Christian Schneider

Author, Columnist

Category: Health Care (page 1 of 2)

The Story of Business: Competing For a Future

A national watchdog group called Bankrupting America has put together an outstanding series of films that highlight the hurdles Wisconsin businesses are facing in trying to grow their workforces.

This once, called “Competing for a Future,” highlights MCM Composites in Manitowoc:

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And this one, called “Moving Forward in Uncertain Times,” features Great Lakes Calcium, a small business in Green Bay, Wisconsin that makes the compound in Tums.

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Fact Check: Scott Walker on Mammograms

While there are a few websites out there dedicated to fact-checking Wisconsin political ads (including Charlie Sykes’ “Politicrap,” to which I have contributed), it’s hard to catch all the ads that are circling the airwaves.  In fact, a good campaign will keep the accusations flying, so that by the time someone can actually test their veracity, it seems like old news.

But there’s one accusation that caught my eye in the past few days that needs some attention.  An ad run by the Greater Wisconsin Committee (funded with $1 million of Governor Jim Doyle’s campaign money) claims that Scott Walker once voted to “deny women mammograms,” and to “cancel” their policies.

Well.

The source cited by the ad is Assembly Amendment 15 to Assembly Amendment 2 to Assembly Substitute Amendment 1 to Assembly Bill 133, which is the state budget bill from 1999.  (Technically, Walker voted to “table,” the Amendment, not against it – but that’s neither here nor there.)

This vote was part of the kabuki dance that goes on with every state budget.  A caucus (in this case, Assembly Republicans) gets together and agrees to their version of the budget.  When their negotiated agreement comes to the floor, the minority party (in this case, Assembly Democrats) offers dozens, if not hundreds, of amendments to the budget package – knowing full well that none of them will pass.  The purpose of offering them is solely for campaign season, so they can use them against members of the majority party.  (Who knew they’d keep this one in their back pocket for 11 years to use against Walker?)  Oddly, nobody in the state media considers the hours they spend taking these votes to be “campaign activity,” when, in fact, these votes exist only to hammer lawmakers in political ads.

To show this is a bipartisan phenomenon, take the 2009-11 budget bill deliberations.  When 2009 AB 75 (the budget bill) came to the floor, Republicans offered over 120 amendments.  One by one, the Democratic majority tabled them.  So each Democrat voted “against” those amendments in the same way Scott Walker voted “against” mammograms.

As someone who’s run campaigns in the past, I know there’s a hierarchy of attacks you can make against an opponent – if you have something really good, you use it the best way you can.  If you have something that’s semi-good, you twist it to make it as good as you can.  And if you have nothing on your opponent, you use one of these obscure, castoff budget votes.

But let’s look at what Scott Walker voted “against.”

In the 1999 budget, Assembly Republicans sought to include a provision that would have helped small businesses purchase affordable health care for their employees (see page 128 of the amendment here.)  The “Private Employer Health Care Purchasing Alliance,” as it was called, would have had the Wisconsin Insurance Commissioner solicit bids from plans that wanted to take part in the program.  If an employer took part in the program, the employer was required to offer health insurance to any employee that worked more than 30 hours per week – and pay for between 50% to 100% of those employees’ health care premiums.

However, in order to provide more flexible plans to keep costs down, some of the plans were allowed exemptions from state-imposed mandates.  For instance, every health plan in Wisconsin must carry coverage for chiropractic service – which adds cost to health plans.  Mammograms are another state mandate, and health plans were allowed to take part that did not cover them.

However – and this is important – plans offered by employers had to include at least one plan with the full complement of state mandates.  From page 132 of the bill, line 22:

The department shall ensure that at least one health care coverage plan includes all of the coverages specified in subd. 2. (the list of mandates.)

What the bill attempted to do was to keep costs down by offering flexibility within plans.  If you are a young, healthy, male, you wouldn’t be forced to buy a plan that makes you pay for mammograms.  If you’re a female who’s never taken a drink of alcohol, you wouldn’t be forced to pay extra for a plan that covers services for alcoholism.  And if you didn’t want to pay for a chiropractor, you wouldn’t have to.  Although legislative Democrats purport to want to keep health costs down, every mandate they add raises the cost of health insurance.

However, the bill ensured that if you did want coverage for all these things, there would be a plan available to you through your employer.  (If your employer didn’t take part in the program, you’d have to purchase health care just like you do now – but with the full complement of expensive mandates.)  The amendment Walker voted to table would have moved many of these procedures back into the “mandated” category – but his vote didn’t deny mammogram coverage to a single woman in Wisconsin.  In fact, if the program were to be administered correctly, it would ensure that many more women received better health care through their employer for a lower price.

Oh, and it’s worth mentioning that the final budget that year was such a horrifying document, it passed by an overwhelmingly bipartisan margin – 82 to 17 in the Assembly.  And it did include a version of the Private Employer Health Care Coverage Plan.

Wisconsin: The Repeal Deal

prohibitionThe ink had not yet dried on the final letter “a” of “Barack Obama” before Republicans began calling for repeal of the massive national health care reorganization bill the president had just signed into law. This seems to be a politically shrewd move for the national GOP, as public opinion polls routinely show widespread opposition to the bill.

Leading the call for repeal is someone who had been one of the bill’s fiercest critics in the months leading up to its passage – newly minted national star Congressman Paul Ryan of Wisconsin. In 2010, only Lady Gaga has rivaled Ryan in terms of national media exposure (and it appears that her only talent is her uncanny ability to avoid wearing pants in public.)

Ryan has smartly re-framed the health care repeal movement, urging lawmakers to “repeal and replace” the recently enacted law. He rightly recognizes the need for Republicans to push actual ideas, rather than being cast in their usual role as nattering nabobs of negativity. In fact, Ryan can be credited as the single reason the GOP at the national level is no longer seen merely as the “party of no.” (Although just saying no to this health care bill may prove to be a political gold mine for Republicans.)

While Ryan’s visage may be new to political observers nationwide, his willingness to fight for repeal of an unpopular law isn’t new to Wisconsin at all. In fact, the Dairy State was the driving force behind one of the most famous repeal efforts in U.S. history. In 1932, it was Wisconsin senator John J. Blaine who drafted the resolution to repeal prohibition, ending over a decade of despair for thirsty Wisconsinites.

In retrospect, it seems crazy that Wisconsin – of all places – would agree to adopt a prohibition on alcohol. Yet on January 17, 1919, Wisconsin became the 40th state to ratify the 18th Amendment. (This came well after the 36th state, Nebraska, ratified the amendment, making it official.)

It is well documented that Milwaukee is very much a city founded on the strength beer industry. In the 1840s, German immigrants flooded to the city, making it the beer brewing capital of the United States. But soon, many immigrants from New England, a stronghold of temperance, began moving to Wisconsin. These new Puritan immigrants, coupled with a World War I-related anti-German backlash that swept through America, gave the temperance movement strong influence over public policy – even when that influence threatened Wisconsin’s most popular industry.

Even when the Volstead Act (the 18th Amendment’s enabling legislation) took effect, Wisconsinites didn’t actually believe the law would stand. In 1922, The Milwaukee Telegram predicted the law would never stand, even as it was going into effect. Ninety year-old Jeremiah Quin wrote the following in opposition to the imposition of prohibition, in language that may be familiar to opponents of the recent health care bill:

blaine“The manner in which attempts are made to enforce this law is offensive to me as it must be to every man of spirit. From the observations of political movements for more than half a century, I conclude that this form of prohibition will not continue; it is producing a daily increasing reaction against the policies in force. It is the manner, not the morals, that is offensive.”

Naturally, once enacted, prohibition became wildly unpopular in Wisconsin. It virtually killed the breweries in Milwaukee, some of which began to make “near beer,” while others shifted over to making ice cream, soda, and cheese. When Schlitz Gardens closed in 1921, the Milwaukee Journal yearned for the days when the entertainment venue attracted such luminaries as New Jersey Governor Woodrow Wilson (who was running for president at the time, and reportedly refused to actually drink a beer.)

In the pages of the Milwaukee Sentinel in February of 1932, Gunnar Mickelsen offered up this erudite defense of drinking, and why Wisconsin was a miserable place without it:

“Now, it is our theory that Milwaukee was happy because it talked. The urge to hold conversation, to communicate ideas and experiences is one of man’s major motivations. It is behind most of his endeavors and his works. Deprive him of the privilege to talk and you rob him in no small measure of his ambition to do.

What use are actions if he can’t talk about them later? The man’s ego who is satisfied at the mere doing, without telling others or hearing their praise or criticism, is a rare fellow. The happiest persons are those who have something to say, know how to say it, and are given the opportunity to do so.

Beer and wine make for conversation. There is in liquors of mild alcoholic persuasion that which quickens the flow of the thoughts in a man’s cranium, loosens a notch the belt about his reticence, and releases upon his tongue the fruits of his meditations. It is for precisely this reason that men have resorted to alcoholic drinks as a means to make their companionship more vivid and happy.”

Mickelsen, no matter how specious and entertaining his logic, had some important people in his corner. One of these individuals was Republican U.S. Senator John J. Blaine of Wisconsin, who made the repeal of prohibition his personal mission.

Modern Progressives would bristle at any comparison between the conservative Paul Ryan and John Blaine, despite their shared desire for repeal of unpopular federal laws. Blaine, while a Republican, was a steadfast Progressive and a loyal follower of Robert LaFollette, Sr. Born to a farmer with egalitarian beliefs, Blaine’s disabled left arm forced him into professions other than the family farming business. After attending college, he went on to law school, becoming involved in the Progressive wing of the Republican Party. By 1902, he was in Robert LaFollette’s inner “Madison ring” of Progressive confidantes.

Blaine was elected Wisconsin attorney general in 1918 before serving three terms as governor. When his hero, LaFollette, died in 1925, a fight broke out to replace the legend in the U.S. Senate. Blaine struck a deal to support Robert LaFollette Jr. for his father’s U.S. Senate seat, in exchange for campaign help against incumbent Senator Irvine Lenroot in 1926. Blaine defeated Lenroot, and quickly became a thorn in the sides of both Presidents Calvin Coolidge and Herbert Hoover. (In his first session, Blaine voted with the Republican majority in the senate only 35% of the time, or less than any other Republican.)

While Blaine was a forceful advocate for the use of the federal government to overcome the hardships of the Great Depression, it was his opposition to prohibition that finally forged his name in the history books. His fierce opposition to the 18th Amendment grew out of his progressivism – he saw prohibition as a recipe for public corruption and didn’t believe it was enforceable. He also didn’t believe it was the government’s role to enforce morality, saying, “I am opposed to prohibition as a matter of principle. I think it is wrong. I think any legislation that undertakes to regulate purely personal habits of individuals is wrong.” He believed that prohibition fostered “an orgy of official corruption in national affairs never before equaled in this country.”

In every session he served in the Senate, Blaine introduced a resolution to repeal prohibition. It wasn’t until the 1931-32 session (his last, incidentally) that his resolution was adopted and sent to the states for ratification. He lost his seat in a Republican primary in 1932, and died two years later at the age of 58.

While Paul Ryan is the face of the modern “repeal” movement, he isn’t the first Wisconsin elected official to face down the federal government in opposition to an unpopular law. American society changed forever because of John Blaine’s willingess to fight for your right to party. (College students all over Wisconsin can be seen honoring Blaine’s memory every weekend by getting hammered and singing “Sweet Caroline” at the top of their lungs at bars.)

Even with Blaine’s tireless work and public opinion at his back, it still took over a decade to repeal the 18th Amendment. (Furthermore, prohibition prevented individuals from doing something they wanted to do – drink – while the current health care bill forces many people to do something they don’t want to do – purchase health insurance.) It remains to be seen whether Ryan can effectively channel public sentiment in the same way.

Not All Democrats Are Hi-Fiving Today

It was at 10:37 on Sunday night that Speaker of the House Nancy Pelosi announced the big health care bill had passed.  (Boy, is she going to be surprised when she finds out what’s in it.)  As the Speaker banged the gavel to close the proceedings, a cheer went up, and Democrats could be seen on C-Span awkwardly hi-fiving each other.

Yet the Democrats within the walls of the House chambers on March 21st may be the only ones celebrating.  In living rooms all over America, state and local Democratic lawmakers likely swallowed hard when the final vote finished.  That sound you heard at 10:37 wasn’t Pelosi banging the gavel – it was the sound of Tom Barrett, Jim Sullivan, Pat Kreitlow, and Kathleen Vinehout dropping a couple of Filet-o-Fish in their shorts.

Americans are busy people.  They’re busy raising their families.  They’re busy working.  They hunt, they fish, and they read books.  (Apparently the only thing none of them do is watch The Marriage Ref.) In the time they allot for paying attention to politics, they really can only pay attention to the large national debates of the time.  Few of them can name their governor. Fewer still can name their state representatives and senators.  As a result, state Democrats may pay dearly at the polls for what their federal masters hath wrought.

We’ve seen it before, and only a couple years ago.  In 2006, Wisconsinites were fed up with the war in Iraq – and Republicans at the state level paid a heavy price (despite 80% of Wisconsin lawmakers being unable to find “the Iraq” on a map.)  The lengthy and unpopular war sent people flooding to the polls to vote against Republicans, costing the GOP four state senate seats and dropping them into an 18-15 minority.  The Assembly, which once had an almost insurmountable GOP majority, lost in the neighborhood of 10 seats in 2006 – holding on to a slim majority that they eventually relinquished two years later.

Our polling at WPRI shows that there’s still plenty of time for the GOP to screw their Wisconsin legislative races up – but it appears that despite not taking a single vote on ObamaCare, Democrats in swing districts may get swept up in the anti-health care tidal wave.  In this respect, ObamaCare will be like the Democrats’ Iraq – a historic overreach that angers the electorate to the point where they defenestrate the majority party.

Some of these Democrats in swing districts have already smartly tried to distance themselves from the federal health care bill.  Democratic senator Pat Kreitlow took a break from his windbaggery to co-sponsor a bill allowing for a tax credit for Health Savings Accounts (HSAs), a concept previously anathema to legislative Democrats.  (I can’t wait to hear his fellow Democrats lambaste him for “only wanting to help the rich,” as they’ve done to Republicans for a decade for supporting HSAs.)  Kreitlow’s approach marks a stark contrast to the remainder of the Democratic Senate, which a couple of years ago actually tried to sneak in a state health plan that managed to be much worse than ObamaCare.

(Oh yeah, remember the “Healthy Wisconsin” single payer health plan?  The one that was SO important Senate Democrats had to sneak it in to the state budget with one day’s notice?  The one that we’re all supposed to pretend never happened?  In some odd way, state Democrats may have been saved by their own incompetence – had “Healthy Wisconsin” passed, we’d probably be looking at a State Senate in which Republicans outnumbered Democrats 32 to 1.  (Madison will continue to elect Fred Risser’s democratic brain in a jar for 100 years after his death.)

So while Democrats at the federal level may have delivered themselves a “victory,” they may have also delivered their colleagues at the state level a death blow.  Their “courageous” vote (note: in most cases, taking bribes in order to vote for a bill is criminal – President Obama has now deemed it “courageous”) may now deliver the states the same thing Ted Kennedy delivered to Massachusetts – more Republicans.

Oh, and a final note – I wrote a whole post without making the inevitable “health care is bad medicine for the Democrats” joke.  Although I guess I just did.

The “Sick Tax” Is Back From the Dead

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.

I Will Gladly Pay You Tuesday For an Expensive Government Program Today

Say what you will about the Wisconsin State Legislature: they stick with what works.  And in the case of the looming state Medicaid deficit, they’re going right back to the same playbook that allows them to slink silently away from their problems without making any real decisions – while leaving us with larger deficits in the future.

According to the Milwaukee Journal Sentinel, the state is facing a $1 billion hole in its Medicaid program.  For the purposes of scale: A billion dollars is a lot of money. The $1 billion shortfall makes up about 17% of the total amount the state spends on Medicaid in a year (although $1 billion is slightly less than the amount Tiger Woods is going to have to spend on a diamond ring for his wife to keep her around.)

Certainly, the state is taking this matter very seriously.  Undoubtedly, our Legislature is combing through the state budget to find efficiencies, or cost-saving measures, or other state programs than can be cut in order to fund this program.

I’m sorry, I can’t keep a straight face anymore.  In fact, what they’re actually doing is taking almost $200 million in payments and just pushing them off until the next biennium, so they’re off the books in this fiscal year.  Then, POOF!  The money just disappears! – Until next year, when they have to figure out how to fill that $200 million hole.

This is a textbook example of how the state has been running up huge structural deficits over the past decade.  The Governor and Legislature decide they want a certain level of government, but have no way to pay for it.  So they just keep pushing spending off into the future, until we end up with a $6 billion deficit when tax revenues slow down.  Naturally, they wash their hands of any responsibility – blaming the deficits on the bad economy.  (I wrote a 40 page paper demonstrating how it actually is their fault, and I think it’ll come in handy for you, especially if you’re an insomniac.)

Perhaps most entertaining is the quote from Governor Doyle’s Medicaid Guy, Jason Helgerson, on why the state is seeing deficits:

Jason Helgerson, who oversees BadgerCare Plus and other Medicaid programs, said the potential shortfall could be offset if the federal government extends the increased payments that states are receiving for their Medicaid programs under the federal recovery act.

“Every state in the nation is facing this,” Helgerson said.

Translation: “PLEASE, BARACK! WE NEED MONEY!  PLEEEEAAAASE!!!!!   PLEEEEEEEEEEEEAAAAAAAASE!”

Furthermore – it’s extremely doubtful that other states are facing the problems that Wisconsin now has to solve.  After all, we’re the state that increased spending 6% at a time when we faced a $6 billion deficit.  And we’re the state that has no rainy day fund to use when times gets tough.  And we’re the state that allows drunk Santas to drive around, terrifying kids (which isn’t really relevant, but entertaining nonetheless.)

So here’s a test – call your bank and tell them you’re a little short on cash this month, so you won’t be making any mortgage payments until July.  Congratulations – you just balanced your books, Legislature-style! Then call me from jail and tell me how the experiment went.

If It’s Broken, Let’s Break it More

Last week, I wrote a commentary detailing how, rather than keeping health care costs down, government programs usually grow much more rapidly than expected.  As an example, I used the BadgerCare program, which, after implementation in 1997, grew much faster than anyone anticipated.  Within several years, the Legislature had to start scaling back benefits in order to keep the program going after membership in the program doubled in the span of 6 years.

Today, we get news that Governor Doyle’s new “BadgerCare Plus” program is suddenly short on cash.  As a result, new registrants to the program will be suspended, leading to waiting lists of up to 20,000 people, by Doyle’s own estimate.

Ironically, this rationing of government health care leads Doyle to the head-scratching conclusion that somehow what we need is MORE government health care:

The heavy demand for the program over the last 3½ months highlights the need for national health care reform, Doyle said.

“I believe we must make sure that people have health insurance,” Doyle said. “We have done everything we can in Wisconsin. We have stretched all boundaries and still there are people falling through the cracks.”

So on the SAME DAY he announces his own health care rationing, Doyle calls for even more of the same, only at the federal level.  As if this new federal program would contradict the evidence that his own state program has provided us – that such a program would do nothing to keep costs down, and only serve to drain citizens of their tax dollars.  This is like arguing that the problem with the corrupt Wisconsin Shares program is that it isn’t adequately funded.

Wisconsin’s Own “Public Option”

crossIt’s a given that both sides of the health care debate feel that they have the high road when it comes to compassion. But the goal shouldn’t be to confuse mere action with progress. Lawmakers would be best to heed Robert Frost’s admonition that it is more important to “do good well.”

At the center of the debate is the idea of a “public option:” a government-run health program that liberals say would merely compete with private plans for customers.

Conservatives counter that historically, when a generous government plan is instituted, private businesses tend to scale back or even drop their health plans, so their employees can save them money by going on the public plan. As a result, taxpayer funded health programs grow much faster than originally anticipated, quickly driving governments into the red.

History is replete with examples of how government health care programs have escalated quickly, devouring public funds as fast as taxpayers can write their checks. As pointed out by Michael Tanner of the CATO Institute:

In 1967, the House Ways and Means Committee predicted that Medicare would cost $12 billion in 1990. In reality, the program cost over $110 billion that year. In 1987, Congress estimated that the Medicaid Special Hospitals Subsidy would reach $100 million in 1992. The actual cost exceeded $11 billion.

Wisconsin, where 45% of individuals who have health care receive it through some sort of government source, has its own example of a health care program run wild. Wisconsin’s BadgerCare program, enacted in 1997, should serve as a warning to those who believe costs can easily be contained within a tidy public program.

Since its inception, BadgerCare has proven to be a difficult program for which to accurately estimate costs and has now grown into a much more costly program than originally envisioned. Enacted in 1997, BadgerCare was intended to provide health insurance for individuals below 185% of the federal poverty level (FPL), but above the 133% cutoff for MA eligibility. The thinking was that people in the gap between 133% and 185% would pay a premium for health care, while those under the 133% level would continue to receive cost-free benefits. Once in the program, people could stay in the program until their income reached above 200% of the FPL.

At the time the Legislature began considering the new program, their Fiscal Bureau was warning them of the possibility that employers may respond to such a generous new program by dropping coverage for their employees. A September, 1997 Fiscal Bureau memo seems prescient in retrospect:

“It should be noted that without sufficient regulation, over time, the cost of expanding MA coverage under Badgercare could increase if under BadgerCare, employers with significant numbers of low-wage employes choose to no longer offer employer-subsidized health benefits or to lower employer subsidization to a level below 80%.”

The first drafts of BadgerCare legislation had enrollees paying 7% of their income in premiums to participate in the program. Charging premiums for this group was thought to “encourage personal responsibility and move individuals from government support toward self sufficiency.”

In the final bill, the Legislature reduced the premium to 3% of an eligible family’s income. Additionally, families with incomes up to 143% of the FPL were eligible for free care; up from the initial 133%. The program was funded through a mixture of general purpose revenue, expected premiums paid by enrollees, and federal matching funds. The LFB estimated that at the 3% premium level, the program would serve 19,600 children and 22,800 adults, for a total of 42,400 enrollees.

When the program went into effect in 2000, the results were somewhat of a surprise, given the expectation that cost sharing made people “self sufficient” and low premiums saved money in the long-term. In the first quarter of enrollment, the program welcomed 23,151 new enrollees (6,298 children and 16,853 adults). By the end of 2003, that number had grown to 114,237 enrollees (37,839 children and 76,383 adults).

The cost of BadgerCare increased commensurately. In Fiscal Year 2001, the first full year of the program’s operation, the Legislature spent $129 million in all-funds revenue on BadgerCare. By Fiscal Year 2004, merely three years later, that number had nearly doubled to $205.6 million.

The introduction of a new, high cost program like BadgerCare couldn’t have come at a more stressful time for the Governor and the Legislature. In 2003 they were dealing with the aftereffects of the 2001 recession and, as was the case in nearly every state, tax revenue plummeted leaving the state budget with a $3.2 billion budget shortfall. Every program, including BadgerCare was put under the microscope in search of savings.

In response to both the fiscal challenges and policy concerns, the Legislature began to make changes that trimmed the BadgerCare program. In the 2003-05 budget, new requirements were added that:

  • Increased premiums for enrollees over 150% FPL from 3% to 5% of family income;
  • Required each member of a family who is employed to verify his or her earnings;
  • Required enrollees to provide documentation as to whether their employer provides family health coverage; and
  • Required participants to provide documentation as to how much their employer pays towards their health care premiums.

It was clear to the Legislature that BadgerCare costs were unsustainable given the fiscal condition of the state. The action taken by the Legislature worked. Enrollment in BadgerCare began to fall in 2004. The program had reached a high water mark of 114,237 enrollees in March 2004; by September 2006, that number had dropped to 94,034. Accordingly, the cost of the program also fell. As noted, in Fiscal Year 2004, $205.6 million was appropriated for BadgerCare. The next year, appropriations for the program fell to $188.6 million, before climbing to $194.4 million in fiscal year 2006 – likely due to the rapidly rising cost of health care.

Proponents of an extensive new federal program argue that government health care doesn’t necessarily mean “rationing” care. Yet within six years of enacting the BadgerCare program, Wisconsin had to do exactly that. The arguments that somehow health care would cost less if people got more care clearly didn’t ring true in Wisconsin, which has one of the highest rate of insured citizens in the nation. Instead, health cost ballooned quickly until they were reined in. In fact, BadgerCare was so unsuccessful at making health care more affordable, legislative Democrats have been pushing a statewide single-payer program for several years.

It is often said that states are the “laboratories of democracy.” Here in Wisconsin, we’ve gotten out our lab coats and Bunsen burners and tried massive government health care programs, to no avail. The federal government would do well to heed the lessons we’ve learned here.

Because No American Should Have to Choose Between Health Care and Getting Their Drink On

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Helping the Sick Pay More for Health Care

Last week, the Joint Finance Committee passed a budget with numerous non-fiscal policy items tucked in amongst the myriad tax increases, fund raids, and increased borrowing.  One of the most talked about policy items, the changes made to “joint and several liability” laws, still has yet to resonate with the public.  (Perhaps opponents should introduce a mascot, like “Whiskers, the Joint and Several Liability Bunny” so people get the idea.)

In order to clarify what effect the new law may have on the legal climate in the state, the Wisconsin Medical Society (which represents the state’s doctors) has provided us with a handy-dandy example of how it will affect health care:

A patient sues three physicians as a result of an injury. After trial, a jury determines that physician A was 30 percent negligent, physician B was 25 percent negligent and physician C was 45 percent negligent. Under current law, each physician and his or her insurer would be liable to pay based on the percentage of negligence because each physician was less than 51 percent negligent. In this example, none of the three physicians would be required to pay the entire award.

The proposed change in the law, as amended by the Joint Committee on Finance, replaces the 51 percent negligence threshold for joint and several liability to apply to 20 percent. Therefore, under the new proposal any of the physicians could be required to pay the entire award because of joint and several liability. This could be especially problematic depending on where the physicians are employed. If a medical liability case involves physicians who pay into the Injured Patients and Families Compensation Fund and some who do not, this creates the scenario where “deep pockets” become the primary incentive for a suit rather than the amount of negligence involved in a case. For example, if a physician who pays into the IPFCF is found to be 20 percent negligent while a non-paying physician is found to be 80 percent negligent, the plaintiff could recover the entire amount of the liability from the physician who pays into the Fund despite that physician’s low level of negligence.

Wisconsin’s medical liability insurance laws require that the Fund pay for claims that exceed the primarily level of medical liability coverage, which could mean more money coming out of the Fund in cases described in this example. If the Fund has greater liability because of the joint and several liability issue, then Fund fees could increase dramatically. The potential for increased liability for the Fund based on changes to the comparative negligence statute might be something that the actuaries consider in calculating the financial risk to the Fund. Private medical liability insurers might also increase insurance premiums for primary coverage if they believe there is a risk of paying more in claims because of the proposed change.

In short, health care just got more expensive.  Higher lawsuit payouts will mean greater costs to doctors and insurance companies, which will need to pass these costs along to consumers.  Plus, it could lead to less efficient care as physicians get pushed more toward defensive medicine, ie. overutilization of MRIs when an x-ray would do, etc.

This appears to be the logic of legislative Democrats – they’re going to make your health care more affordable by making it more expensive.  Sadly, people looking for cheaper health care don’t generally make campaign contributions.  So when two liberal interests collide, you can bet the one that writes the checks out during election season will win.

The Most Coherent Defense of Universal Health Care Yet

Lost in all the hullaballoo about Miss California’s support of “opposite marriage” during the Miss USA pageant last week was this unbelievable answer from Miss Arizona, when asked if she supports universal health care:

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That made more sense than anything the Wisconsin Democrats supporting “Healthy Wisconsin” have said to this point.

Spend Less Tax Money, Get Healthier

Every year in the United States, various levels of government spend trillions of dollars to help treat illnesses. Our government is adept at spending money on the back end to ameliorate the effects of disease. But what if government spending itself was to blame for much of the sickness?

Take, for example, the federal government’s farm subsidy policies, which pump billions of dollars into the production of certain crops – most notably, corn. Between 1995 and 2006, taxpayers have shelled out $56.1 billion in corn subsidies. That’s nearly three times as much as the next two closest subsidies, wheat and cotton. Between 1995 and 2006, Wisconsin farmers have collected $2.4 billion in corn subsidies.

These subsidies have profound effects in many areas, from the environment to our health. Corn subsidies make it profitable for farmers to plant crops in areas that may previously not have been profitable, which encourages the clearing of forest land and natural habitat for farming. The total planted area of corn, at 93.6 million acres, is up 19 percent from last year, to the highest level since 1944.

But perhaps more importantly, federal subsidies encourage the overproduction of corn, which may be contributing to the deterioration of our health in America. Prior to 1973, the federal subsidy program kept family farms afloat by limiting the amount of corn in production. Essentially, the federal government paid farmers not to farm. In 1973, with lawmakers recognizing the absurdity of paying farmers not to plant certain crops to control the supply, the program was reorganized to promote more production.

Since 1973, production of corn has skyrocketed, due to the combination of subsidies and improved farming technology. These improvements in technology, including fertilization with anhydrous ammonia, gives rise to yields of up to four times what the same land could produce 50 years ago. With these improvements, corn can grow closer to each other, yielding more per acre.

All that corn, however, has to go somewhere. And a great deal of it is working its way into our food and drink, with damaging results. Take, for example, the use of high fructose corn syrup – a sweetener that didn’t exist 30 years ago now inhabits virtually everything you find on a supermarket shelf. Corn subsidies have drastically reduced the cost of high fructose corn syrup, which has made it the primary sweetener in soda, juice, jellies, ketchup, and other processed foods. While studies show the consumption of sugar in America is down, the consumption of high fructose corn syrup has skyrocketed.

While there are numerous studies linking high fructose corn syrup to increased obesity, corn supporters continue to argue that it contains similar ingredients as regular sugar, all things being equal. However, government subsidies, which keep the cost of high fructose corn syrup extremely low, make products that incorporate it extremely inexpensive. As a result, consumers have an incentive to purchase high fructose corn syrup-based products, as they are much cheaper than products sweetened with sugar (which has been subject to a substantial importation tax since 1977.) Thus, high fructose corn syrup products are being consumed at rates well beyond what we saw with sugar, and far in excess of what can be considered healthy.

Meat hasn’t escaped the effects of government corn subsidies, either. During the last 30 years, the avalanche of corn production has also caused it to replace grass as the primary cattle feed. Subsidies make corn cheap, which means more feed for more cattle. As a result, livestock are being fed until they nearly burst, resulting in fattier cuts of meat in our grocery stores and hamburgers. Loren Cordain of the University of Colorado has estimated that a typical grain fed t-bone steak might have 9 grams of saturated fat, while a grass fed steak might have 1.3 grams of saturated fat.

Naturally, much of this cheap, low-quality meat finds its way into our fast food restaurants, which, as a result of corn subsidies, can sell its food for virtually nothing and still make a profit. While, ultimately, everyone is responsible for what they put in their own mouths, markets also determine what people purchase. This exposes one of the ironies of America – it tends to be the poorest people who have the highest incidences of obesity and Type II diabetes – both of which have risen sharply since the corn explosion. This is because the cheapest food tends to be the most toxic to our health. Subsidies make unhealthy food cheaper, and when something’s cheap, people will buy more of it. So when you do go to McDonald’s and enjoy a Big Mac, keep in mind – your tax dollars helped pay for it.

So how unhealthy is America since corn subsidies made their way into the farm program? According to a 2008 study, more than 25 percent of adults are obese in 28 states, up from 19 states in 2007. More than 20 percent of adults are obese in every state except Colorado. In 1991, no state had an obesity rate greater than 20 percent. According to the same study, an estimated two-thirds of Americans are now overweight or obese. That compares to 1980, when the national average of obese adults was 15 percent. According to the U.S. National Institutes of Health, obesity is also linked to type 2 diabetes, coronary heart disease and stroke, cancer, osteoarthritis, gall bladder disease, liver disease and pregnancy complications.

So the next time you see a report on how much more spending we need on health care in Wisconsin, think to yourself – how much healthier can we make ourselves by scaling back spending on things like farm subsidies? If we cease making unhealthy food artificially cheap, we can end the cycle of encouraging dangerous eating, and save our health in the long run.

-January 12, 2009

Citizen Action of Wisconsin: Not Close, and No Cigar

Last week, when WPRI released our report detailing the massive amount of unfunded liabilities local governments are carrying for their retirees, I honestly didn\’t expect much of a counter-argument.  How could there be?  The facts are indisputable.  In fact, the best shot a local official took at an explanation was the Superintendent of Waukesha Schools, who unbelievably argued that their financial system is sound because it\’s like a mortgage.  It\’s difficult to think of a worse comparison, given the fact that mortgage lending is currently sending our economy down the tubes.  He actually would have been better off saying something like, \”our financial system is as safe as the Green Bay Packers with the indestructible Aaron Rodgers at the helm.\”

Yet lo and behold, on the very day the report was released, the liberal Citizen Action of Wisconsin attempted to respond to the facts in the report.  And needless to say, I remain unconvinced that there is a rational response to the argument we made in the study.

Citizen Action said the \”ultraconservative\” WPRI report missed the mark because it failed to discuss the fact that health care costs are rising so quickly.  (Personally, I would have preferred \”mega-conservative,\” as it sounds more like we can crush cars with our bare hands, like Optimus Prime.)  In fact, one of the reasons the report didn\’t go into detail about increasing health costs is because we just released a 20-page paper on that exact topic.

But the main problem with local government retiree health insurance isn\’t that the costs are going up too quickly – it\’s that the benefits exist at all, and that their existence are going to swamp local budgets in the very near future.  If local governments hadn\’t attempted to pad their employees\’ pockets with this previously publicly undisclosed benefit, they wouldn\’t be in the position of having the taxpayers bail them out – which almost certainly will happen. And the rising cost of health care has absolutely nothing to do with the fact that these governments chose to spend billions of dollars on ex-employees that no longer work for the people, instead of spending the funds on existing services.

In fact, Citizen Action\’s complaints about the rising cost of health care actually strengthens the immediacy of the WPRI report.  We focused on the fact that local governments owe $6 billion in future unfunded liabilities – the fact is, that number is going to increase rapidly over the next few years, both because governments are underfunding their liabilities and because costs are going up.

The truly ironic fact is that Citizen Action is continuing to push their dead-in-the-water \”Healthy Wisconsin\” single-payer government run health plan.  That would be the plan passed by the Wisconsin Senate that all the new Democratic state senate candidates are avoiding as if it were a pair of garage sale underwear.  They actually believe that their plan, which would have government completely take over health care in Wisconsin and cost taxpayers $15.2 billion, would actually solve this problem of increasing health care costs.  In fact, it would do nothing to slow health costs – it would merely change who pays for them.

A perfect example of how health care costs explode when government takes them over was evident last week, when the state announced that the new BadgerCare Plus program would be $25 million over budget in its first year of existence.  The BadgerCare program itself was the same story – in Fiscal Year 2001, the first full year of BadgerCare\’s operation, the Legislature spent $129 million in all-funds revenue. By Fiscal Year 2004, merely three years later, that number had nearly doubled to $205.6 million.  Consider the retiree health costs that are now being reported, and it\’s absurd to argue that somehow costs drop when the government gets involved.

So, it appears Citizen Action\’s response to increasing health care costs is to exacerbate the problem by making taxpayers foot the bill.  While we\’re at it, maybe we can solve the economic crisis by guaranteeing more bad housing loans and asking the taxpayers to pay for it.  Wait… we\’re doing that?

Finally, Citizen Action criticizes WPRI for supposedly \”singling out\” government employers for their budget mismanagement.  In fact, our report discusses postemployment benefits for private businesses, and how they began to address their liabilities in 1990, to the point that they are now manageable.  Furthermore, a previous WPRI study demonstrated that public sector postemployment benefits far exceed those of the private sector.  Plus, businesses generally don\’t have the taxpayers there to bail them out when they mismanage their liabilities, as governments most certainly will.

It\’s hard to fault Citizen Action of Wisconsin for not reading the whole report, though – they\’re busy during election season trying to elect Democrats to the Wisconsin Legislature and using state funds to do it.

Looking in the Funding Mirror

Last week, George Lightbourn and I released a report that demonstrated that the proposed \”Healthy Wisconsin\” government health plan would run a large deficit. As expected, proponents of the plan pushed back – yet without addressing any of the concerns raised in the report.

I chuckled when I saw the following quote from State Senator Jon Erpenbach in Friday\’s Wispolitics REPORT, referencing the study:

I don\’t know where they\’re getting their numbers, and second of all I\’d like to know who backs them financially on this stuff. – Healthy Wisconsin sponsor Sen. Jon Erpenbach, D-Middleton, on the WPRI report.

First of all, it\’s pretty easy to figure out where we got our numbers, since we lay that all out in the report, which Erpenbach clearly didn\’t read. In fact, most of our data comes from the Lewin Reports on both the Wisconsin Health Plan and Healthy Wisconsin – reports which Erpenbach himself commissioned and uses to bolster his plan. Maybe he should get around to reading those, too, since he paid for them.

In fact, the math is pretty easy – the state Department of Revenue expects incomes to rise at 4.6% per year over the next 10 years. The Lewin Group expects health care costs to rise 6.5% per year over that same time. That creates a gap that has to be funded – and the Lewin Group itself says the plan will have to raise taxes in the future to make up the deficit. If Erpenbach disagrees with that premise, perhaps he should get his money back from the Lewin folks.

The second irrelevant criticism leveled at our report is to question our funding. This is even more entertaining, since people who spend all day polluting comment threads on blogs somehow aren\’t able to perform a Google search to research WPRI\’s funding. But, of course, this is all just a sideshow to distract people from the actual criticisms of the plan that we level – since proponents of the plan don\’t really have an answer. Regardless of our funding (and honestly, I don\’t even really know much about it), the facts are the facts – just ask the group commissioned by Jon Erpenbach to research the issue.

And as long as we\’re on the funding issue, it might be instructive to look at who\’s funding Jon Erpenbach\’s effort to get Healthy Wisconsin passed. You may remember last year, when Erpenbach may have violated state law by co-mingling lobbyist money with his campaign funds to produce a poll showing support for Healthy Wisconsin.

From the Milwaukee Journal-Sentinel:

Lawmakers who joined with interest groups to conduct a poll on a proposed universal health care plan might have violated campaign finance laws by taking money from groups not authorized to make political contributions.

State Elections Board Executive Director Kevin Kennedy hadn\’t seen all the details of the arrangement Tuesday but said Senate Majority Leader Judy Robson (D-Beloit) and Sen. Jon Erpenbach (D-Middleton) might have benefited from special-interest funds that aren\’t allowed into the electoral process.

The two senators contributed campaign funds toward a poll also bankrolled by groups that cannot give to candidates.

If the interest groups had paid for the poll themselves and simply given it to the senators, there would be no trouble, Kennedy said. Potential problems have arisen because the poll combined political and non-political money.

\”Our concern would be to make sure non-political money wasn\’t providing a political benefit\” to the senators, Kennedy said.

Oops. Maybe Erpenbach, who thinks we should use taxpayer money to run political campaigns in order to lessen the influence of lobbyists, should start the effort by actually adhering to the law himself.

Here’s How You’re Going to Die

A much-discussed graphic has surfaced on the internet, which graphically demonstrates the leading causes of death in the United States. It has come to be known as the “death spiral” chart. Apparently, it was originally developed by National Geographic magazine a few years ago to give people a visual representation of what they were most likely to die from.

Here it is:

The first thing I noticed was the “total odds of dying, any cause: 1 in 1.” Man, I need a better bookie.

Strangely, they also list “Air/Space Accident” on the list. How many deaths are attributable to “Space?” Does that count the aliens that come down to Earth to off us?

What I found most interesting about the graph is that the leading cause of death, heart disease, is also the most preventable. Study after study shows that eating right and exercise drops the risk of heart disease exponentially. Yet the threat of death doesn’t appear to be enough to scare people into living healthier lifestyles. That may be the true benefit of this graphic.

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