Government Affairs Update

In addition to the budget activity noted in last week's Almanac, we wanted to provide updates on some key legislative and policy issues important to the University at the federal, state, and city levels.

Federal Relations

Community Service

The idea of linking community service with the Federal Work Study program is currently popular in Washington. Both the Bush Administration and Congressional leaders have released plans that would require colleges and universities to devote increased Work Study funding to community service activities.

Initially, while community service was highly encouraged, the Federal Work Study program did not have a percentage requirement. The first percentage requirement took place in 1994 with five percent of total federal Work Study wages going to students in community service. The Higher Education Act currently mandates that institutions devote at least seven percent of their Federal Work Study funds to community service. Prior to last fall, a 10 percent requirement was widely anticipated.

A recent study showed that Penn devotes 12.6 percent of our Work Study funds to community service. We are in the top among peer institutions, falling behind only Stanford and narrowly edging Harvard and Columbia.

In his State of the Union address, President Bush announced a plan that would require institutions to utilize 50 percent of Work Study funding for community service. The proposal would also require that at least five percent of Work Study participants work in the homeland security fields of public safety, public health, and emergency preparedness. Further details are not yet available.

In Congress, Senators Evan Bayh (D-IN) and John McCain (R-AZ) have introduced the Call to Service Act of 2001, which aims to revamp national service programs and expand community service opportunities for Americans.

The legislation would require that all colleges utilize 25 percent of Work Study dollars to finance students in community service jobs. This would occur incrementally, with full implementation of the 25 percent figure by 2011.

The measure would expand the Americorps program to include 250,000 members (currently 50,000 individuals serve), and link service programs to national security. It would also remove post-service awards from participants' taxable incomes.

Colleagues who have spoken to Senator Bayh's staff about this measure state that the Senator intends the 25 percent figure to be a starting point for debate, and is willing to negotiate for a lower number.

Senator Edward Kennedy (D-MA), who chairs the Senate committee with jurisdiction over this legislation, does not support the measure. However, the issue had gained a lot of attention and will likely be dealt with in some manner. The University will work closely with the higher education community to offer changes in Federal Work Study policies that would facilitate an increase.

Commonwealth Relations

Medical Malpractice Costs in Pennsylvania

The Health System--along with other providers (both physicians and hospitals) in the Commonwealth--is faced with extraordinarily high medical liability costs. More recently, some private practice physicians, especially in certain sub-specialties, have not been able to obtain commercial coverage at any price.

From the University's perspective, the causes of this "crisis" are varied and complex including Pennsylvania's medical legal system and rules, the CAT Fund mechanism (which provides coverage from $500,000 to $1,200,000), and the high number of healthcare providers in the area. The consequences are significant and include a high number of medical malpractice cases, significant jury awards, and very high medical malpractice insurance premiums in comparison to other states. In data collected by the Pennsylvania Medical Society (PMS), insurance carriers in 2001 implemented rate increases ranging from 20% to 60%, the CAT Fund surcharges for physicians and other providers increased during the same period by more than 25%, and Pennsylvania medical malpractice premiums are 40% to 70% higher than surrounding states.

The potential impact on access to care is significant. Physicians, especially in orthopaedic and neurosurgery, obstetrics and emergency medicine, are considering relocating or changing their practice specialties, and the Clinical Practices of the University of Pennsylvania (CPUP) and other practices are experiencing challenges in recruiting physicians to this area--in part due to the ever increasing cost of professional liability coverage. While the Health System is able to provide coverage for faculty and its employed physicians through its insurance company, the financial impact on the Health System is significant. Budgeted FY 2002 cost of $17.5 million for the primary layer of insurance represents a 31% increase over FY 2001 actual cost and a 43% increase over FY 2001 budgeted cost. Similarly, budgeted FY 2002 aggregate total professional liability cost of $44.4 million represents a 21% increase over FY 2001 actual cost and a 28% increase over FY 2001 budgeted cost.

The University has been working through various coalitions/associations, and as an institution, to seek reform of the Pennsylvania medical malpractice liability system. These coalition efforts include advocacy campaigns by the Hospital and Health System of Pennsylvania, the Urban Health Care Coalition, and Greater Philadelphia First.

The Pennsylvania Senate and House responded to the calls for medical malpractice reform. On February 13, the State House of Representatives amended and then overwhelmingly approved last week a medical malpractice reform bill, HB1802, which had been passed by the Senate the previous day. In modifying, rather than simply approving, the Senate-passed bill, the House stalled a Senate version opposed by the Hospital Association of Pennsylvania (HAP) and PMS as inadequate in its CAT fund relief and tort reform provisions. Although it does not include all of the tort reform and short-term CAT Fund relief sought by PMS/HAP and UPHS, the House-passed bill would modify the joint and several liability rule to include proportional liability for non-economic damages above $1 million. It also requires that awards for non-economic damages be reduced to present worth or paid periodically, thus strengthening the tort reform provisions contained in the Senate-passed legislation. The House did not, however, amend the legislation further to provide additional short-term relief in the form of lower caps on CAT Fund surcharges over the next several years.

HB 1802 has been sent back to the Senate for concurrence with House amendments. The House and Senate will be in recess until March 12, so no further action will occur until then.

City and Community Relations

City Council Activity

After months of delay, two key issues appear resolved by City Council.

1. Redistricting: City Council members are required by the City Charter to adopt a new redistricting map, redrawing the lines of its 10 districts to ensure equal population in each district based on new US Census figures. Since the fall session, this process had City Council members and the Administration very divided. Initial redistricting measures negotiated by Council President Verna were vetoed twice by Mayor Street. On February 7, City Council renegotiated a new plan that passed in City Council. Mayor Street signed into law this third bill redrawing councilmanic district lines, enabling council members to draw their first paychecks since October. The new district boundaries take effect in 2004, after the next councilmanic elections.

2. Neighborhood Transformation Initiative (NTI): Early last year, the Mayor introduced his comprehensive Neighborhood Transformation Initiative as a vehicle to improve the quality of life in communities throughout the City. Council President Verna offered a competing blight bill in November, providing a different funding and oversight scheme than the Mayor's proposal. In December, the City Council Committee on Finance conducted a two-day hearing on Council President Verna's bill. Penn's West Philadelphia Initiatives were frequently cited as an example of the value of investment in community revitalization. The full Council passed Verna's bill unanimously in December, but the Mayor vetoed the measure. City Council has since held hearings on the Mayor's original proposal offered by Councilman Darrell Clark and a new bill has been negotiated. The plan requires the Administration to submit an annual Neighborhood Transformation Initiative budget and project statement to Council. However, it eliminates Verna's proposed project review team, which would have had authority to approve all contracts and expenditures. The renegotiated plan meets the Mayor's expectations for oversight of the bond. Once the bill is passed by City Council and signed into law, as appears likely, bond-funded NTI program activity could begin as soon as July.