Ahhh, yes – we all remember the summer of 2009 as if it were yesterday. Politics was still full of Hope and Change. People argued about issues, and not back-waxing or naked intimidation. When we said Tiger Woods was “on the prowl,” we were talking about golf. (SIDE NOTE: How “Naked Intimidation” hasn’t already been used as the title for a late-night Cinemax movie is beyond me.)
In the Wisconsin Legislature, 2009 brought a new state legislature – and with it, a slew of new tax hikes. In order to fill a $6 billion budget hole, the Senate and Assembly approved a new $300 million tax on hospitals, which was supposed to draw down more federal matching money. Republicans roundly condemned this much-publicized “sick tax,” as they called it – pointing out that the tax will just be passed on to consumers, at the same time the legislature was complaining about the high cost of health care. (Under the plan, the new federal matching money would be directed to hospitals with high levels of Medicaid caseloads.) The GOP was actually successful in having a similar plan removed from the 2007-09 budget bill, but it was finally enacted in 2009 Act 2.
One would think that would end the debate about the “sick tax” – but as observers of the legislature know, if elected officials find a tax that the public can stomach, they will bleed it dry. (For example, a single pack of cigarettes will soon cost more than an iron lung.)
That is why a new “sick tax” is quietly working its way through the legislature. Under the original plan, “critical access,” or mostly rural, hospitals were exempt from the tax. Under Assembly Bill 770, that exemption would be gone – and these hospitals would have to begin paying the tax. According to a hospital lobbyist handout sent to legislators, the tax would collect $10.5 million in taxes, $4.6 million of which would go to the MA trust fund. The remaining roughly $6 million would be used to draw down $11 million in federal matching aid. So, in exchange for accepting a $10.5 million tax hike (which they just pass on to patients anyway), the hospitals reap $17 million in payments. To hospitals, it looks like free money.
On March 5th, the bill passed an Assembly committee by a 7-2 vote, with one Republican supporting it. It now makes its way to the Joint Finance Committee.
The problem with this bill is, of course, that it does nothing to address the real problem in health care – the growing cost of care. Instead, it merely raises taxes to fund those increasing costs. Furthermore, it builds in additional state costs with the promise of more federal aid. If that aid dries up, the state is on the hook for the rest. (Someone should ask Jim Doyle how his recent attempts at getting federal funds is going.)
What’s perhaps most troublesome is that this bill, while being rushed through while no one is looking, doesn’t appear to have significant Republican opposition. In fact, three Republican senators (Olsen, Lasee, and Schultz) and a handful of GOP representatives (Ballweg, Bies, Murtha, Spanbauer, Townsend) are actually co-authors of the bill. These Republicans are all rural, and likely believe this new tax will be a boon for their hospitals.
But if Republicans are counting on 2010 to be a big year for the party, they should be extremely careful about lining up to support tax increases to prop up unsustainable spending levels.