Mark Sanchez: We've heard the ads on radio. We've seen the ads on TV. GLP-1s. These are these drugs that have come on the market the last few years. They are weight loss drugs. They also treat diabetes. They're expensive. And it's really put employers, especially if you're self-funded, and health insurers in a bind of, well we have something that's effective, but boy, they cost a lot. These are the drugs, Wegovy, Zepbound, Saxenda, and the other ones you see advertised. And this is a story we had last week. It came to us from our sister publication, Modern Healthcare, which is pretty well known in the healthcare industry. And it talked about a lot of the nonprofit Blue Cross Blue Shield plans in the nation, including Blue Cross Blue Shield of Michigan, kind of dipped their toes into expanding coverage for these blockbuster weight loss drugs, and then kind of pulled them back. Now they're still in the early days of these drugs. Some folks argue there's not real great evidence of clinical effectiveness or cost savings effectiveness because, you know, obesity is kind of out of control in America and it drives a whole lot of high-cost chronic medical conditions, diabetes being one of them. And what's the payoff from paying for these high-cost drugs now versus what's the payoff later? Do we start getting some of these high-cost chronic medical conditions under control? So, it's an interesting story that Modern Healthcare put together last week. Again, number of Blue Cross plans, including Blue Cross Blue Shield in Michigan, are just looking at how to handle these drugs, how to cover these drugs. They were talking about $1,000 per month for these medications. This is, I guess you could say, the marketplace sorting things out. Yes, there's an argument to cover them, but that cost is high. And as we've talked about here on the show, Patrick, health insurance just keeps getting more and more expensive. And part of the reason that the specialty drugs that do great things, but there's a big cost that goes with them.
Patrick Center: So, are we in that phase where it's the cost analysis, the return on investment that has yet to see enough documentation over time? Because as you mentioned, obesity creates a lot of these other chronic health conditions that we have. Is it just this time period that we're in trying to figure out the cost analysis?
Mark Sanchez: Absolutely. Like any business, you have capital costs, you spend money on something, you expect a return on investment in that. Now health insurers may operate a little differently, they spend money on medical claims, on prescription drug claims, but what's the return on that? What is the true effectiveness? And that's the return they're looking at is first the efficacy, the safety, and the effectiveness of these high-cost drugs. Do they work as promised? Will this lead to a better outcome? Will this lead to a better cost down the road? So that's like any medical innovation, that's the big question that gets asked of do you cover this early when it's on the market or do you wait to get some evidence, some basic proof that this is working as promised, that it's effective. Again, Blue Cross Blue Shield of Michigan is one of the Blue’s plans across the nation. They talked to Dr. James Grant, who's their chief medical officer at Blue Cross Blue Shield of Michigan. His line is, where they've approved innovation, they learned a lot of things. But what's the true benefit down the line? That's an equation still to come, because a lot of companies, especially if you're self-insured and your health insurance for your employees, this is part of the debate that you're having to have, is whether to cover these types of drugs. And know, Blue Cross Blue Shield of Michigan dropped coverage of GLP-1s for weight loss for its fully insured large group as well for the commercial plans this year, and it did not cover the drugs for weight loss and its individual exchange plans. That's the equation of what to cover, when to cover, how to cover, and it's something that the market's got to sort out.
Patrick Center: We're talking with Crain's Grand Rapids Business staff writer, Mark Sanchez. A ballot initiative. There's a group, they want to add an additional state income tax for people making over a half a million dollars annually, and that would provide an additional amount of $1.7 billion going towards K through 12 schools.
Mark Sanchez: This is the time, gee, didn't we just have an election? And we're already looking at the next one in 2026. In Michigan, the governor's race is going to heat up. We have several candidates for that. We've seen a number of candidates for an open U.S. Senate seat in Michigan in 2026. And now we've got the possibility of a ballot initiative, exactly as you explained it. It's basically add a state income tax for people who make more than $500,000 annually. The group behind it called Invest in MI Kids and My Kids, they say this would pump about $1.7 billion into K-12 schools. They're proposing it as a surcharge for folks over $500,000 or a joint filer over $1 million in income. Would add an additional 5% on the income tax and of the 4.8 million returns in the 2023 tax year in Michigan, they're about 14,000, a little more than 14,000. That's about one third of 1% that would be subject to the tax. That's data from the State Department of Treasury. So, the organizers of this ballot initiative, they formed their committee last week and plan to submit this proposed petition language. They say the schools are underfunded by billions of dollars each year and have a high student to counselor ratios, oversized classes, and there's not enough funding for infrastructure. So, they need about 446,000 valid signatures within a 180-day period to get this November 2026 statewide ballot. And their deadline is July of 2026. So, it's still a way off, but boy, these election cycles come quick. And it's one of those initiatives to watch. One of the statements in opposition came from the folks here in Grand Rapids, the West Michigan Policy Forum. Jase Bolger, used to be Speaker of the House here in Michigan, he called it his line worse is that this proposal would drive Michigan further in the wrong direction. They see it as the wrong way to go, higher taxes. Everybody wants to fund schools well, but they see this idea that's just going in the wrong direction for the state.
Patrick Center: We will stick with the topic of money. Michigan's oldest state bank is launching a new wave of community financial institutions.
Mark Sanchez: Let's go back many years. We had a wave of bank mergers in the late nineties, early two thousand. Out of that, we saw a lot of smaller community banks form. And over the years, we've seen this happen when you have consolidation in the industry, a group of investors, a group of bankers come in underneath, and they decide let's form a small community bank we believe this will resonate with people. But it's been a while since we've seen community banks forming. A lot of community bank formation here in Michigan. I think the last couple were Ann Arbor and Birmingham here in Grand Rapids many years ago. You had Grand River Bank come together. That's been at least a decade, probably 15 years. But now there's a gentleman, Gregg Bigger is his name, who returned to Michigan. He's a Michigan native, came back to the state a couple of years ago. And he first had this idea of forming what's known as a de novo bank, a startup bank. But there's a high capital cost and high regulatory burden. So instead, he went and bought this little bank in Decatur. That's a village, boy, in between Kalamazoo and St. Joe there in southwest part of the state. It's called the First State Bank of Decatur. It's a small bank, only about, I think, $64 million in assets. But what he intends to do with that is to use the state charter for that bank to start forming some other community banks. He's got a holding company, GTSB Financial Inc. And through that holding company, the First State Bank of Decatur has opened a loan office in St. Joseph to expand a little bit. GTSB Financial is also forming a bank in Traverse City called Grand Traverse State Bank. It's already got a commercial loan office, loan production office opened up there in Traverse City. Also forming another bank called Bank 313 in Detroit that's already got a loan office. So, it's an interesting way he's going about this. Rather than put out that capital and that regulatory burden, he found a less expensive way to do this, which is to acquire a small community bank. It's in this rural market down there in Southwest Michigan. He's using that as the platform to form some other banks that will operate in, again, in Detroit, Traverse City under their local brand names that's tied to the community. There's an interesting line he talked about when I spoke with him for this story, Gregg Bigger, he said, community banks have not been in big favor for a little while as far as people investing and forming these institutions. But he believes that's coming back. He believes that community bank space is kind of open again. And there's some investment groups in Michigan that he says, since they rolled this thing out a number of months ago, that they've been calling him to get involved in what he's building or perhaps to start their own. So, he's hoping to see kind of maybe another wave of community bank formation in the state.
Patrick Center: Crain's Grand Rapids Business staff writer, Mark Sanchez. Thank you so much.
Mark Sanchez: Thank you, Patrick.