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Salem Rotary Club (April 27, 2011)

Governor Remarks

Salem Rotary Club

April 27, 2011

As the Governor of Oregon, let me start by making something very clear: Oregon is open for business.

Oregon ranks #6 on Forbes Magazine’s list of best states for business.

The Tax Foundation ranks us 14 in its 2011 State Business Tax Climate Index.

And the latest Workers’ Compensation Premium Rate Ranking indicates that Oregon has the ninth lowest rates in the country – 17 percent below the national median – a key factor in lowering the cost of doing business in the state.

My first act as Governor was to launch a number of immediate job creation action items, and I’m proud to report that we’ve made real progress on all of them. Today I can announce that over 13,000 jobs have been created in Oregon already this year and our unemployment rate is inching its way down.

Companies like Solopower, U.S. Geothermal, Facebook, Shimadzu and Vigor Industrial have announced new Oregon plants, acquisitions, jobs and capital investment – more evidence that the recovery is underway.

Since I came into office, we’ve worked hard to improve the “Tone at the Top,” or how State leaders talks to business leaders. We need state leadership that welcomes growth in our business community, encourages our citizens to understand the importance of a balanced economy to long-term prosperity in Oregon. Uncertainty is the enemy of investment, and lukewarm support for jobs growth costs us dearly.

We have a number of large influential companies we are proud call Oregon home, but the truth is Oregon is a small business state.  

  • The average company in this state has 15 employees.
  • It is the companies that you work with everyday in your communities that make up the bulk of Oregon’s economy.  The 85,000+ businesses in Oregon with less than 500 employees each will lead our recovery and put Oregonians back to work.

I am encouraged by the resilience and innovation of the Oregon companies I have visited my first four months in office, from Hill Meat Company in Pendleton and Select Onion in Ontario to Kialoa Paddles in Bend and Rogue Creamery in Central Point.

The state assists small businesses by connecting them to export markets, connecting firms to supply chains for larger companies, providing innovative research at Oregon’s universities and helping access capital necessary to create jobs and grow their businesses.

Over the past two years, access to capital has been a critical issue for small businesses across our state. Business Oregon’s finance and capital access programs have helped small businesses meet this need.  

  • Ochoco Lumber Company just fired up its new wood pellet facility outside Prineville with loans and grants from Business Oregon.  The project will allow the company to retain 80 jobs and create 14 new ones.

Small doesn’t mean provincial.

  • Lektro, Inc. – a family-owned business in Warrenton – used support from Business Oregon to access international markets, and now more than 80% of the company’s sales are exports overseas. The company employs more than 50 workers manufacturing electric vehicles including “tugs,” which are used across the globe to tow commercial and military aircraft. There are nearly 3,000 LEKTRO tugs in operation, working in almost every industrialized country in the world.

And I am aggressively pursuing a range of economic development policies and priorities – from workforce development to strategic investment in innovation and clean technologies to keeping the Columbia River Crossing project on schedule – that will be important to getting Oregonians back to work.

But as important as it is to get the private sector economy going again, that will not, by itself, reverse the pattern of disinvestment that threatens our future.  Putting people back to work – as important at that is – will not, by itself, reduce our prison population or the escalating cost of health care; it will not ensure that all our children are ready to learn when they reach kindergarten; or increase the number of Oregonians who get at least two years of post-secondary education or training.

To be clear, our opportunity; our moment in time; the leadership challengeinvolved – is to be able to describe the new systems; the new business models, if you will – in health care and in education – in such a way that people can see them; and believe in them; and let go of the past in order to embrace them.

And to truly secure a prosperous and sustainable future for Oregon, I need you to take a leap of faith with me. I know it isn’t easy. To make that leap of faith – and surely we must make it – requires imagination; a willingness to question our assumptions; and a strong sense of community.

I believe that together – and for the sake of Oregon’s future – we can all muster up the courage to do it.  

Transformation - Education and Health Care
Oregon’s budget shortfall represents an opportunity to change and improve the way the state does business.  We can no longer afford to keep kicking the state’s problems down the road.  

The balance budget I delivered to the legislature includes ideas that have been advocated by Democrats and ideas that have been advocated by Republicans, because Oregon’s success depends on a willingness to develop new partnerships and coalitions and move beyond the partisan divisions of the past.

Transforming education and health care delivery in Oregon is absolutely essential to our long term economic recovery; essential to building the workforce of the 21st century; essential to raising our per capita income back above the national average – in short, essential to a prosperous and sustainable future.

And it all starts with ensuring early childhood success.

Investing early is the foundation to ensure that every child enters school ready and able to learn, enters first grade ready to read, and leaves first grade reading.

Every year, 45,000 children are born in Oregon.  Forty percent of these children are exposed to a well-recognized set of socio-economic, physical or relational risk factors which adversely impact their ability to develop the foundations of school success. These risk factors include poverty, unstable family backgrounds, substance abuse, criminal records and negative peer associations.  

Overcoming these challenges early is the key to avoiding and having to pay for the all-too-familiar problems down the road: social dependency and/or involvement in the criminal justice system.

Today, Oregon spends approximately $380 million per year on services for children ages 0 to 5, not including health care, K-12 and other human services (welfare, child protection and behavioral health treatment). Oregonians can and should expect a return on this investment.

More than half-a-dozen agencies operate dozens of programs for early childhood care and education – but they are not coordinated, and focus on service delivery rather than outcomes for kids.  

This should no longer be acceptable to any of us. We can do better.

My budget unifies disparate programs, streamlines administrative costs and measures outcomes to ensure that every child enters school ready and able to learn, enters first grade ready to read and leaves first grade reading.

Integrating and streamlining early childhood services is just the first step toward creating a single, transparent 0-20 education investment system that is integrated, efficient and accountable. Our current education funding process is not and requires a new approach to deliver better results for students, more resources for teachers and better value for taxpayers.

I have also asked the Legislature to create the Oregon Education Investment Board to streamline administration and create a seamless and strategic 0-20 education budget to meet Oregon’s education responsibilities. This Board has strong support from school officials, teachers, parents, education experts, and business leaders like you, and I believe it is vital that the Legislature pass it this session to set us on the right course.

Health Care
And then there is health care…

I probably don’t need to tell you that the biggest drain on job creation in Oregon isn’t taxes: It’s health care.

And if we want to create jobs for the long-term, we have to transform the way our health care system works.

Health care can no longer be allowed to grow at double digit rates – if it does, it will continue to rob resources from workers’ wages, from school funding, and from our common social infrastructure. It will also prevent businesses from making the investments in innovation and staff that they need to be successful.

Let me be clear. The problem here is nothow to pay for health care. The problem is the lack of value in what we are buying, which should be measured in producing health at a cost we can afford.

We know that over 80 percent of the cost in our health care system comes from treating people with one or more chronic conditions like congestive heart failure, diabetes or asthma.

We know that ten percent of the population accounts for nearly 70 percent of the cost.  If we had a system that could identify and properly manage that ten percent – and if we could shift our focus from after-the- fact acute care interventions to prevention and wellness and the community-based management of chronic conditions – we could dramatically reduce cost while improving the health of our population.

Let me give you an example. Let’s suppose there is a frail 92-year-old woman with well-managed, stable congestive heart failure living alone in a small apartment without air conditioning somewhere in SE Portland. During a heat wave the temperature in her apartment reaches 102 degrees. This increase in temperature adds enough additional strain on her heart to put her in active congestive heart failure.

Under our current system, nobody is likely to know about this woman until an ambulance delivers her to the emergency room at OHSU (which is a union hospital by the way). Under a more rational system, however, she would have a case manager – a home health worker – wh0 would be monitoring her condition and checking in with her on regular basis.

Under our current system, Medicare will pay for the ambulance as well as the $50,000 cost of her hospitalization but not for a $500 window air conditioner, which is all she needs to stay at home and out of the acute-care medical system in the first place. This makes no sense, either economically or from the standpoint of improving the health of Oregonians.

A couple of weeks ago, we took the first step to transforming health care by introducing legislation to create an Insurance Exchange (SB 99), which will make it easier for small businesses and individuals to get quality, affordable health care in the private market. We will create a competitive marketplace where more than 350,000 Oregonians can compare, choose and enroll in an insurance plan that meets a standard we set, rather than wait for the federal government to create an Exchange for us that would meet minimum national standards. This Exchange will make it easier for businesses to offer their employees health insurance – which can be a great recruiting tool – without forcing business owners to become insurance experts, which too many feel they must be at this time.

I am also putting forward a plan to help move us toward a more efficient and accountable health care delivery system that will reduce costs while improving the quality of care and the health of Oregonians. This sustainable and patient-centered model will include some groundbreaking steps:

  • Coordination of the delivery of mental, physical, and oral health services.
  • Setting fixed budgets at levels sufficient to achieve best outcomes, provide incentives for prevention efforts, and address the unsustainable growth in health care costs.
  • Creating a framework within which local/community-based health entities can assume increasing responsibility for health in their community.
  • Including all Oregonians eligible for Medicaid, and those eligible for both Medicaid and Medicare (dual-eligibles).
  • Building upon best practices that exist in communities.

This legislation will fundamentally change our heath care delivery system to improve the health of the population, at a lower cost while improving the patient experience in terms of clinical outcomes, patient safety and patient satisfaction. Unlike the short-sighted decisions of other states that are considering dropping Medicaid recipients from state coverage, we’re taking a different approach – because there’s nothing to gain and a lot to lose by stripping people of coverage, only to have them show up in emergency rooms – where we end up treating their stroke in the hospital rather than managing their high blood pressure in the community.

Already some stakeholders are beginning to dig in and resist this transformation, clinging to the status quo in the hopes that somehow – the economy or the federal government, or the tooth fairy – is going to make a fundamentally flawed and dysfunctional system work; clinging to the belief that it makes sense to continue to pour money into a system which produces population health statistics just marginally better than Cuba’s.

I need your help to deliver health care reform.  I need your members and your families to demand that we do something fundamentally different because the time is now.

We can do better, but to succeed, we must do this together, respecting each other and restoring our sense of community. Oregon’s success depends on our willingness to pull together and develop new partnerships and new coalitions. I have no doubt that together we can create jobs, lead the way on health care, and deliver to our children the kind of Oregon we believe in.

Thank you.


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