FALL OCMA NEWS

HERE WE GO AGAIN!! OSHA MOVES FORWARD WITH CRYSTALLINE SILICA PROPOSAL

In 1999, OCMA, working closely with the American Foundry Society (AFS), assisted in stopping a speeding locomotive in the form of a significantly more restrictive OSHA crystalline silica standard. In 2001, after substantial industry opposition, OSHA announced they had removed crystalline silica from their regulatory priority list and indicated it would not proceed on the formal rule-making track. Having successfully stopped this proposal during the regulation-happy Clinton Administration, it was reasonable to conclude at the time that under a more business friendly Bush Administration, the crystalline silica standard would not be a agency priority. How wrong that conclusion has proved to be!

Like a Phoenix rising from the flames, the more restrictive OSHA crystalline silica standard is threatening to hammer an industry already burdened with the recently promulgated Iron & Steel Foundry MACT rule and the forthcoming implementation of the NAAQS ozone and PM standards. OSHA has formally requested the Small Business Office of Advocacy to convene a crystalline silica Small Business Regulatory Enforcement Fairness Act (SBREFA) panel for this year. AFS was successful in recruiting former AFS President Jack Pohlman, TPi Arcade, Inc. and Ron Pomeroy, Kansas Casting Inc. as members of the panel.

By law, OSHA is required to convene a SBREFA panel when it decides to promulgate under the formal rule-making process, a rule that would have a significant impact upon small business. Obviously, a more restrictive crystalline silica standard would have a monumental impact upon the metal casting industry where more than 90% of the companies are defined as small businesses.

In 1999, OSHA staff were contemplating a proposed rule that would have cut the Permissible Exposure Limit (PEL) for crystalline silica in half, from the present limit of 0.10 mg/m3 to 0.05 mg/m3. Such a proposal would have a devastating impact on any metal caster using sand to make molds and cores. At the OSHA stakeholder meeting in Chicago in June 1999, a person representing the Industrial Hygienist profession stated that attempting to measure crystalline silica exposure at that level would be nearly impossible. Nevertheless, it appears as if the present OSHA Administration is prepared to begin the long, difficult, and extremely important formal rule-making process for crystalline silica. OCMA will be greatly involved in industry efforts to once again derail this misguided proposal. Our industry cannot fail in this endeavor. This standard would surely be the “toothpick that broke the camel’s back” for our industry. We will need your attention and assistance. Please stay tuned for new developments, communicate the importance of this issue to other metal casters, and be prepared to assist in this battle.

MEETING UPDATE

Approximately fifty (50) OCMA members attended the Third Annual OCMA HR Day on Tuesday, October 7, 2003, in Columbus. Ohio Representative Chuck Blasdel from the 1st House District (Columbiana County home to Col Pump Company, Inc. and Humtown Products, Inc.) was the luncheon speaker. Representative Blasdel is an “up and comer” in the Ohio House of Representatives. He presently serves as Chairman of the Banking, Pensions, & Securities Committee, but also serves on the following key committees: Health, Insurance, and Ways & Means. The key points of his presentation are summarized below.

Ohio Representative Chuck Blasdel accepts his OCMA Speakers Award.

1. Born and raised in East Liverpool, whose most famous resident may be Lou Holtz, Rep. Blasdel related a story about the famous coach. Coach Holtz was commenting about an All American linebacker who “got knocked down at lot, but always got back up”. Rep. Blasdel compared Ohio manufacturing to that linebacker saying Ohio manufacturers have been knocked down before, but they have always gotten back up.

2. In order for Ohio manufacturing to “get back up” the State needs to take specific actions to assist manufacturing and other businesses. Rep. Blasdel outlined three actions that need to be taken. 1) Tax Reform, 2) Regulation Reform, and 3) Tort Reform.

3. Regarding tax reform, he noted that the Ohio income tax has nine brackets. This is “crazy” when the best tax system is both flat and broad. The income tax system makes it difficult for Ohio to compete with other states with less progressive tax systems. Additionally, the taxing of inventories reflects a system based upon the old industrial economy and severely inhibits entrepreneurs who are looking for a favorable tax climate. Taxing tangible personal property whether the new company is making a profit or not, does not present a very persuasive argument to prospective companies.

4. The budget crisis of this summer was an excellent opportunity to address the need for tax reform. Unfortunately, the Governor and Ohio General Assembly took the easy way out by raising the sales tax. He voted against the budget because the Ohio General Assembly failed to reduce spending or to reform the current tax system. He feels the legislature should have made a greater effort to reduce spending for Medicaid and education before it tacked on a higher sales tax.

5. Concerning regulatory reform, he related that the Ohio EPA complained about the fact that their funding had been cut. What the general public did not hear was that although the funds from the general revenue fund or grf were reduced by 10%, funding from fee and rotary accounts increased so much that the Agency received a 17% increase year to year. Rep. Blasdel is participating on a new committee – Regulatory Reform and Oversight and hopes that the regulatory structure can be altered in the near future.

6. A second element of a program to revitalize manufacturing in Ohio would be tort reform. Although Ohio has not suffered from the massive settlements that have taken place in other states, the need for tort reform is clear. He indicated that S.B. 80 was passed in the Ohio Senate and is now being discussed in the Ohio House. There are several competing ideas about how best to achieve tort reform. He believes that a comprehensive tort reform package will pass or multiple tort reform packages will be enacted.

7. An issue of great importance to our society is health care. He believes that health care will be the major issue of the 2004 Presidential election. Personally, he is growing more and more concerned about the issue because he fears that a national health care program may arise. The consumer is now too far removed from the economics of the health care transaction. Employees don’t pay the doctor or the hospital bill and therefore have little or no concern for the cost of care. A significant portion of the American public is now receiving health care from the government through Medicare and Medicaid. Without tough decisions by Congress and other health care policy makers, a national health care system could be in our future. To that he commented, “If you think health care is expensive now, wait until it’s free!”

8. The focus of the Ohio state government should be retention of the manufacturers that have already built viable businesses in Ohio. We need to maintain the manufacturing base in Ohio and strive for economic development by keeping these companies profitable. Ohio is not going to become a Silicon Valley. We have a strong manufacturing base and state government should direct its attention at helping companies find ways to compete in the world economy. More regulation and higher taxes are not the answers.

With OCMA President Walt Chaput, Erick Schmidt beams about his OCMA Speakers Award

Erick Schmidt, McGohan Brabender, provided the members present with a health insurance update addressing the drivers that are increasing health care cost in the U.S. McGohan Brabender represents more than 1000 employers and is the largest broker in Southwest Ohio. Highlights of his presentation are presented below:

1. Erick began his presentation with a slide that identified the problem in health insurance rate increases – rising health care costs. The chart presented showed the relative decline in health care costs in the early and mid-90’s due to the success of managed care. However, those benefits are no longer evident. From 2000 to 2002, the annual change in the average total health benefit cost rose by 17% while pharmaceutical costs rose by 25%. This increase was for active employees only.

2. Health care premiums are increasing at an average rate of 22-24%. Although the national average is 14-15%, this average includes reduced benefit packages and increased contributions by employees. Erick indicated that the success of managed care in the mid-90’s has contributed to today’s problem. Managed care created the illusion that health care was cheap. He compared it to how consumers would act if there were a $15 cap on the price of a tank of gasoline and how that would remove the consumers concern about rising gas prices.

3. Hospital spending accounted for the largest share of increased cost in 2001 (the latest data available). The rise in inpatient expenditures between 1998-2000 was due to:
· 19% due to technology
· 18% related to hospital consolidation
· 15% due to hospital underutilization
· 20% due to hospital wages including physicians, nurses, and other health care professionals.

4. Consolidation is helping hospitals become a market force, increasing utilization and costs. In 2001, hospitals accounted for 43% of the increase in health care costs, up from 31% in 2000. Demand is beginning to exceed supply, with the number of hospital beds per 100,000 declining 15% in the past five years.

5. Medicare is a payer for a larger portion of patients, but because it reimburses below actual costs, and this factor is trending upward, private payers are expected to make up the difference. In Ohio, Medicaid pays on average approximately 97% of the actual cost of health care, Medicare pays less than 93%, and private payers end up paying approximately 15% more than the actual cost of their care. For Premiere Health Partners, a large hospital group, uncompensated care in 1997 was approximately $40 million, in 2001; the cost had risen to more than $90 million!

6. Forces from physicians that are driving health care costs higher:
· Dissatisfaction with reimbursement levels
· Anti-managed care sentiment
· Physician recruitment
· Malpractice cost skyrocketing
· Service they provide
· No incentive to educate the patient re: costs
· Quality issues

7. Physicians will continue to challenge market balancing of price. The American Medical Association (AMA) is sponsoring an effort to allow a physician exemption from federal anti-trust laws essentially allowing physicians to group together for contract negotiation! The Congressional Budget Office (DB)) estimates that physician fees would increase 15% and the Health Insurance Association of America estimates this legislation could push health care costs up by $2.3 billion annually for Ohio alone!!

8. Although the President has suggested that the role of government is to fix the system where it is failing, federal programs and potential programs have the opposite impact. Medicaid costs are exploding in Ohio. Medicaid cost Ohio $10 billion out of a $45 billion budget. There was a membership increase of 84,000 last year; the total is now 1.4 million recipients. Medicare prescription program and patient bill of rights legislation will only exacerbate the cost explosion. Finally, in 1965 under Medicare there were eight (8) mandated health benefits. Today there are more than 1500 with 600 more proposed!

9. Insurance carriers have contributed to the increasing costs. Since consumers have demonstrated less tolerance for managed care, carriers have reduced these activities. They have gone from managed care to managed cost and become “simply a payer”.

10. Health care insurance premiums are increasing because drug costs and usage continue to escalate. Prescriptions are often the easy answer:
o The average person received about 11 prescriptions a year;
o As many as two-thirds of people taking Claritin and other allergy drugs don’t actually have allergies;
o One-third of the 150 million outpatient prescriptions for antibiotics are unnecessary;
o Lifestyle drugs are becoming more popular at a cost. Viagra costs approximately $85 for ten tablets; Xeniol, a weight loss drug, cost more than $100 for a one-month supply, and Zyban used for nicotine addiction cost more than $100 per month.

11. Drug Company increased investment in marketing is paying off through increased usage and profits. The average cost of a prescription increased 10% in 2001 to nearly $50. In 2000, of the $20.8 billion increase in prescription drug expenditures, 48% was due to increased usage of the top 50 drugs. The top ten drugs outspent, GM Saturn, Dell, Pepsi, Budweiser, Nike and Campbell’s Soup combined for advertising.

12. Consumer demand for health care is expected to grow into the future. Aging “baby boomers” will place increased demand on the healthcare system. Persons between the age of 55 and 59 will grow 24% by 2005, and by 41 per cent by 2010. On average, a U.S. male’s healthcare spending doubles in the 45 to 54 age group, and rises another 50% up to age 64.

13. Current benefit designs have insulated consumers from the true cost of health care services. The consumer out-of-pocket share of health care expenditures has decreased in the last decade, from nearly 23% in 1990 to 17 percent in 2000. The same holds true for prescription drugs.

14. What can employers do?
· Re-evaluate your health plan type and benefit structure to reduce premium expenses;
· Consider employee’s needs and input when selecting a health plan;
· Continuously improve employee knowledge and involvement in healthcare issues, particularly cost; and
· Recognize that health care coverage is not just a cost of doing business, but also an investment in your employee and the success of our business;
· Benchmark your health insurance plan.
· Design incentive plans that promote the use of generics;
· Use insurance committees;
· Explore the use of Health Reimbursement Accounts.

15. Some employers are making those employees who reject insurance coverage for their spouse under another available plan pay more for family coverage than for those employees whose spouses do not have such options.

Erick’s PowerPoint presentation, which is more comprehensive and easier to read than the handout, is available from the OCMA office. Just e-mail a request if you are interested.

Patty Phillips thanks OCMA President Walt Chaput while Scott St Clair admires the OCMA Speakers Award they will be sharing.

Patty Phillips, Ohio BWC, RN & Director of Injury Management, and Scott St. Clair, BWC Business Consultant, outlined actions the Ohio BWC is taking to control health care costs for injured workers. The highlights of their presentation are outlined below:

1. The medical benefit costs for injured workers have skyrocketed in the past several years as outlined below:
· Hospitals increased from $167 million in FY 1998 to $290 in FY 2003;
· Physicians costs increased from $260 million to $290;
· Pharmacy costs increased from $57 million to $131 million;
· Vocational rehabilitation costs increased from $10 million to $52 million.

2. During the same time period (1998-2003) indemnity payments for PTD/DWRF have actually declined from $400 million to $382 million. Additionally, claims have actually declined from 296,158 to 230,186.

3. From FY 1998 to FY 2003, the 60% increase in total medical costs have been fueled by an 81% increase in hospital costs and a 125% increase in pharmaceutical reimbursements. To address these increases the Ohio BWC convened a stakeholders meeting in January 2003 to discuss rising health care costs. All of the stakeholders were included.

4. For hospitals, the stakeholders made the following recommendations:

Outpatient Care

o Standardize clinical editing;
o Identify and correct utilization trends like frequent ER visits:
o Modify reimbursement structure to encourage and require alternative settings (outpatient, ambulatory care service) where services are less expensive.
Inpatient Care

o Standardize clinical editing (will begin on January 1, 2004)
o Modify reimbursement structure to reduce reimbursement from 79% to 75% effective January 1, 2004 and to develop a long-term strategy based upon DRG’s or Per Diem effective January 1, 2005.
o Assess effectiveness of MCO retro-review (will begin on January 1, 2004).

6. Since pharmaceutical expenses are the highest cost driver the following recommendations were made:

· Pharmacy benefits manager position established. Prior authorization now required for many drugs.
· Ohio BWC will establish a drug formulary in 2004 that will cover all claims and will deny reimbursement for non-WC type situations. Doctors will have to appeal decisions.
· Drug reviews will be established especially for expensive, over-utilized drugs such as OxyContin, a $350-400 painkiller.

7. For physicians, the following recommendations were made:

· Decrease reimbursements for injections beginning October 1, 2003. Focus upon pain management rather than trigger point injection by epidermal;
· Eliminate reimbursement for hot/cold packs;
· Standardize guidelines for injections, spinal cord stimulators and morphine pumps, a huge cost for very few patients;
· Form a new technology committee by July 2004;
· Establish chronic treatment guidelines by January 2004;
· Determine physician outcomes by July 1, 2004.

8. For vocational rehabilitation the following recommendations to be fulfilled by January 1, 2004, were made:

· Vocational rehabilitation accountability to be established. Pay interns at 85%; recognize and certify ergonomists; provide vocational rehabilitation provider report card, and provide detailed billing codes.
· MCO accountability will be established including sending quarterly summaries to employers and report outcome to Ohio BWC Dolphin.

9. What can employers do to help control costs?

· Continue efforts to prevent injuries/illnesses;
· Develop relationships with your providers;
· Manage claims aggressively;
· Realize the cost of unnecessary appeals;
· Promote return-to-work programs. A new Ohio BWC program to assist small employers is in the works;
· Consider claim settlement to avoid later exposure.

10. Additional strategies:

· Closely monitor your claims;
· Talk with your employees about workers comp costs, prevention, etc.;
· Find medical providers in your area and educate them about your worksite;
· Think about return to work (RTW) strategies;
· Find cooperative pharmacies.

11. The BWC dividends that company’s came to rely upon since 1996 have been rescinded this year because the BWC does not have a significant surplus from which to draw the needed resources. The last several years have provided minimum or decreasing investment growth and rising medical care costs have contributed to the reduction in the BWC surplus. Although the state insurance fund is fully funded, there is no longer a surplus.

The Patty Phillips and Scott St. Clair PowerPoint presentation is available from the OCMA office. If you are interested just send an e-mail.

EMTEC Report

Nick Cannell, EMTEC, provided the report. Highlights are outlined below:

· EMTEC will be receiving approximately 25% more in state funding to service the Wright Technology Group.

· Nick has been approved to seek federal funding for metal casting companies. He can offer assistance to companies attempting to win grants/loans from federal agencies such as U.S. Department of Energy.

· He reminded the audience that he continues to be ready and willing to assist companies interested in applying for Ohio BWC Safety Grants or loans from the Ohio Air Quality Development Agency (OAQDA). The Clean Air Resource Center is the small business program of the Ohio Air Quality Development Authority. It offers tax abatements and low interest loans for equipment purchased to reduce air contaminants. This would include a bag house, a new cupola, an exhaust system, etc. It is a fairly flexible program and there is no limit on the size of the program. Several OCMA members have benefited from partnerships with the Clean Air Resource Center. You can find the details at: http://www.ohioairquality.org

· EMTEC is involved with four casting related grant proposals:

· Use of fly ash to make cores for sand casting;

· The casting of aluminum knuckles onto extruded fiberglass/plastic rods for suspension components;

· The development of a plastic/aluminum alloy; and

· The development of a high temperature plastic/ceramic mold material for gravity casting.

Former OCMA HR Committee Chair John Lalley thanks the OCMA membership for his special, “super-sized” Iron Pourer in recognition of his eight years of outstanding service as the Committee Chair.

Former OCMA Treasurer Gary Follmer accepts his distinguished service award from OCMA President Walt Chaput while Gary’s predecessor and “interim” replacement John Burke looks on.

Photos courtesy of Nick Cannell, EMTEC

On October 1, 2003, the OCMA Environmental Affairs Committee sponsored an Iron & Steel Foundry MACT Workshop II at Ashland Casting Solutions in Dublin. Approximately thirty (30) OCMA members and non-members attended the workshop to hear presentations summarizing the final rule and providing information about how to “opt out” of the MACT rule. We were fortunate to have three of the top MACT standard experts as speakers; OCMA Vice President for Environmental Affairs Kurt Braun, Ford Motor Company, Jim Schifo, Keramida Environmental, Inc. and OCMA Trustee Craig Schmeisser, RMT, Inc. We were also very grateful for the generosity of Ashland Casting Solutions for not only providing the space for the workshop, but also, picking up the tab for lunch. With these valuable contributions, the workshop was both an educational and financial success.

Jim Schifo, Keramida Environmental, Inc., OCMA Vice President for Environmental Affairs Kurt Braun, Ford Motor Company, and Craig Schmeisser, RMT, Inc. discuss the workshop goals.

Jim Schifo, Keramida Environmental, Inc. makes a point during his presentation.

Craig Schmeisser, RMT, Inc., listens intently to a question from the audience.

Dennis Veith, GM-Powertrain – Defiance, asks a question while Bart Pinson, Honda of America Mfg., Inc., and Jeremiah Clegg, Burnham Foundry LLC observe.

Despite dwindling numbers, OCMA PAC Golfers hang tough!

The OCMA PAC Golf outings went off without a hitch this year and as the accompanying pictures below display, we had wonderful weather. The slow economy did contribute to less participation than usual, but the outing raised more than $600. The golf outing raises funds for political contributions to legislators and/or candidates who support manufacturing and metal casting. Most importantly, it provides an opportunity to leave work and your troubles behind and just “enjoy” golf and your metal casting buddies for an afternoon. Hope to see you next year!

Northeast Ohio Outing at Silver Lake CC:

John Kurtz, Kurtz Bros., Inc., John Lalley, Pascarell & Wiker, LLP, Walt Chaput, GM-Powertrain, Defiance, Ruben Bake, Ashland Casting Solutions, Karl Kane, GM-Powertrain, Defiance, Kurt Braun, Ford Motor Company, and Roman Pallone, Ashland Casting Solutions.

Southwest Ohio Outing at Four Bridges CC:

Bud Tibbits, Hill & Griffith Company, Dennis Baker, Flowserve Corporation, Russ Murray, OCMA, and Kim Myers, Griffin Wheel Corporation.