Right, since I am on vacation myself this week, I didn’t know the instant it happened that UPMC dropped their call for a tax credit (or something) from City Council in exchange for their donation to the Pittsburgh Promise. They probably felt the tax credit request was stirring up too much trouble. There was an opinion piece on Monday in the PG from Martin Gaynor of CMU that I was gearing up to respond to (c’mon, Gaynor is in a professorship donated by a former CEO of what is now Highmark, how ironic can you get …). Gaynor made the (vaguely worded) claim that UPMC was launching some elaborate scheme designed solely to benefit itself. But UPMC has dropped it all, although they do say that if they run a deficit any particular year, they should be let off the hook for the PP. Also UPMC is standing by the tax credit agreement the school board made with them. They are also making the mil and a half contribution for this year, at least, to the Pittsburgh Service Fund – the non-profit’s pot of money given directly to the city.
I’ve come to believe that UPMC did have a subtle agenda, but its target was not the city or the state legislature, rather it is the state insurance commissioner. Currently we have an acting commissioner, and given that state senate is republican controlled, th-our governor may not want to spend political capital to get someone acceptable to the republicans and risk offending his own party. Especially since Rendell is trying to shepherd through legislation on a state malpractice fund in surplus, and what to do with that surplus. Now is the perfect time for UPMC to have a low profile statewide, or at least a low negative profile. We tend to forget that UPMC is both a health care provider and a health insurance provider. As such, it is likely to get even closer scrutiny from the state insurance commissioner, especially if it runs a 600 million dollar profit; er, ... surplus; sorry, ... excess margin. To be perfectly honest, I am not sure whether the health insurance wing or the hospital part ran the surplus, or if they did together. Regardles, UPMC probably felt it had to make a grand charitable gesture to engender goodwill, and make the state insurance commissioner seem like Scrooge if he complained about UPMC’s excess margin.
I don’t think UPMC cared that much about getting a double tax credit (from the city and the school board), although I’m sure they felt it would have been nice. But I guess their assessment of the problems it might cause, and the likelihood it could cause lawsuits to arise, changed rapidly from last Monday to today. I think UPMC got what is wanted, though. There is still some hypothetical tax-incentive for other non-profits to donate, including Highmark (with its own large excess margin of over 300 million in 2005 and almost 3 billion in reserves. The trick for UPMC is to get non-profits (or anyone else) to contribute after next year, to trigger UPMC’s matching grants. If Highmark kicks in a million and a half dollars each year, after this next year, UPMC will match with its own million dollar contribution. The Pittsburgh Promise will benefit, and UPMC will be winning a strategic war, getting Highmark to put more money into this charity than UPMC does. Since everybody could get the same tax credit, and at least UPMC is assured of getting the tax credit, that is a small but essentially positive factor. In fact, UPMC is probably counting on everyone claiming the credit, giving it as their incentive to donate to the PP.
So UPMC has essentially won a tactical battle, having magnanimously given up their request/demand for the tax credit from the city. There had been some suggestion that non-profits should kick in some property tax dollars during the election, but mostly in terms of “wouldn’t it be nice”. UPMC had raised its own talk about that this past Monday, people wondering if a state senator or representative had tipped UPMC off or something. Mostly, though, I think UPMC was doing its own maneuvering to give future donors to the PP some incentive. In that regard its hard to see them as anything but successful.
I want to say something about the death of Benazir Bhutto in Pakistan. Pakistan has been something of a nightmare for us for years, all the way back to the eighties, when I guess we turned to them as our non-arab ally in the region. they are nuclear armed and seemignly a short step from becoming another terrorist-controlled state. As it is, we can't get to Osama Bin Laden, whom is believed to be in Pakistan. As allies, they have been a problem. So we apparently pinned our hopes on Bhutto, and surprise, now she is dead. We are saps, and dangerous ones at that.