In The News

Reminder: Rent Control Will Not Solve the Florida Housing Crisis

From: The James Madison Institute

Orange County is facing a lawsuit from The Florida Apartment Association and the Florida Association of Realtors over its decision to add a rent control proposal to the 2022 November ballot. The proposal, which aims to selectively cap rent increases for a year, is the latest revival of the classic price-control method policymakers have used to stabilize the prices of amenities and goods. Rent control places limits (or price “ceilings”) on the amount a landlord may charge a tenant for rent. While rent control has historically been promoted to improve housing affordability for low-income families, its unintended consequences tend to harm the very families it aims to assist.

Despite well-documented negative effects of rent control—and a Florida statute that restricts its practice within the state—some state lawmakers and local commissioners are pushing for its revival. With the cost of housing rapidly increasing within the Sunshine State, policymakers must focus on reducing barriers to housing market entry for developers. This approach would increase the housing supply and thus reduce costs for inhabitants rather than exacerbate the crisis using the same counteractive initiatives that have failed in the past. Rent control has proved to cause a multiplicity of adverse effects, including decreased affordability, gentrification, and an increase in the migration of urban issues into suburbs. Problems that rent regulation aims to fix end up becoming amplified.

The practice of capping rent prices has a long history within the United States and continues to incite debate among lawmakers. Amongst economists, however, the policy is not very popular because it merely imposes a price ceiling on the housing market. As demonstrated by the fundamental supply/demand model pictured below, a price ceiling creates an imbalance between the quantity of supplied housing and the quantity of demanded housing. In other words, the amount of individuals/families seeking rent-controlled units exceeds the number of rent-controlled units available in a given area, causing a shortage in affordable housing. Price ceilings create the illusion of lower rent prices, but only a select few benefit from such a policy.

Affordable housing shortages encouraged by rent control occur because landlords are unable to charge rent prices that would otherwise prevail under an area’s housing market equilibrium. Rent control incentivizes—or financially forces— them to sell, demolish, or convert their rental properties to recover their losses. This is what economists Rebecca Diamond, Timothy McQuade, and Franklin Qian found when examining the effect of rent control policies on San Francisco’s housing market from 1990 to 2016. Like Florida, the city of San Francisco had been experiencing high housing costs, and its local officials sought to relieve this by implementing rent control policies. Diamond and her colleagues reported a 15% decrease in the supply of rental housing caused by these laws and noted a city-wide rent increase of 5.1% due to the reduction of overall housing supply. These affordable housing shortages displace many low-income families from their communities, which can have detrimental impacts on their health, transportation options, and education access.

There are ways that lawmakers can effectively address Florida’s housing and cost-of-living crises without stalling the housing market and displacing communities. One avenue would be to ease zoning and land-use regulations in high-demand areas. These laws, which regulate everything from the size and use of land to historic preservation requirements, can be costly and daunting for developers to comply with. Strict zoning laws are proven to make new development close to impossible. In fact, “in nearly every major U.S. city, apartments are banned in at least 70 percent of residential areas.” Such laws deter—or prevent—new housing development, thus stagnating supply and causing housing costs to rise. These high costs are passed down to tenants in the form of higher rent and outprice many households from their communities.

In removing tedious zoning and land-use provisions, Florida’s state and local governments would drastically reduce the barriers of entry for housing developers. The result is increased housing construction within high-demand areas and decreased rent prices for residents. Additionally, tax breaks could incentivize owners of single-family residences to turn their homes and properties into multi-family dwellings. This would also work to increase the supply of properties available for rent.

The high housing costs experienced throughout the Sunshine State are a result of a skyrocketing demand for housing, exacerbated by unprecedented migration patterns. This has prompted many state lawmakers, like those in Orange County, to propose a classic price-control restraint on rents to “stabilize” affordable housing options. However, this outdated method of placing a price ceiling on rental rates will not fix the housing crisis but merely create further imbalances within the state’s housing market. As seen in its previous implementations, rent control decreases the number of properties available for rent and displaces the families it intends to help. Instead of repeating a historic mistake, Florida lawmakers should take steps to reduce tedious barriers of entry—such as unnecessary zoning and land-use laws—to increase the supply of housing. This way, housing supply will be able to satisfy high housing demand and reduce the cost of living for all Florida residents.

GETTING GOVERNMENT OUT OF THE WAY OF NEW HOUSING

From: Frontier Institute

“GOVERNOR GIANFORTE’S HOUSING TASK FORCE HAS OUTLINED SEVERAL SERIOUS PRO-HOUSING REFORMS THAT WILL GO A LONG WAY TO BOOSTING THE SUPPLY OF HOMES THAT WORKERS, RENTERS AND YOUNG FAMILIES CAN ACTUALLY AFFORD.”

Over the last few months our CEO & President, Kendall Cotton has represented the Frontier Institute in Governor Gianforte’s Housing Task Force. And after a lot of hard work from members, the initial draft of recommendations was released earlier this week.

The overwhelming majority of solutions focus on removing the current government barriers to housing, but these can be broken down into 3 overarching themes.

1. Regulatory Reform

Six recommendations suggest the Montana Legislature directly address state and local regulatory barriers to increasing housing supply by streamlining permitting, placing sideboards on local zoning and broadly restoring the rights of landowners throughout Montana cities to build attainable forms of housing, particularly in areas where existing infrastructure can be maximized through infill development.

3. Investments to improve government efficiency, workforce development and private sector home construction. 

Four recommendations prioritize investments that would improve state and local government efficiencies, as well as incentivize private sector construction. Four other recommendations include encouraging public-private collaboration, requiring reporting for short term rentals, freeing up state-owned urban land for housing and local tax reform.

While this is just an initial draft of potential recommendations, we are pleased with the overall direction of the task force so far, especially the heavy focus on regulatory reform. Here’s Kendall’s statement on the draft:

“Governor Gianforte’s Housing Task Force has outlined several serious pro-housing reforms that will go a long way to boosting the supply of homes that workers, renters and young families can actually afford,” said President & CEO Kendall Cotton. “I look forward to listening to the public’s comments and working with the task force to refine the recommendations.”

Stay tuned as I continue to keep you updated on these reforms.

For Liberty,
Tanner Avery

Lawrence W. Reed is coming to Billings!
The author of “Was Jesus a Socialist?” & “Excuse me Professor” is coming to Billings on October 19th to answer the questions: What is a truly free society? What should the proper role of government be in that society?

Seating is limited so reserve your free ticket before they are gone. Click the here to reserve your tickets.

Updates On Licensing Reforms
Last week, the Department of Labor and Industry published its initial draft on potential occupational licensing reforms. Among these proposals are changes that would restructure board governance to mitigate conflicts of interest, increase the department’s ability to recognize licenses from states with similar requirements to Montana and the creation of provisional licenses.

Our Take: These reforms follow our recommendations we laid out in our Health Care Policy Playbook. If implemented, these reforms will go a long way toward expanding access to care throughout Montana.

Does ‘Infill’ mean the end of rural America?
In an article published this week by the Foundation of Economic Education, the author suggests that legalizing denser infill housing is the best way to accommodate everyone’s housing preference. By legalizing infill, people who prefer that option are free to do so, freeing up land that would otherwise be used for urban sprawl. Under our current overly strict zoning new housing would look much like figure 1, but when infill is legalized (figure 2), it actually frees up more rural land.

Our Take: Removing government barriers so that people are more free to live their life as they see fit is always a good policy. Allowing for infill doesn’t mean the destruction of rural Montana, but it does mean we can begin to address the housing shortage without having to lose the things we love about Montana.

Gov. Walz’s 100 percent carbon-free electricity mandate would make electricity more expensive for businesses

From: American Experiment

In Part 4 of this series, we discussed how the Walz Proposal would increase electric bills for Minnesota families by an average of $137 per month. In Part 5, we discuss how the proposal would increase electricity costs for businesses by an average of $9,900 per year.

Click here to view other installments in the series.

Increasing costs for businesses

Commercial electricity customers accounted for 32.6 percent of all electricity sales in the year 2020, according to the U.S. Energy Information Administration (EIA). Rising electricity costs force businesses to raise the prices of the goods and services they offer or reduce staffing or other expenses to help offset additional energy costs.

Under the Walz Proposal, commercial customers would see their electricity costs increase by an average of $9,900 per year, every year through 2050. Costs peak in 2040, when the average commercial electricity customer would pay an additional $17,698 that year for consuming the same quantity of electricity they used in 2020.

In the LCD Scenario, businesses would see their average annual expenses increase by $2,829 per year, and costs would peak at $6,712 in 2040.

The cost of electricity is a concern for businesses of all sizes, but rising prices would be especially harmful to small businesses for whom energy costs constitute a more significant portion of their overhead.

If we want a thriving small business community, increasing the cost of energy by an average of $9,900 per year, every year through 2050, is a massive step in the wrong direction.

Large industrial customers will also be harmed by rising electricity costs because these firms use massive quantities of electricity. These impacts will be discussed in Part 6.

Narrow Delaware beach highway under threat from climate change

From: WHYY

COSTS OF WIND AND SOLAR

From: Ethan Allen

Longtime environmentalist Michael Shellenberger said in an October 1 lecture in Sydney, Australia that one of the “most misleading ways wind and solar sales people sell their technology” is to claim the electricity produced by wind and solar is cheaper.”

 “However, the paradox about wind and solar energy is when deployed at scale, they actually make electricity production more expensive,”

“There are basically two reasons,” he said. “It requires more machines, more backup power generators, more transmission systems, and more people to manage the chaos of an electrical grid with a large amount of unreliable weather-dependent, variable, intermittent energy.”  

Shellenberger  said “Solar and wind produce too much energy when you don’t need them, and not enough energy when you do, and both of those impose costs on the electrical grid.”  He pointed to a prediction by German economist Leon Hirth, that the economic value of wind and solar [electricity] significantly decreases as they take up a larger percentage of the electricity mix on a grid.”

In a paper for Energy Policy in 2013, Hirth estimated, when:

1) Wind power generation is 30% of the electricity mix on a grid, its value decreases by 40%; and

2) Solar power generation is 15% of the electricity mix on a grid, its value decreases by 50%.

He noted that it would cost the US $750 billion dollars to create enough storage to back up the entire country’s electricity grid for just four hours.

Hurricane Ian Shows the Limits of Green Energy Policy

From: John Locke

Green energy policy is all the rage with Washington DC and Europe, but it’s storms like Hurricane Ian that can show the limits of its usefulness. As North Carolina endures the bracing winds and rains of the deadly storm, will the power of Ian reveal the flaws in pursuing renewable power like wind and solar over gas, coal and nuclear?

Hurricane Ian has devastated Florida and is now churning its way through the Carolinas. Though it’s been downgraded into a tropical storm, it’s strength and power will still be felt throughout the coast and far inland.

Gov. Roy Cooper declared a state of emergency on Thursday, and most of the Wake County schools closed for the day on Friday out of an abundance of caution.

Duke Energy is already addressing outages impacting about 40,000 North Carolinians, and other electricity providers are also scrambling to get the power back on throughout the state.

Southport, a city a little south of Wilmington, is also dealing with a storm surge and WRAL is reporting that there is “basically no beach left” in Wrightsville.

The impact from the tropical storm is far from over, but the path of the storm and its impact raises some serious questions about the future use of green energy in North Carolina.

Ironically, the storm is skirting by an area that Gov. Cooper has chosen for a future wind turbine farm. In an agreement with a North Carolinian and French company, the state will allow the development of a wind turbine farm 20 miles off the state’s southeastern coast near Wilmington in an area deemed an “empty ocean,” as apparently wildlife only matters when a company is building a pipeline and not a wind turbine farm.

There will eventually be an untold number of 800 foot or taller turbines dotting the coastline helping to power potentially 500,000 homes, or will it?

Looking at the disaster Hurricane Ian has wrought onto Florida, South and North Carolina, it’s unclear how wind turbines based in the ocean would help the state in any sense during a major storm.

From just a practically standpoint, the winds are probably too powerful for the blades to function, so in the event of a hurricane they would likely be turned off. And if the storm is damaging enough, how are power company officials going to address broken blades or other issues when ports and boats have been destroyed?

A blade that falls in the water cannot be returned to function on the turbine, nor can it apparently be recycled.

In a report earlier this week, Locke’s Jon Sanders pointed out a paper that analyzed the impact of hurricanes on the suggested coastal wind turbine farms, which determined nearly half would be wiped out within a 20-year period.

When it comes to solar panels, the jury is still out on whether that technology, which North Carolina is also pursuing, would be able to withstand the winds of a strong hurricane.

Chariot Energy, a solar panel farm company, admits that most solar panels are probably unable to sustain the winds and avoid the damage that can be brought by a major hurricane. Given that these energy devices are located on roofs or on the ground, debris can be a serious problem, except in some exceptional circumstances. So even if the system can survive the winds, debris could damage and render it unusable.

Green energy may be seen as the future, but it’s unclear if it can yet withstand some of mother nature’s most powerful forces.

For more about the potentially negative impact of the proposed wind turbine farms, read the John Locke Foundation’s report Big Blow: Offshore Wind Power’s Devastating Costs and Impacts on North Carolina.

America Needs Florida’s Secret to Success: Work

From: Foundation for Government Accountability

America works when people work. It’s that simple. When people don’t work it causes many problems – from high inflation to supply chain issues and shortages to stress from people overworked and businesses understaffed to government dependency and hopelessness. Today, amidst increased economic anxiety and decreased faith in our federal institutions’ competence to solve big problems, our elected leaders must act with urgency with proven reforms.

Now, the public is seeing bold action based on proven results. Senator Rick Scott recently unveiled legislation called the Let’s Get to Work Act—the most serious and bold welfare reform proposal in 30 years. It represents a turning point.

The Left continues to insist that we can spend our way out of problems like inflation and worker shortages. Of course, the government largely created those problems by spending money.

But history teaches us that the best way to get America working again is to get Americans back to work. To do that, Congress needs to work more too. That means more proven reform, not more government spending.

We both travel the country explaining to state policymakers how limited their options are for welfare reform under current federal law. States can’t have work requirements in either food stamps or public housing right now, even if they want to. They’re handcuffed, operating auto-pilot hand-out programs that depress their workforces and keep people in poverty.

And the architect of this new plan, Senator Scott, knows it. And he knows how to fix it.

In 2016, when he was the Governor of Florida, Rick Scott built stronger work requirements within these constraints and required all able-bodied adults between 18-49 years old without dependents on food stamps to work, train, or volunteer part-time. After that reform took effect, enrollment in that population declined by 94 percent as able-bodied Floridians went back to work in more than 1,000 different industries and earned higher incomes.

Results that clear and positive are rare in public policy. And it played a big role in making Florida the economic envy it is today.

This new, federal bill builds on those efforts by reinstating the ability of states to implement those work requirements—currently suspended by the Biden administration. It also expands the same requirements to adults between 50-59 and parents of school-age children.

Finally, the plan would build a more universal work requirement by spreading their success to able-bodied adults who receive public housing benefits.

This does more than allow all 50 states—from California to Florida—to design their own policies to build self-sufficiency in low-income households. It gets to the very source of so many of our current problems around inflation, government spending, and a pervasive, crushing dependency that is holding our workforce—and country—back.

Maybe even more importantly, it strengthens our safety net protecting the truly needy. In public housing, for example, the absence of a work requirement for the able-bodied means seniors and individuals with disabilities get stuck on waiting lists behind Americans who can and should be getting back to work and out of public housing.

In Florida, for example, the average Floridian has to wait four years to receive housing assistance in Tallahassee and nine years in Miami. Nine years! Clearly public housing is broken.

Of course, it takes more than good policy to take this big leap forward in welfare reform. It takes strong leadership in Congress. To rebuild faith in our political institutions and leadership, Congress needs to get back to work, too.

And this is exactly the kind of timely, realistic, and transformative project in which a functioning Congress would engage deliberately and thoughtfully. Senator Scott deserves strong praise for showing us what Congress should be doing.

The modern welfare state has encouraged the growth of a welfare industrial complex—an array of organizations that benefit from and defend the status quo.

Inevitably, they will label this proposal as heartless. But there is no heart in stretching a safety net meant for the truly needy beyond sustainability. It is not compassionate to keep someone able-bodied and work-ready in poverty and dependent.

The status quo is indefensible.

Of course, no single piece of legislation will restore our American ethic of work, eliminate inflation or the federal deficit, repair the public’s faith in Congress’s ability to work as it should, or make our welfare programs the hand up they should be.

But this legislation is a massive and vital step in that direction.

5 Outrageous Examples of Government Waste That Highlight the Need for Accountability

From: Goldwater Institute

Wasteful spending runs rampant throughout the ranks of government, from the federal level in Washington, D.C., down to state and local governments and school districts. But public records laws empower citizens to find out what their government is up to and expose reckless spending. Thanks to the Goldwater Institute’s new Open My Government guide, citizens can learn how to use these laws to hold public officials accountable.

Here are five outrageous examples of government waste that underscore the need for citizen oversight:

1. The city of San Francisco “wasted” over $20,000 on a trash can. Following a four-year-long research and development process, city officials stationed 26 new trash cans—15 custom-made prototypes and 11 off-the-shelf cans—around the city this past summer before picking a winner. But why did the city even bother with the custom-made models—which ranged in price from $11,000 to $20,900 each—when the off-the-shelf cans only cost between $630 and $2,800 apiece?
2. Between 2003 and 2017, the Washington Metropolitan Area Transit Authority spent at least $416,789 maintaining a self-cleaning toilet. That’s an exorbitant amount of money, but it gets worse: as of 2019, when this wasteful spending came to light, the toilet hadn’t even worked for the past two years.
3. In 2008, California taxpayers agreed to spend $9 billion on a high-speed rail project that would run from San Francisco to Los Angeles, cost $33 billion in total, and be operational by 2020. Fourteen years of delay and mismanagement later, new estimates project it will cost $105 billion, and the first phase of the rail won’t even be finished until 2029.
4. In 2019, the Illinois legislature allocated $98 million to a project that would research and implement a way to reduce the noise trains make when they stop. Illinois taxpayers were forced to pay this bill—a fraction of what the Illinois Policy Institute said was “nearly $4 billion in discretionary funds set aside for politicians’ pork projects”—after two former clients of the Illinois House Speaker complained about the sound.
5. In 2016, Pima County, Arizona officials agreed to loan $15 million to a company that wanted to send tourists to the stratosphere in specially modified weather balloons, with the conditions that World View Enterprises would make monthly repayments and employ a certain number of people. But as of last year, the company had never met its employment targets and hadn’t even been able to make its payments. The Goldwater Institute has led the way in challenging this illegal expenditure, since it violates the Gift Clause of Arizona’s Constitution, which forbids counties from lending or giving taxpayer money to private businesses.

Power to collect and allocate tax dollars is an essential government function; however, without careful oversight, all levels of government are prone to wasteful spending. That’s why concerned citizens, watchdog groups, and journalists have all worked to bring accountability by uncovering extravagant expenditures.

The federal Freedom of Information Act (FOIA) and state public records laws allow citizens to keep their government accountable by filing public records requests. These laws are an invaluable tool that provide individuals access to bills and receipts showing how their tax dollars are being spent.

Wasteful spending is just one aspect of government operations that needs oversight. Public records requests have also been used to open the books on public school curriculums and reveal electronic communications between government personnel. The public’s business should be open to the public, which means citizens have a right to arm themselves with the knowledge they need to shine a light on what their government is up to. As the Supreme Court wrote in 1978, “An informed citizenry [is] vital to the functioning of a democratic society, needed to check against corruption and to hold the governors accountable to the governed.”

The Goldwater Institute created Open My Government to help citizens successfully submit public records requests. It offers a step-by-step, state-by-state guide that outlines best practices for drafting well-defined requests for public information that are tailored to each state’s unique public records law. And for those who are met with resistance, Goldwater’s American Freedom Network of pro bono attorneys is standing by ready to help citizens in any state access the information they’re entitled to.

Why is Delaware’s FOIA Process still stuck in the ’70s?

From: Caesar Rodney Institute

In 1977, the Delaware General Assembly adopted Delaware’s Freedom of Information Act (FOIA), stating in the Delaware Code that:

“[I]t is vital in a democratic society that public business be performed in an open and public manner so that our citizens shall have the opportunity to observe the performance of public officials and to monitor the decisions that are made by such officials in formulating and executing public policy; and further, it is vital that citizens have easy access to public records in order that the society remain free and democratic.” (Source: 29 Del. C. § 10001)

I was in high school in 1977 and remembered calling my friends on our landline phone and running the long cord into the closet so I could have some privacy (all phones were landlines back then!). Forty-five years later, the technological world and the state government have changed immensely. Yet, the FOIA process has remained largely unchanged since the 1970s.

In other words, today, thirty years into the internet era, a FOIA request STILL must be made in writing to the appropriate public body – just like in 1977, with the caveat that the form can now be found online. The following is from the AG’s website:

“A FOIA request must be made in writing to the appropriate public body. The State of Delaware has a FOIA request form that may be electronically submitted through an online portal to various state entities.”

Delaware’s Cumbersome FOIA Process

Of course, the written submission is just the start of the process

After submitting a written request, the FOIA government agency can simply delay responding by stating that the request is “voluminous” – a term NOT defined in the Delaware Code. The agency also can claim that the request was not in “sufficient detail,” further delaying or canceling the request. In addition, the agency can ask for significant monetary compensation for “copying charges,” thereby limiting access to public information, especially in historically disenfranchised communities.

In short, there is limited remedy for citizens to gain access to public information from an expansive government bureaucracy. It is so bad that an effort was made in the recent Delaware General Assembly with the introduction of Senate Bill 155 to codify the rights of Delaware citizens to sue the Government in the Delaware Superior Court.

However, with court and attorney fees regularly running in excess of $30,000, this solution seems completely impractical for a Delaware parent who simply wants to know their child’s middle school curriculum.

Solutions Right in Front of Us

Fortunately, in 2022 there are technological solutions right in front of us, but that would require changing Delaware’s government focus from a reactive FOIA program to a forward-looking FOIA program.

Every document created today is created digitally (on the computer), and even documents received by the State as hardcopy can be scanned into a digital format to be on the computer.

The state of Delaware simply needs to post (make available) all public information on its website so that search engine crawlers can index the pages for web searches.

To do this, the State needs:

• A definition of public information – and this already exists in code;
• Someone in each department to be in charge of this process – and this already exists in the “FOIA Coordinators”; and
• An information technology infrastructure to handle the documents – and the State has the $60 million Department of Technology and Information and a website!

With the pieces in place, Delaware’s government should change its paradigm from defensively reacting to requests for public information to progressively ensuring that the words written in 1977 — “citizens shall have the opportunity to observe the performance of public officials and to monitor the[ir] decisions…” – are meaningful.

The “FOIA Coordinator” role should be changed to focus on loading ALL public information onto the State’s website for indexing by search engine crawlers so that the documents are searchable by any citizen at any time, thereby greatly reducing the need for written FOIA requests while creating an open government for every Delawarean.

(Note: There would remain some issues, like internal email exchanges, but by eliminating the broad requests for information, targeted requests become much easier to handle on a case-by-case basis. The AG notes that email requests can be handled by each public body “using reasonable efforts by its own staff.”)

Summary

In the Delaware Attorney General’s training of “FOIA Coordinators,” she lays out the purposes of FOIA:

• Promote governmental transparency and accountability
• Inform citizens
• Make it possible for citizens to observe and monitor the performance of public officials

However, a process created in 1977, when government was smaller, and technology did not exist, no longer achieves these purposes. Despite numerous attempts at tweaking the system, as recently as 2021, FOIA laws are NOT achieving their objectives.

With trust in the government at all-time lows, the Carney Administration and the Delaware state legislature should make it a priority that ALL public information be available and searchable online by default to all Delawareans.

As former U.S. President Barack Obama said in his 2009 address to the nation, Delaware should follow:

“My Administration is committed to creating an unprecedented level of openness in Government. We will work together to ensure the public trust and establish a system of transparency, public participation, and collaboration. Openness will strengthen our democracy and promote efficiency and effectiveness in Government.”

– Barack Obama

New Medicare plan riles state retirees

From: Cape Gazette

Lawsuit aims to block changes

A recent change in Medicare coverage for state retirees has many reconsidering their options as a lawsuit seeks to stop any changes.

Rehoboth Beach resident Gina Scanlon, a former Cape Henlopen School District employee who taught school for 39 years, said she received information in June on the state’s new Medicare plan for state retirees, calling it a nightmare.

“It’s more paperwork,” she said. “A nurse or doctor will have to approve treatment, which could delay treatment. There’s a possibility that someone’s health could be impeded because of the wait.”

In September, Scanlon said, she attended a meeting in Georgetown where state officials touted its new Medicare plan with Highmark Blue Cross Blue Shield – the Freedom Blue PPO Medicare Advantage Plan – also known as the Highmark Advantage Plan.

After the meeting, she said, she realized that some out-of-state doctors, such as those with the Johns Hopkins healthcare system, might not accept Delaware’s new Medicare insurance.

Scanlon said she plans to go with the new plan, instead of opting out, which would mean she would lose prescription benefits.

“I wish they would have asked us whether we would be interested in reducing benefits or other options before deciding on the new plan,” Scanlon said. “The worst thing about this is it was so underhanded and sneaky.”

Others agree.

The new Medicare plan for state retirees is at the center of a 111-page lawsuit filed Sept. 25 in New Castle Superior Court by RiseDelaware Inc., former state Sen. Karen Peterson and Department of Justice retiree Thomas Penoza. RiseDelaware is a nonprofit established “to act as a sentinel on issues involving state healthcare benefits provided for Medicare-eligible Delaware retirees.” Retiring legislator John Kowalko is listed as a director.

“This lawsuit is brought in response to defendants’ spectacular failure to comply with these statutory requirements,” states the lawsuit, which lists defendants Delaware Department of Human Resources Secretary Claire DeMatteis, Office of Management and Budget Secretary Cerron Cade, the Department of Human Resources, the State Employee Benefits Committee and the Division of Statewide Benefits.

“Indeed, defendants have decided to adopt a new regulation that deprives tens of thousands of state retirees over 65 years old of critical healthcare benefits without providing them the required notice, information or opportunity to be heard,” the lawsuit states.

Under state law, the state must provide its roughly 30,000 state retirees with a Medicare supplemental plan, which the state previously provided through a Highmark BCBS plan known as the Medicfill Medicare Supplement Plan.

Under the Medicfill plan, the lawsuit states, retirees were not limited to a specific network of doctors, and they were not required to obtain prior authorization from the insurance company before receiving treatments ordered by their doctors.

Now, the lawsuit states, new rules require doctors and hospitals to abstain from administering tests and treatments unless the insurance company authorizes them.

A State Employee Benefits Committee, chaired by DeMatteis and co-chaired by Cade, met for months to develop the new Medicare plan. While doing so, the lawsuit states, the committee failed to hold public hearings or allow public comment, and did not file notice of the regulation – all in violation of state law.

The lawsuit is asking a judge to rule that the committee violated state law by adopting the new Medicare plan, and to stop the state from implementing it.

“Defendants are like a jet plane racing down the runway with its wings yet to be attached,” the lawsuit states. “Confusingly, they say they have not yet executed a contract that will implement the change to Medicare Advantage.”

Peterson said she has not heard anything from the state, and does not expect to now that the matter is in litigation. She said RiseDelaware plans to hold a rally Wednesday, Oct. 12 on the steps of Legislative Hall.

DeMatteis and Cade declined to comment on the lawsuit.

A GoFundMe account has been created to pay for RiseDelaware’s legal fees and costs, with about $40,000 raised of its $150,000 goal as of Oct. 4.