allocated $200 million for venture investments out of a total portfolio exceeding $78 billion. All but $15 million of that $200 million has been invested over 10 years, largely through funds with Wisconsin ties, but with no requirements that investments take place in Wisconsin.
During last year's budget debate, a modest proposal to create and fund a Wisconsin Venture Network using money from higher securities fees was hollowed out when all but a fraction of the money was earmarked for the general budget.
In the long run, maybe the state's reluctance to get involved in venture investments is the right course. Privately run funds aren't subject to geographic investment requirements or unrealistic expectations that returns will somehow match the next election cycle.
One state program that has stimulated early stage investments is the Accelerate Wisconsin investor tax credits program. Since 2005, Wisconsin investors in "qualified" state companies have been able to receive a 25 percent state tax credit spread over two years. The program will essentially triple in size in 2011. But a number of companies need investors now, so the Legislature is looking to speed up the expansion by making at least $3 million in additional credits available this year.
Because of how the credits work -- it takes $4 in private investment to recoup every $1 in credits -- that could attract $12 million in venture and angel investment this year.
And groups such as the Wisconsin Technology Council, the Wisconsin Innovation Network and the Wisconsin Angel Network are providing formats for investors from Wisconsin, the Midwest and well beyond to learn what innovations the state's entrepreneurs can offer. More than 150 Wisconsin companies have posted executive summaries, which give potential investors a glimpse of start-up firms, online through the Wisconsin Angel Network. They represent a "farm team" of investable companies.
This is mainly a private sector issue, of course, and enlightened self-interest is a powerful tool. But more policymakers are coming to understand that without adequate angel and venture capital, Wisconsin's innovation economy won't grow fast enough to replace jobs lost to the recession and global competition.
"The reason people should care about venture capital is that there is a direct correlation between the amount of venture capital and a state's per capita personal income," said Lorrie Keating Heinemann, secretary of the state Department of Financial Institutions. Heinemann has been a champion for angel and venture investing in Wisconsin, including the "fund of funds" idea, which can better link the state into major investor syndicates.
As the election year unfolds, look for leading candidates for public office to weigh in with their ideas on how to make Wisconsin a more venture-friendly state. Wisconsin has a strong foundation of ideas, innovators and angel investors. The stage is set to attract and incent the venture industry.
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8:26 AM
How a non-profit firm's investment is keeping a for-profit company in Wisconsin

By Tom Still
Logistics Health Inc. needed to cash out a major early investor. Gundersen Lutheran wanted to diversify its portfolio and open doors to new markets, preferably by investing close to home.
The resulting match will strengthen the La Crosse area economy and provide an innovative example for other investment-minded health-care systems in Wisconsin. At a time when many emerging companies are scouring for investors, homegrown sources of capital are welcome news.
Gundersen Lutheran announced Dec. 30 it has become a minority owner of Logistics Health, a La Crosse-based contractor of health services that has grown from a dozen employees to 750 workers in less than a decade. It reportedly marked the first time Gundersen Lutheran has invested in something other than a traditional portfolio of stocks, bonds and other securities.
Dr. Jeff Thompson, chief executive officer of Gundersen Lutheran, said the deal will help the health-care system by providing above-market returns and creating pathways to provide services nationwide. It will also help La Crosse, he said, by keeping Logistics Health in town.
"So rather than making investments in other parts of the country ... we're taking some of our funds to invest in a local company," Thompson told the La Crosse Tribune.
Former Gov. Tommy Thompson (no relation to Gundersen Lutheran's Thompson) is president of Logistics Health and a former federal Health and Human Services secretary. He said the deal kept Logistics Health off the "auction block" by cashing out long-time investors who might have moved the company if not for a local buyout of their shares.
"The great thing about this deal is it keeps the company growing and it keeps it in La Crosse, where it's a big part of the economic and civic fabric," Thompson said in a recent interview. "If you lose a corporate headquarters, you wind up losing the management talent, the top salaries, the charitable and volunteer contributions and much more. We didn't want that to happen."
About 85 percent of the business at Logistics Health Inc. is built around working with federal agencies. It deals with the Department of Defense to ensure that soldiers receive necessary physical examinations, vaccinations, health profiling and other services. It also works with other federal agencies on homeland security issues, such as preparing for bioterrorism attacks. Logistics Health provides inoculation services, clinical studies and focus groups to help national, state and local authorities prepare for attacks they all hope will never come.
Gundersen Lutheran is a physician-led, non-profit health system with patients in Wisconsin, Iowa and Minnesota. In addition to its national reputation for quality care, Gundersen Lutheran is known in health-care circles as an "integrated delivery system." That means it offers a full range of medical specialties, regional clinics, a teaching hospital, home care, behavioral health services, pharmacies, vision centers, air and ground ambulances and more.
In the brave and uncertain new world of health care reform, integrated delivery systems are the model because they tend to provide coordinated medical services in an efficient setting that often eliminates costly intermediaries.
Dr. Frank Byrne, president of St. Mary's Hospital in Madison and a health-care executive who has championed integrated delivery, said the Logistics Health deal is consistent with Gundersen Lutheran's "forward-looking" approach. At the same time, Byrne noted, the deal isn't unprecedented: Major health-care systems in Missouri, Ohio and Minnesota have made similar investments. So long as health-care systems don't stray too far from their core expertise and stay aware of potential conflicts of interest, Byrne said, it makes sense to invest in companies that stand to help their own bottom lines while also aiding the broader community.
In fact, Byrne said, a community's physical health can be influenced by its economic health -- which is why many major hospitals and health-care systems are engaged in civic and economic development efforts.
"Economic development is a community health status issue," said Byrne, who noted that health-care organizations are already "important economic engines in their communities."
Former Gov. Thompson said he hopes other health-care systems and major non-profit organizations in Wisconsin think about investing in the state if the right opportunity arises.
"This is a strategy that other companies and non-profits should look at, whether they're in health care or some other field," Thompson said. "With the right deal, it's a win-win for Wisconsin and the companies themselves."
Finding private equity is a tough chore for many emerging companies these days. The Gundersen-Logistics deal presents a model that could work for others.
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6:59 AM
Holiday perks list includes naughty and nice in politics, business

By Tom Still
A source close to the toy industry has once again leaked a copy of Santa's perks list for Wisconsin politicians and newsmakers. Here's what the good boys and girls in Madison and Washington will reportedly find in their stockings this Christmas week. But they better not pout and they better not cry if an alert district attorney asks why gifts were delivered down chimneys after midnight.
Gov. Jim Doyle: A fat sack of money to help trim the state's budget deficit would be nice, but with checked bags costing $15 each these days, Santa must travel light. So let's give Doyle a T-shirt that reads: "One more year and I'm outta' here!"
Milwaukee Mayor Tom Barrett: A helping hand (literally). Barrett took a vicious beating last summer at State Fair Park when he intervened in a domestic dispute, and still has only partial use of his right hand. Now a candidate for governor, Barrett is also learning how to cut meat, write and button his shirt all over again. He recently joked he has "very good third-grade penmanship." That's OK, Mr. Mayor. If you're elected governor, vetoing bad budget bills only requires a few strokes of the pen.
Milwaukee County Executive Scott Walker: A link to www.onehitwondercentral.com. Walker's campaign for governor thus far has dwelled on cutting spending and taxes, but now that the latest Wisconsin Taxpayers Alliance report shows Wisconsin slipping out of the ranks of the nation's biggest spending and taxing states, Walker needs a second tune. "How I'll Love the Economy Better Than Those Other Guys" has a nice ring to it.
Former U.S. Rep. Mark Neumann: A copy of Ross Perot's book, "United We Stand." Because Republicans are notorious for deciding early which candidates to back in their own primaries, Neumann finds himself swimming upstream in the GOP's race for governor. But what if this successful businessman borrowed a page from Perot and ran a third-party race? As 1992 presidential candidate Perot might say, "Why not, dad-gummit?"
The state Veterans Affairs Board: A copy of Dr. Seuss' "The Grinch Who Stole Christmas." Veterans Affairs Secretary John Scocos was serving a National Guard stint in Iraq at the time of some questionable spending at a state veterans' facility. When Scocos returned to his civilian job running the Department of Veterans Affairs, he was eventually fired over things that appear to have happened while he was overseas. That's not the best public-relations message for an agency that tells private employers to protect the jobs of workers who must fulfill military obligations.
The state Department of Natural Resources: How about 200,000 or so deer GPS units for the 2010 hunting season? A company just across the border in Duluth, Minn., sells global positioning systems to help hunters find lost dogs. However, the bigger problem (and market opportunity) is that Wisconsin hunters can't seem to find the deer the DNR game wardens swear are out there. Perhaps White Bear Technologies can adapt its GPS units to fit around the necks of those phantom deer.
The Madison City Council: A copy of "A New Yorkers View of the World." This famous New Yorker magazine cover depicts a map of the world as seen by self-absorbed New Yorkers. About half of the map is devoted to details of Manhattan and the world west of the Hudson River is shown as largely a wasteland. That's how some anti-business politicos in Madison view Wisconsin's capital city -- as an imperious economic island. In the real world, however, money and opportunities can (and do) move elsewhere.
Wisconsin's congressional delegation: A link to "The Coastie Song," an Internet hit. The state's two senators and eight House of Representatives members often find themselves outnumbered by the "coasties," those members of Congress who hail from the populous East and West coasts. It's time for all good "sconnies" on Capitol Hill to band together, especially when it comes to getting Wisconsin's fair share of federal aid. In 2007, for example, Wisconsin ranked 49th among the 50 states in federal aid per capita to K-12 students. Are "sconnie" kids somehow less deserving -- or are we leaving money on the table?
Google: What to get the company that has everything and still craves more? Santa's answer: A history book that describes what happens to those who aspire to global domination. A Paris court has ruled that Google's expansion into digital books breaks France's copyright laws, and a judge slapped the Internet search leader with a $14,300-a-day fine until it stops showing literary snippets. Google will appeal, of course, but the ruling has at least slowed Google in its crusade to scan all the world's books into a digital library accessible to anyone with an Internet connection. If you Google the phrase "intellectual property" right now, the definition might come back "Vive la France!"
For Wisconsin's rising political stars: In an era when scandal and partisanship drives more good people away from politics than it attracts, it's reassuring to know that quality office-holders continue to be attracted to public service. That's a gift to Wisconsin citizens. Happy holidays, everyone!
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3:18 PM
Give market forces a chance to meet energy and climate change needs

By Tom Still
Some days, it seems the only certainty about the U.S. economy is uncertainty.
Three of the economy's largest sectors -- health care, finance and energy -- are in varying degrees of flux, in part because Washington seems bent on keeping it that way. President Obama and Congress can't seem to bring closure to the health-care reform debate, the financial industry is under pressure from the Loan Officer in Chief to make more small business loans, and the Copenhagen climate change talks have raised more doubts than confidence.
Layer on a $12 trillion national debt that will be financed by $200 billion in federal debt service payments this year alone, it's a wonder the economy is performing as well as it is.
The growing schism over international, national and even state regulations tied to global climate change -- and how that affects the energy sector -- is a prime example of what's causing heartburn among business leaders.
The Copenhagen climate talks are entering their last phase, but negotiators have made less progress toward reaching an agreement on global greenhouse gas emissions than some would have hoped. With China and India balking and smaller nations adopting a "blame-America-first" stance, perhaps the impasse is no surprise.
Compounding the uncertainty of what an international agreement might hold is the U.S. Environmental Protection Agency's expanding reach over carbon emissions from all sources. The EPA, in response to a 2007 U.S. Supreme Court decision that ruled greenhouse gases are a pollutant subject to the Clean Air Act, appears poised to place greenhouse limits on everything from factories to real-estate development.
National business groups are worried that a command-and-control regime established by the EPA will lead to new and burdensome requirements on manufacturing, the construction industry and other sectors -- driving up energy costs and choking job creation.
In Wisconsin, groups such as the Alliance of Automobile Manufacturers, Wisconsin Automobile and Truck Dealers Association, and Wisconsin Corn Growers Association are voicing their dismay over new standards for car emissions proposed in state climate change legislation unveiled last week.
Those groups believe the state emission standards, which are not unlike those adopted in California, are unnecessary because of a national program on greenhouse gas emissions and fuel economy standards.
"By adopting (the California standards) Wisconsin is implementing a public policy that provides no measureable environmental benefit above and beyond its federal counterparts and creates significant challenges for the ethanol industry," read a letter from the groups to Gov. Jim Doyle and members of the Governor's Task Force on Global Warming.
What's missing in this debate is a commitment to letting the markets work. Capitalism is far cleaner than undemocratic systems of government, as was demonstrated when the Iron Curtain collapsed, revealing a legacy of Communist-era pollution. Now that China has moved toward a market economy, it is slowly cleaning its air and water -- even as its production and consumption grows.
Some of the best examples of land, water and wildlife conservation in the world are private or a blend of private and public incentives, not top-down public solutions. Manufacturers, energy producers and consumers, land owners and other business leaders are as concerned about the possible results of climate change as much as anyone. But they're also worried a command-and-control response will lead to less innovation, not more.
Wisconsin is a state with every reason to enhance production of homegrown alternative energy sources, to conserve energy and to diversify its energy sources. After all, a state that lacks coal, oil and natural gas is largely dependent on others -- whether those others live in Oklahoma, Saudi Arabia or Venezuela.
Innovation is taking place in the state's research and development labs, both public and private, and inside major companies such as Johnson Controls, Rockwell Automation, Kohler and Orion Energy Systems. It's also bubbling up in smaller but emerging firms that are finding better ways to produce second-generation biofuels, wind energy, solar energy and much more. They deserve a chance to work.
Better, cleaner sources of energy are needed. But solutions that value regulation over innovation won't solve the problem without creating more uncertainty in an already uncertain time.
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2:41 PM
In western Wisconsin, regional economic growth has 'Momentum' of its own

By Tom Still In parts of western Wisconsin, the ties to Minnesota seem almost as strong as those to the Badger state. Many people in Wisconsin's border counties read Twin Cities newspapers, watch Twin Cities television stations, follow Twin Cities sports teams and, most likely of all, see their economic destinies as linked to Minnesota's metropolitan powerhouse.
Western Wisconsin's economic links to Minneapolis and St. Paul are tight, but the magnet effect of the Twin Cities' economy doesn't preclude a regional identity for the Wisconsin counties east of the St. Croix River. In fact, it helps to define it.
Building on metro market ties while nurturing home-grown strengths is the role of Momentum West Inc., a non-profit confederation of 10 counties in western Wisconsin. It is an example of how regional economic development has found a niche.
Momentum West is a phoenix, having risen from the still-warm ashes of Momentum Chippewa Valley, a predecessor, three-county effort. With renewed leadership and buy-in from corporate, academic and community investors, Momentum West was born in December 2007 and now includes Barron, Chippewa, Clark, Dunn, Eau Claire, Pepin, Pierce, Polk, Rusk and St. Croix counties. Major cities in that footprint include Eau Claire, Chippewa Falls, Hudson, River Falls, New Richmond and Menomonie, where the group held its annual meeting last week.
Its mission seems simple enough: Develop partnerships, leverage resources and market the region as a great place to live, work and do business. Executing is a bit more complicated, as it involves meeting the sometimes conflicting needs of communities and investors who cooperate where cooperation makes sense -- but who compete where competition is necessary.
For now, cooperation is winning out. Momentum West leaders know it's tough for individual cities or counties to market themselves in a world of competing messages. But a regional approach to defining the shared attributes of all 10 counties carries some weight, assuming the message is pitched to the right audience.
That's been the thinking behind regional economic development efforts in Wisconsin for nearly a decade. The idea took off during the Wisconsin Economic Summits in 2000 through 2003 with the realization there is no single "state economy," but rather a matrix of overlapping regional economies that don't respect city, county or even state borders.
In addition to Momentum West, those regional groups today include 7 Rivers in the La Crosse area (which include parts of Minnesota and Iowa), Thrive in the Madison area, NEW North in northeast Wisconsin, Grow North in north-central Wisconsin, Centergy in central Wisconsin and Milwaukee 7 in southeast Wisconsin. Some groups are more active than others, but they're all trying to define their regions strengths in ways that work for their collective parts.
For Momentum West, the Twin Cities economy is both foundation and competitor. The Twin Cities can draw Wisconsin companies, workers and investors into its orbit -- and simultaneously spin out economic activity on the Wisconsin side of the border.
Among the regional advantages touted by Momentum West is a well-educated workforce, in part the product of three UW System campuses (Stout, River Falls and Eau Claire) and two technical colleges (Chippewa Valley and Indianhead) as well as some private colleges and universities. Many of those institutions pride themselves on working with the business sector.
UW-Stout is a prime example. Since the late 1980s, the Stout Technology Transfer Institute has engaged dozens of companies in solving manufacturing issues, thus saving or creating jobs. Its Northwest Manufacturing Outreach Center is a national example and its technology park, a partnership with the city of Menomonie, the Stout Foundation and Xcel Energy, houses 24 buildings, more than 40 companies and 1,200 jobs.
The region can also boast of high quality of life, lower costs of living, solid communications, energy and transportation structures, and companies that fall into clusters of emerging industries (such as bio-agriculture and bioenergy), growth industries (electronics, computers, medical devices, packaging and plastics) and enabling industries (nanotechnology and chemicals).
Regional economic development strategies have their pitfalls, of course. Such regions may not be readily identifiable outside the state. Will someone living in Michigan be drawn to "Thrive" here? Will a business leader in Minnesota distinguish between "New North" and "Grow North" -- or, for that matter, think they're anywhere but in his own state? Building brands is neither cheap nor short-term. There may also be a temptation to trade city-by-city competition for region-by-region rivalry, which can be Balkanizing for Wisconsin as a whole.
The leaders of Momentum West understand those challenges and more. They won't run from their economic ties in the Twin Cities, but they won't be content to live in their shadow, either.
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6:40 AM
Controlling costs must be a part of federal health care solution

By Tom Still
To say small business owners in Wisconsin are nervous about the outcome of the debate over health-care reform is like saying a football quarterback is jittery just before a 300-pound defensive end grinds him into the turf. Both know what's coming -- and both can only hope to get back on their feet once it's over.
Representatives of small business have become persuaded that, no matter what version of the health-care bill is adopted by Congress, they will pay more to provide health care to employees. Those same small business owners believe neither the House nor the Senate bill address spiraling costs, the core problem from an employer perspective. They also believe Congress will ratchet up already burdensome costs in two main ways -- through expensive new coverage requirements and by forcing the nation's insured to pay more to cover the uninsured.
There's no doubt the federal debate has been about reforming access to health care, rather than controlling costs. Most health-care reformers in Congress want to see the nation's 46 million uninsured -- more than 15 percent of the population -- protected by a safety net. They contend it costs the United States billions of dollars in lost productivity, social woes, family bankruptcies and more for so many people to go without health insurance.
While access to health-care poses real problems, so does a system that consumes 17 percent of the Gross National Product and which forces employers to choose between hiring another worker or salting away money for the next double-digit increase in health-care premiums.
A recent actuarial analysis by Wellpoint Inc., the parent company to Blue Cross & Blue Shield of Wisconsin, concluded the most likely compromise of the bills pending before the House and Senate would increase premiums by 17 percent for a small business with eight workers of average age and health status. That's on top of increases already coming, with or without reform.
Skeptics might say such estimates are more insurance company "spin control," but even discounting the self-interest of the insurers it's safe to say Congress and the White House have thought far more about improving health-care access than controlling costs.
Here are some suggestions for addressing the cost side of the equation, and keeping more money in the hands of small businesses that create the bulk of the nation's jobs.
* Focus on wellness, disease prevention and ways to better manage chronic illnesses, such as diabetes and heart disease. Chronic illnesses account for 75 percent of U.S. health care costs.
* Provide incentives to hospitals and clinics in crossover markets to collaborate where possible, rather than compete over every service. Cost increases in health care can be slowed when health-care organizations avoid service and facility duplication. Hospitals and clinics may make more money on specialists, but primary care keeps customer costs down because those medical professionals stress wellness, prevention and disease management.
* Accelerate the movement toward digitizing medical records, which first gained federal support when former Wisconsin Gov. Tommy Thompson was secretary of Health and Human Services. President Obama is right about moving this idea ahead. Electronic health records will provide a long-term foundation for higher quality care while reducing errors and giving medical professionals better data. It's a ready example of how technology can help patients.
* Pass the Comparative Effectiveness Research Act of 2009. The basic idea behind "comparative effectiveness" is to create a national database to share information about how new or different therapies, treatments and diagnostics work for patients. Medical professionals would have near-instant access to that information.
* Allow small businesses more, not less, leeway in buying coverage plans that fit their employees. Such plans might cover mostly catastrophic cases, preventative care and child medical care, with relatively high employee-paid deductibles for everything else.
Health care reform is inevitable because the current U.S. system has its flaws. In the rush to improve access, however, let's not forget that rising costs will create a new and more serious crisis if small businesses stop creating jobs.
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1:14 PM
Giving thanks for some of the big (and little) things in life

By Tom Still
A partial list of things for which I'm thankful this week:
* For American innovation, ingenuity and inventiveness, three "I's" in a winning team that will rebuild our economy long after the stimulus payments are gone.
* For sports icons like Brett Favre. While many Green Bay fans revile him as a gridiron Benedict Arnold, the fact is that professional football needs household names like Packers' legend Favre. If you root for Tampa Bay, St. Louis, Cleveland or some other faceless franchise at this point in the season, following your local heroes may hold less interest than tracking the redemption of a 40-year-old quarterback.
* For great teachers who inspire kids to learn.
* For the Pilgrims, who celebrated their first Thanksgiving in 1621 after leaving England in the Mayflower and surviving a 62-day Atlantic crossing -- all, it appears, in hopes of getting away from their relatives for the holiday.
* For clean water, which we have in abundance in Wisconsin. Even better, the state has the research, development and manufacturing capacity to help the world's water-poor while building a 21st century industry at home.
* For a political system that can endure or otherwise overcome 2,000-page healthcare reform bills, Sarah Palin fans, Sarah Palin haters, Rush Limbaugh, Keith Olbermann, runaway federal deficits, run-at-the-mouth blogs and run-of-the-mill candidates.
* For newspapers and other true news outlets. Ever heard of the "Google News Room" winning a Pulitzer Prize for reporting on national news? Ever seen a reporter or editor from Bing or Yahoo covering your local school board or city council? You haven't and you probably never will. While the Internet has forever changed how the news is delivered, there's no substitute for local, state and national newsrooms staffed by professionals who actually produce content. The fact you can find news on Google, Bing and Yahoo doesn't mean it materialized out of thin air. Someone had to report, write and edit it.
* For emergency service volunteers. When the back tire on my brother's motorcycle blew out last year on a lonely stretch of West Texas highway, he would likely have died had it not been for the EMS crew in Seagraves, Texas, which quickly triaged his head injuries and put him on a med-flight to a hospital in Lubbock. Those minor miracles are repeated countless times, every day, across America.
* For our military personnel everywhere.
* For Wisconsin farm products such as Door County cherries, Portage County potatoes, Crawford County apples and Marathon County gingseng, mainly because the Chinese seem to think our gingseng is better than their home brew.
* For medical advances that quietly save lives every day. It's important to protect ourselves and our families from threats such as the H1N1 virus, but it's worth knowing that some past threats have faded into history. There hasn't been a case of polio in the Western Hemisphere since 1991. The World Health Organization announced the eradication of smallpox 30 years ago; it killed at least 300 million people in the rest of the 20th century alone. Innovations rooted in Wisconsin have helped to end or control rickets, endemic goiters, anemia, pellagra, skin cancer, bone loss and much more.
* For the connectivity of modern technology, which allows us to stay in touch with our families, friends, business associates and the world through e-mail, text messages, Skype, Twitter, Facebook, Linked In and a myriad of social media yet to be invented.
* For a Thanksgiving holiday that allows us a few days away from all that connectivity.
Happy Thanksgiving!
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10:19 AM
Myth busters: Why some things you hear about venture capital are wrong

By Tom Still
A record 500-plus people attended Wisconsin's largest early stage investing conference this month and another 250 rubbed shoulders in the same convention hall at the Midwest's largest forum on health care investing. What better time to shatter myths surrounding the investors who crowded both events?
Myth One: "Venture capital is dead." Remember the scene in "The Princess Bride," shortly after the hero Westley (Cary Elwes) is apparently tortured to death by Prince Humperdinck (Chris Sarandon) and Westley's friends bring his body to the cottage of Miracle Max (Billy Crystal)? OK, you probably don't remember that scene unless you've seen the movie a bunch of times, but Miracle Max examines the body and declares Westley is only "mostly dead," which means revival is possible. Had Westley been "all dead," Miracle Max explains, he could have done nothing more than search his pockets for loose change.
So it is with venture capital. Beginning in the third quarter of 2008 and running through mid-2009, venture capital appeared dead but it was really only "mostly dead." As the fourth quarter of 2009 rolls to a close, a number of venture capital firms and venture capitalists are gone forever, but a smaller, wiser corps of private equity investors is emerging from the industry's nuclear winter.
Deals are being made, just not as many. In the boom year of 2000, there were nearly 7,900 venture deals worth $101 billion in the United States. In the bust year of 2009, look for roughly 2,600 worth about $20 billion. Like The Princess Bride's Westley, venture capital may have been "mostly dead," but the loose change in the industry's pockets is slowly being invested again.
Myth Two: "There's only one early stage venture capital firm in Wisconsin." Not entirely so. While Venture Investors LLC of Madison is the state's most familiar seed and early stage VC, specializing in health care and information technology, there are others on the scene. Peak Ridge Capital, with offices in Boston and Canada, has planted a private equity flag in Wisconsin. Kegonsa Capital Partners of Madison functions like a venture capital fund in many, if not most, ways. The NEW Fund in northeast Wisconsin invests in early stage deals, Capital Midwest Fund of Milwaukee is organizing, Triathlon Medical Ventures of Cincinnati has been scouting the state and other angel networks and funds have been known to co-invest with VCs and other angels.
Myth Three: "Venture capitalists won't read my business plan, anyway, so why bother asking?" It depends on how it's pitched. Entrepreneurs who write a crisp executive summary or find a way to make a brief "elevator pitch" often entice investors to read more. Most VCs want to see possible deals -- if for no other reason than to stay current on the market. Of course, there's little sense in sending a software business plan to a biotech VC or vice versa, but entrepreneurs who do their homework can land their plans on the right desk.
Myth Four: "Even if VCs in the Midwest might read my plan, the East and West coast guys won't." Don't assume that's true. Many coastal VCs have learned that high-quality, right-sized deals can be found in cities such as Madison, Milwaukee and elsewhere in the Midwest. Coastal investors such as Steve Burrill, a leader in biotechnology, and Hank Barry, who made a name in software, have told Wisconsin entrepreneurs to quit being shrinking violets. Be politely aggressive, they counsel, and make contact with VCs who might invest in your sector -- regardless of geography.
Myth Five: "Out-of-state VCs won't invest in Wisconsin without a local co-investor." Serial entrepreneurs such as Toni Sikes of Guild.com, Eric Apfelbach of Alfalight and Virent Energy and Ralph Kauten of PanVera, Mirus and Quintessence Biosciences would beg to differ. While it's sometimes the case that out-of-state VCs look for a local partner to help them conduct due diligence on a possible investment, most function just fine on their own -- and may prefer to do so.
Myth Six: "Most venture capitalists care only about biotech or software, and my business is neither." At this month's Wisconsin Early Stage Symposium in Madison, 22 companies of all descriptions -- from sports footwear to a GPS system for dogs -- presented their business plans. The "non-healthcare" track of 11 companies was observed by more potential investors than the healthcare track, which included a number of investors from the companion MidAmerica Healthcare Venture Forum. Your company name need not include "bio" or "genix" in its suffix or prefix to attract potential investors, especially at a time when shorter payback periods are at a premium.
It's not a surprise to most early stage companies that venture capital is still slogging through tough times, with investment returns hard to come by and new money difficult to raise. But as one veteran investor remarked in Madison this month, "I'm starting to believe the light at the end of the tunnel is no longer an oncoming train."
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5:36 PM
Mercury Marine incentives in line with what others offer to win, keep jobs

By Tom Still
Now that the Doyle administration has revealed the costs of keeping Mercury Marine in Fond du Lac, a predictable "Was it worth it?" reaction is rippling through the public, press and policymakers.
Judged by recent incentives paid or announced by other states to retain or lure major businesses, the answer appears to be "yes." In fact, Wisconsin may have kept Mercury Marine in the state at a "cost-per-job" that falls somewhere on the lower end of the national incentives scale.
The fight to keep Mercury Marine Inc. from moving its Fond du Lac operations to Oklahoma could cost Wisconsin taxpayers $70 million in public assistance to the outboard-engine maker, Doyle said last week. That's in addition to a $50 million loan funded by a half-cent Fond du Lac County sales tax and $3 million from the city of Fond du Lac.
In return, Mercury Marine is expected to retain or create up to 2,700 jobs in the Fox Valley, where it is one of the largest employers. About 400 of those jobs will come from the company shutting down a plant in Stillwater, Okla. If the company retains or creates the full estimate of 2,700 jobs, and all of the state and local incentives kick in, that's about $45,500 per job. A back-of-the-envelope estimate suggests 2,700 workers paid at $45,000 per year are worth $120 million per year in gross pay alone. That buys a lot of houses, groceries, electricity, health care, gasoline and all the other things that make a local economy click.
It also generates a lot of state and local tax revenue, which is how those governments recover their investments over time.
How does the Mercury Marine incentives package stack up to other recent deals?
* When IBM decided to open a technology delivery service center in Dubuque, Iowa, a stone's throw from Wisconsin, the cost per job created was about $40,700. That's based on the reported public-private incentive package of $53 million and 1,300 jobs, which is the predicted total when the center is fully operational in June 2010.
* In early June, GE Healthcare announced it will open a new digital mammography production facility in New York. The 230,000-square-foot facility will add 150 manufacturing jobs with an annual payroll of $10 million. Investment in the facility totals more than $165 million, including a capital grant of $10 million from New York state, according to the company. That's about $66,000 per job.
* In mid-2008, IBM announced it would invest up to $1.5 billion to expand and upgrade its facilities in New York, creating 1,000 jobs and retaining 1,400 more. The reported state and local incentive package was $140 million, or roughly $58,300 per job.
* The Mercury Marine incentives look like a bargain when stacked against the state, local and private package assembled in the attempt to keep General Motors in Janesville. That $195 million package, which included $115 million from the state, would have created between 1,200 and 1,500 jobs. Using the higher jobs estimate, that's an average of $130,000 per job -- or three times the Mercury Marine cost per job.
The cost-per-job equation is only one way to calculate the value of incentives, of course, with total investment by the company being another measure. Total investment takes into account capital expenditures and secondary jobs, such as construction, that are also valuable. But when unemployment is hovering around 10 percent, direct jobs and payroll are what most people understand and value.
To be sure, there's a philosophical argument against states engaging in an endless War of Incentives. In a perfect world, competition over job creation wouldn't involve state and local tax credits, land discounts and the like. But the world is far from perfect and the marketplace is brutally efficient, which means states must compete or risk losing jobs and companies they already have without gaining anything new.
Wisconsin's conservative public psyche may find incentive packages like the Mercury Marine deal troubling. It would be much more worrisome, however, if Wisconsin continued to stand idly by while other states and nations played an aggressive incentives game. Not all incentive packages are worth the cost, but the smart deals pay for themselves over time.
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6:06 PM
In the 'race to the top,' Wisconsin offers education examples to build upon

By Tom Still MADISON -- President Obama showed up at Madison's Wright Middle School Wednesday to talk about reforming education, but that topic may not have been top of mind for everyone who came to hear him.
It was the day after Democrats lost races for governor in Virginia and New Jersey, two states where Obama made personal appeals, and during a time in which Congress is stewing over health-care reform, troop levels in Afghanistan and legislation to extend unemployment benefits.
In case anyone was listening, however, the setting was as good a place as any to talk about what it will take to produce better educated citizens.
Wright Middle School is a 12-year old charter school within the Madison School District. It has about 240 sixth-, seventh- and eighth-grade students, mostly black and Latino, with attendance rates that historically hover around 93 percent. It's been a public education success story because the students who attend all choose to be there -- and their parents choose to be involved.
Obama wanted to speak at Wright Middle School to highlight the "Race to the Top" competition, which will invite states such as Wisconsin to compete for a share of $4.35 billion in federal education grants. Obama, who believes lagging achievements in education are a chronic problem in the United States, urged Wright students to aim higher, calling education "a prerequisite for success."
He's right, of course. Better educated people are more likely to find jobs, keep jobs, earn a good living and contribute to society as a whole. The real debate is how best to produce more of them.
"Race to the Top" dangles federal aid carrots to states that raise academic standards, improve teacher quality and expand the reach of charter schools. While $4.35 billion is a lot of money, it represents only a fraction of total K-12 education spending in the United States -- about $667 billion in 2008-2009. It's even a fraction of federal-only spending on elementary and secondary education, a category that has grown sharply since former President Bush launched "No Child Left Behind" in 2001.
More money alone won't solve the problem. For "Race to the Top" to work, it must spur education innovation that spreads far beyond a charter school here and a new standard there. It must build upon best practices that can be broadly implemented, in Wisconsin and elsewhere.
Public-private efforts to enrich science, technology, engineering and math education provide ready examples of innovation. In Wisconsin, programs such as Project Lead the Way, Science Olympiad and FIRST Robotics have energized students and teachers alike -- and are beginning to yield results.
Project Lead the Way is one instructive example. It prepares middle and high school students for careers in engineering and technology through courses that capture students' imagination. It's used in 2,300 schools nationwide, including 162 in Wisconsin, and is taught by existing public and private school teachers who are immersed in PTLW techniques. The track record is impressive: 73 percent of Project Lead the Way students enter engineering or tech programs, and 80 percent earn their degrees.
Another example of thinking differently about education involves student testing. Wisconsin has begun the process of phasing out its current system of testing student performance in grades three through eight and 10 in favor of a system that will more effectively guide teachers, parents and students -- and help prepare those students for college and the workforce.
In the process, it should also help businesses in search for workers with 21st century skills, and Wisconsin taxpayers who have a stake in more effective use of local, state and federal dollars.
Other states have remade their testing systems already. Some, such as Oregon, have developed an Internet-based system, which dramatically shortens reporting time and allows for repeat tests for those who want to improve. Michigan requires the ACT test in its system, which lowers the statewide average score (a Wisconsin bragging right for decades) but serves to encourage more students to continue their education after high school. Nebraska built a statewide assessment system from classroom and district best practices. They're all designed to raise standards and performance.
Don't get me wrong: Wisconsin could use whatever share of the "Race to the Top" dollars it can get: It ranks a miserable 49th among the 50 states in per capita federal spending on K-12 education, according to one recent study. But let's make sure those dollars are put to work on innovation that can spread far beyond a school here or a classroom there.
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7:01 AM
Academic R&D spending can translate to more economic growth statewide

By Tom Still The latest figures from the National Science Foundation confirm what many people in Wisconsin already knew: the UW-Madison is one of the nation's leading research universities.
The numbers also underscore the fact that academic research and development isn't confined to the labs and research offices of the state's flagship university. Research and development work is taking place at colleges, universities and similar institutions across Wisconsin, and the total reflects a competitive edge most states would envy.
Sixteen academic institutions in Wisconsin spent $1.12 billion on science and engineering R&D in the federal fiscal year that ended Sept. 30, 2008, according to the NSF, up from $1.07 billion the previous year. That figure doesn't include about $40 million in research from two institutions not tracked by NSF -- the Marshfield Clinic and the Blood Center of Wisconsin -- or spending on non-science research by all 16 campuses.
The UW-Madison led the way with nearly $882 million in science and engineering spending, good for third on the list behind Johns Hopkins University and the University of California at San Francisco. That's right, the UW-Madison raised and spent more on R&D than UCLA, Michigan, Stanford, Harvard or MIT, to name a few universities most people would incorrectly suspect rank higher.
Toss in $63 million in non-science R&D spending at the UW-Madison, which was also third in that category, and the composite rank is second -- only behind Johns Hopkins, where about half of its $1.68 billion total is tied to defense work within its Applied Physics Laboratory.
More surprising to R&D groupies may be how much research is taking place outside Madison. The science and engineering total alone was $275 million in fiscal 2008, counting Marshfield and the Blood Center.
The Medical College of Wisconsin ($165 million) and UW-Milwaukee ($41 million) were the two biggest R&D centers outside Madison in 2008, but Marquette University, the Milwaukee School of Engineering and 11 other UW campuses showed up on the NSF's rankings of the 690 schools that spend anything on research.
Study after study has established links between academic research and development and job creation through what is called "technology transfer," or moving ideas from the laboratory bench to the marketplace. Wisconsin is a state that consistently ranks in the top quartile of states in academic R&D -- but it has not matched that performance when it comes to turning those ideas into jobs and economic production. That's why UW System President Kevin Reilly created a "Research to Jobs" task force in early 2009 and asked Carl Gulbrandsen, managing director of the Wisconsin Alumni Research Foundation, to lead it.
A core recommendation of the task force was creation of nine Emerging Technology Centers across Wisconsin to ramp up research that could translate to jobs. Two of the nine (tissue and cellular engineering at UW-River Falls and nanotechnology applications at UW-Platteville) have been launched. Others are planned for:
* UW-Oshkosh: Super‐capacity energy storage for next-generation electric cars and other energy intensive applications.
* UW-Stevens Point: Nanowire and nanostructure manufacturing for applications in solar energy, hydrogen sensors and nanoinstruments.
* UW-Whitewater: Interactive media and distance learning.
* UW-La Crosse: Pharmaceuticals based on medicinal plants and fungi.
* UW-Green Bay: Value-added products from waste, such as paper waste.
* UW-Stout: Plastics and composite materials, in collaboration with UW-Stevens Point.
* UW-Parkside: Biomedical sciences.
Over the past 80 years, WARF has done as good a job as any similar organization in transferring R&D into patents, licenses and economic activity. There are scores of companies in the Madison area that testify to the fact that UW-Madison research has moved from lab to commerce.
But most R&D apples don't fall far from the tree. The national rule of thumb is that most campus spinoff companies land within 50 miles of campus. The Emerging Technology Centers proposal is an effort to accelerate the transfer of technology from those campuses -- and to spur economic development in or near those campus communities.
Academic R&D spending is a tangible asset by itself, but its value is multiplied when the research yields new companies and jobs. It has happened in the Madison area -- it can happen elsewhere.
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5:25 AM
Wisconsin's economy benefits from free trade, so let's guard against protectionism

By Tom Still Organized labor cheered a month ago when President Obama imposed three years' worth of 30 percent tariffs on low-cost tires imported from China. Unions blamed the loss of more than 5,000 production workers in five years on Chinese imports, so they rolled out the praise when Obama decided to make inexpensive tires cost nearly a third more.
It's hard to see what will be gained by the tire tariffs. They represent the folly of imposing nation-to-nation trade sanctions in a world where production, distribution and sales channels cross many borders.
No new jobs are likely because U.S. tire producers, who didn't support the tariffs, won't rush to compete with the Chinese imports. American tire-makers decided years ago to focus on high-end tires. And just because the Chinese tires will suddenly cost more, don't expect low-cost imports will stop showing up in American stores. Another supplier, also from outside the United States, will fill the orders. The next round of low-cost tires may come from Vietnam, Indonesia or India. What about American consumers? Well, they'll pay a bit more for new tread for their vehicles.
In the meantime, the Chinese will look for ways to slap tariffs on American goods, a retaliatory act that could lead to other tit-for-tat actions.
If a trade war breaks out, Wisconsin should be among the first states to duck for cover. Wisconsin is a state dependent on trade, in large part because so much of what the state produces -- farm goods, manufactured goods and even technology -- is consumed elsewhere.
"Trade is vitally important to the Wisconsin economy," said James Haney, president of Wisconsin Manufacturers & Commerce, in an interview with " WisBusiness: The Show." Haney noted each $1 billion in exports produces about 20,000 jobs in Wisconsin, which means more than 410,000 Wisconsin jobs are tied to trade based on the state's 2008 export total of $20.55 billion. That total is up nearly $8 billion since 2004.
When the 2009 figures come in, however, it will likely show that Wisconsin's recent exports surge has slowed or even receded. That wouldn't be surprising, given estimates that global trade will decline by 9 percent overall this year. The economy is the main culprit, of course, but protectionism remains a dangerous sidekick.
Earlier this year, the Global Monitoring Report by the World Bank noted "a pattern is beginning to emerge of increases in import licensing, import tariffs and surcharges, and trade remedies to support industries facing difficulties" brought on by the recession. The tire tariffs are but one example.
Wisconsin members of Congress can oppose protectionist legislation, of course, but state policymakers have no real jurisdiction over the issue -- other than to support free trade when they get the chance.
That means resisting the urge to score political points by criticizing state trade missions, such as the recent China-Japan trip. A $61,000 mission to churn up business with two leading trade partners (more than $1.8 billion in 2008) is an investment, not a junket.
It also means reaching fostering relations when there's a chance. A memorandum of understanding was signed last week by the premier of Manitoba and Wisconsin Gov. Jim Doyle to foster cooperation in agri-business, alternative fuels, renewable energy, biotechnology and more. Canada is easily Wisconsin's largest trade partner at nearly $6.5 billion in 2008, and Manitoba's relative proximity to Wisconsin means it imports more than its share. A similar agreement already exists between Minnesota and Manitoba.
Trade is a powerful force for good in the world, for political as well as economic reasons. In Wisconsin, it's also a matter of survival for many state businesses and workers.
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11:08 AM
The wrong 'public option' health-care plan could punish Wisconsin

By Tom Still
For reasons that would require an actuary and a congressional historian to explain, Wisconsin gets the short end of the stick when it comes to Medicare. It always has, since the dawn of Medicare in the 1960s, and perhaps always will.
Wisconsin's "donor state" status in Medicare has traditionally been two parts annoyance and one part point of pride. Wisconsin health-care providers grit their teeth over the state's low Medicare reimbursement rates, which pay them less than providers performing the same service in New York, Texas or Florida, but they draw some solace from federal studies that rank Wisconsin and Minnesota as the top "quality of care" states.
Now that some version of ObamaCare is edging closer to a vote, any satisfaction that came from doing more with less is giving way to a realization that Wisconsin's health-care "stick" is about to get even shorter.
Health-care reform without Medicare reform is likely to cost Wisconsin taxpayers billions of dollars over time. That's because the "public option" plan preferred by President Obama and many members of Congress would force Wisconsin to subsidize the health-care sins of other states. Here's why:
Under Medicare, the federal health-care system for the elderly, Wisconsin providers receive about 15 percent less than providers doing the same things in other states. If some form of Medicare becomes the "public option" alternative to private insurance plans, as favored by some in Washington, Wisconsin providers would again be underpaid -- and not just for the elderly.
Why do the rest of us care if hospitals, nursing homes and doctors in Wisconsin aren't fully reimbursed for Medicare services? Those costs don't go away, and are mostly passed on to individual consumers and companies that provide health coverage for their employees.
Wisconsin could be penalized in another way by the wrong "public option" plan. Wisconsin has one of the highest health care insured rates in the nation, or, put another way; it has one of the smallest percentages of uninsured citizens. If everyone nationally is taxed equally to pay for the uninsured, Wisconsin residents and businesses will be taxed to pay for the uninsured in California, Texas and elsewhere.
However, if the tax applies mainly to businesses that do not provide insurance, each state's economy will bear the cost roughly equivalent to what they will get back in federal dollars from the new program. In other words, Wisconsin businesses and health-care institutions wouldn't be penalized -- again -- for trying to do the right things.
Obama appears attuned to the regional disparities in Medicare reform, and many members of Congress have pushed to end the inequity. U.S. Rep. David Obey, D-Wis., the chair of the House Appropriations Committee, has called the regional disparities "outrageous."
So have leaders from major health-care organizations such as the Mayo Clinic, based in Rochester, Minn., and Wisconsin's Marshfield Clinic. They say Medicare's current funding formula (which reimburses providers nationally according to 89 local rates) pays the most to health-care providers and geographic areas that provide the lowest quality care at the highest costs.
Congress can accomplish health-care reform in a way which covers everyone and pays everyone more equally. The feds know how to do it. The Federal Employee Health Benefits plan, already in place, pays roughly equal amounts for care across the United States. Adopting that approach would avoid cost-shifting to private businesses in Wisconsin. By taxing only those businesses that don't provide health care, the cost of reform levels the playing field among states in competing for businesses.
Wisconsin's congressional delegation should demand that any "public option" plan under health-care reform doesn't perpetuate Medicare inequities or penalize the state for its historically higher quality of care and coverage rates. Health-care reform that taxes Wisconsin more to pay for care and coverage gaps elsewhere isn't reform at all.
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