Friday, June 29, 2007

SCOTUS Decision Shouldn't End Chapter 220

The US Supreme Court struck down school integration plans in Louisville and Seattle yesterday since they used race as a deciding factor in "some assignments," the JS reports today.

This is important for Milwaukee, of course, because the Chapter 220 program that ships students of color into the suburbs and -- on a much smaller scale -- white students into the city is based exclusively on race.

Certainly there's more to the decision, but this quote from the majority opinion by Chief Justice John Roberts jumped out at me:
It was not the inequality of the facilities but the fact of legally separating children on the basis of race on which the court relied to find a constitutional violation in 1954. . . . What do the racial classifications at issue here do, if not accord differential treatment on the basis of race?
There's a curious transition that takes place in that quote between "legally separating children on the basis of race" and "racial classifications" in general. In other words, Roberts argues that any significant consideration of race, whether it's for separation or integration, is discriminatory and, as a result, not in line with the Brown decision or the US Constitution.

Roberts offers a compelling quote from the Brown case in his opinion (pages 39-40) to demonstrate his point. As the brief from the plaintiff in Brown put it: “[T]he Fourteenth Amendment prevents states from according differential treatment to American children on the basis of their color or race.”

A corresponding quote wasn't cited from the actual Warren court decision in Brown, and that decision pretty clearly focuses on racial classification for the purpose of segregation rather than the purpose of integration.

But for those seeking absolutism, any state classification of race in public policy -- whether for separation (i.e., bad) or integration (i.e., good) -- is inherently discriminatory, as Chief Justice Roberts argues, since it tries to subjectively differentiate between what's a good use of race and what's a bad use of race, while simultaneously and inevitably placing restrictions on what any other race can do.

In practice, however, there are more considerations. There have been great strides made in race relations since the Brown decision, and many of those strides are a result of a conscious consideration of race when crafting public policy. Did anyone truly expect significant steps to be made, practically speaking, based upon good will and deference to the Warren court?

Much of this harks back to the difference between de jure segregation in the South -- upon which the Brown decision was based -- and the de facto segregation in the North. At the same time of the Brown decision, massive suburbanization was taking place across the North, and much of that suburbanization had an explicitly racial component.

For instance, in the first Levittown that was built in Long Island, NY -- considered by most to be the prototypical postwar suburb -- there was a direct policy that barred "members of other than the Caucasian race" from living there. When I was researching my senior thesis on the school integration battles fought in Milwaukee in the 1960s, I recall coming across a similar policy for some of the North Shore suburbs (if I can find it, I'll post it here).

The basis for programs like Chapter 220 was established in this reality of de facto segregation. Put differently, the difficulty with completely removing considerations of race from public policy is that considerations of race are made every day through interpersonal relations and personal decisions. The Supreme Court can't change that, nor does (or should) it attempt to change it; but by restricting public policy from including a classification of race for any purpose, it can exacerbate its negative effects.

Perhaps basing programs like Chapter 220 solely on race is no longer necessary today since the explicitly racial barriers to neighborhood integration have since been removed in the suburbs, thereby eliminating the direct creation of de facto school segregation.

This doesn't mean, however, that these programs are inherently discriminatory and, as a result, unconstitutional. Indeed, most observers would be hard-pressed to explain how a program like Chapter 220 -- which explicitly categorizes students by race -- has increased or even worked to sustain racial discrimination in the Milwaukee metro area.

But if the greatest barrier -- not necessarily the only barrier -- to school integration today is economic, perhaps the state should consider either adding an economic component to the Chapter 220 criteria or making the criteria exclusively economic. Either would be preferable to elimination, and the latter would bring Chapter 220 in line with the criteria for the school voucher program that's beloved by Republicans, which is typically the party that crows the most about Chapter 220.

I'm not sure what an economic component would do to the nearly 400 white suburban students who head into MPS each year under Chapter 220. And some serious consideration would need to be given to ensuring that an economic component wouldn't unreasonably stop any of the roughly 3,000 families of color who now participate in Chapter 220 from sending their children to a suburban school through the program simply because they earn above an arbitrary income limit.

But, in the end, while the SCOTUS decision yesterday may have been based on shaky grounds, even if it results in a challenge to Chapter 220, that doesn't need to mean the end of what's ultimately an effective program.

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Wednesday, June 27, 2007

Health Care Reform: Making It Fairer

One of the more compelling arguments against any universal health care plan, not just Healthy Wisconsin, is that it's unfair to require employers -- particularly those who don't already offer their employees health insurance -- to contribute to a program; rather, the labor market should dictate their participation.

As with most of the other arguments against universal health care, this line assumes that the system that we have now is fair or another type of system could be fairer.

For starters, just because you don't have health insurance doesn't mean you're not going to need health care. And when the uninsured -- or underinsured -- go in for care that they can't pay for themselves, which is happening on an increasing basis each year, the costs get shifted onto paying patients and, in all likelihood, their employers through increased premiums, deductibles, co-payments, co-insurance, etc.

The same is essentially true for employed people who are forced into Medicaid because their employer does not offer them affordable health insurance. Not only do individuals and businesses pay for these people to get onto BadgerCare, those individuals and businesses that pay for health insurance pay more for that insurance because of low Medicaid reimbursement rates.

So if a set of employers chooses not to offer its employees health insurance because the labor market doesn't demand it, that decision is actually costing other employers and employees more.

What, then, are the options? Really, there are a few:
  • Do nothing. The result of this will be a cycle in which cost shifting increases as more and more employers skimp on health insurance or remove it from their employment benefits altogether, which, in turn, places more pressure on those who are still in the system who, as a result, leave the system and so on.
  • Refuse care to those who don't have health insurance -- or enough health insurance -- and cannot afford the care out-of-pocket. This reduces cost shifting and would likely put more pressure on the labor market, at least the middle and upper class portion of it, to have health insurance be a part of employment. However, the moral implications are obvious.
  • Mandate that everyone carry an adequate level of health insurance, just as we do with car insurance, to reduce or eliminate cost shifting.
For most people, options 1 and 2 are out because of the economic and moral issues that arise with each.

That leaves option 3, which, if done centrally, has the added bonus of holding down costs through increased administrative efficiency and purchasing power. But the big issue for that option is how it's going to be funded. Do we place the onus on employers, individuals, or some of both? There's going to be winners and losers -- in terms of both cost and coverage -- any way to slice it.

The Healthy Wisconsin initiative involves both, but the weight is on the employer. Germany, which also offers its citizens universal coverage through an array private payers and providers just like Healthy Wisconsin proposes, also involves both, but the funding split is equal with employees putting in about 6.5 percent of wages and employers matching that amount.

You could opt to place the entire -- or even the vast majority -- of the onus on individuals, but would the resulting decrease in after-tax wages be any more desirable than requiring employers to foot the bulk of the bill?

As some critics have pointed out, some minimum wage employees -- mostly in the retail and service sectors -- would lose their jobs if all employers were required to pay into a health care system like Healthy Wisconsin, while other jobs -- the ones that currently don't get health insurance through their employer -- would see a decrease in wages to compensate for the increased labor costs associated with the employer assessment (of course, they'd now also have adequate health coverage).

But if the onus was placed on the individual, similar results would likely happen, except minimum wage workers would be quitting rather than getting fired since their after-tax income would decrease beyond the levels that would make it livable (it's pretty much beyond that point already for most who rely on minimum wage for their livelihoods).

Even if you split the difference like Germany, there will still be a drop in employment -- probably through a combination of firings and quittings -- as a result. There's simply no magic way around it.

And that's the reality -- there's no easy way out of the health care situation. Tinkering just won't cut it.

The quicker we start facing that reality in substantive discussions rather than politically-charged rants, the quicker we can move to a system that isn't without losers, but also doesn't have the amount or level of losing that we currently have or what other alternatives would bring.

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Tuesday, June 26, 2007

Critiquing Healthy Wisconsin: Where's the Substance?

Conservatives were up in arms yesterday over the announcement of the Healthy Wisconsin initiative.

The Senate GOP had the fear-mongering in full effect with a press release stating that pregnant women, children, and seniors could lose access to their doctor under the initiative, while others focused on using politically-charged soundbites like "big government" and "socialized medicine" to generate alarm over the proposal.

There was little to no substance in any of these attacks. That doesn't mean, however, there are no substantive challenges that could be made to the Healthy Wisconsin initiative.

Here are a couple of points conservatives -- and liberals -- might want to try on if they're interested in a substantive discussion on health care reform.

The Deductible
If free marketers usually get one thing right and progressives usually get one thing wrong about health care reform it's that over-utilization of health care services is a serious problem. Some of this over-utilization is on the provider end -- for instance, utilizing unnecessary treatments and tests to generate more reimbursements -- but much of it is on the patient end.

Providing incentives for consumers to use health care wisely and consciously is an important piece of any universal health care reform plan. The Healthy Wisconsin initiative does this through its use of a $300 deductible for individuals and a $600 deductible for families. Aside from care of children and pregnant women, along with proven preventive care measures, other services under the proposal would be subject to the deductible.

It's good that the Healthy Wisconsin proposal involves cost-sharing through a deductible, co-pays, and co-insurance, but why not raise the deductible and include a HSA, which would make the plan virtually identical to the well-vetted Wisconsin Health Plan?

That way, if a portion of the deductible was state-funded through the HSA, it would give consumers some breathing room knowing that the first non-preventive treatment they receive won't be coming out of their regular bank account. Yet, since it still would be coming out of their HSA, the financial disincentive for over-utilization would remain.

Plus, then there's the added bonus of having a tax-sheltered account that could be self-funded (or employer-funded) to cover the remaining portion of the deductible or other cost-sharing, or rolled over from year to year to prepare for the more expensive catosphrophic or chronic care that could be needed in the future.

Special Affinity Groups
There is a clause in the Healthy Wisconsin bill that would allow health networks to restrict access to participants who are part of certain pre-defined "special affinity groups," such as farmers or teachers.

Part of the purpose of fundamental health care reform is to put everyone in the same boat when it comes to health benefits. This is important for practical purposes, such as community rating, but it's also important for conveying trust to the public that the system is equitable. Siphoning off a portion of the population works against this trust and -- to an extent -- the viability of community rating.

Perhaps there's a good practical reason to restrict particular health networks to a certain trade group, but I'm not seeing it on the surface. This is one point that Dems should explain in more detail.

The Healthy Wisconsin initiative -- in spite of likely being added to the Senate version of the budget today -- is very much a work in progress. The time now is much better spent parsing the substantive points of it rather than clinging to divisive and hyperbolic soundbites.

UPDATE: You can see a more reader-friendly detailed account of the Healthy Wisconsin plan here.

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Monday, June 25, 2007

Senate Dems "Healthy Wisconsin" Initiative


As of this morning, the Senate Dems have released the major points of their universal health care plan, called "Healthy Wisconsin," and here's what can be gleaned from them:
  • Payer structure (see UPDATE below): Although it's not completely clear from what's been released so far, the payer structure under the Healthy Wisconsin initiative would mimic the structure under the Wisconsin Health Care Partnership Plan, in which a single plan would be created through a public-private trust that would negotiate directly with providers. Private insurance still would be available, but at a "nominal cost."
  • Funding mechanism: There would be a 4 percent assessment on employee Social Security wages (i.e., wages up to $97,500) and a 10.5 percent assessment on payroll for employers. Aside from preventive care and care for children, all visits and prescriptions would involve co-pays and a deductible set at $300 for individuals and $600 for families.
  • Bottom line: Based upon a Lewin Group study, the plan would save the state $1.3 billion, which would most likely come from reduced public worker benefit costs. The plan would use this money for property tax relief for households and businesses.
Republicans are jumping all over the funding, calling it the "largest tax increase in the history of the state," even though that soundbite ignores what employers and employees are already paying for health care -- which, on average, is a lot more than what they'd pay under the Healthy Wisconsin initiative -- and the property tax savings that would come under the plan.

The tax increase line is a predictable point of opposition to start with since it's an easier sell than what I think will ultimately be the biggest roadblock for this plan (aside, that is, from the Republican Assembly), which is the payer structure. Even though the plan isn't explicitly single payer, it looks quite close (unless I'm misreading the info that's been released on the plan, thus far -- look for an update later in the day if that's the case).

While single payer has great promise in terms of administrative efficiencies and putting payers back in a strong negotiating position with an increasingly consolidated provider side, it also has the political baggage that comes with shutting out an entire industry and the ideological heat that comes with involving the government directly in health care negotiations, even if those negotiations take place through a public-private trust.

It would help if the plan allowed for direct private competition in a similar way as John Edwards' national proposal, which lets consumers choose between a public plan and an array of private plans. Or the public plan could provide basic coverage while private plans are relied upon for supplemental coverage, which is essentially how the French do it. Any way you slice it, the Dems need to find some place for private plans, and it remains to be seen if allowing them at "a nominal cost" is enough.

The details will be telling, and -- since this is by no means a final offer -- so will the discussions that take place between now and when something actually gets passed, which -- as I noted last week -- won't happen before 2009, at the earliest.

UPDATE: The full text of the Healthy Wisconsin bill is out (the meaty details start on page 22).

Importantly, the text of the bill makes clear that this proposal is NOT single payer. The "health networks" it refers to are -- based on my reading -- private insurers who submit bids to the public-private trust. Based upon cost and coverage, the trust will determine the "low cost" networks and everything else will be categorized as a "higher cost" network. If people opt for one of the low cost networks, the trust will cover the entire cost of premiums. If people choose one of the higher cost networks, they will be reponsible for the premium cost difference between that network and the low cost network rate.

This is similar to how the tiering works under the Wisconsin Health Plan, which is the system currently used for state employees.

This is an important point because it avoids the political pitfalls of single payer and ensures that the direct negotiations between payers and providers will be a market endeavor rather than one that's overly-dictated by the state.

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Friday, June 22, 2007

The Three Musketeers: Taxes, Health Care, and the Economy

The latest Badger Poll found the following three issues to be the top concern among Wisconsin residents:
  1. Taxes (23 percent)
  2. Health care (12 percent)
  3. Economy (11 percent)
I understand the general purpose of getting public responses on "the most important issue," but as I look at those top three, I can't help but wonder how you can possibly separate any one from the others.

Health care costs are the biggest strain on public revenue, and unpaid medical bills are one of the biggest factors behind personal debt and bankruptcy. And as costs continue to rise and put pressure on employers, wages will continue to stagnate and gradually the level of insurance will decrease for employees, which in turn leads to an increase in unpaid medical bills and -- in addition to more personal debt and bankruptcy -- results in more costs shifting onto the payers who remain in the system, such as public employees and private employees who are still receiving affordable coverage.

To simply aim public policy at the monolithic goal of "cutting taxes" has the potential for handling a portion of the cycle by shifting more health care costs onto public employees -- if the tax cuts are realized in that way -- which I'm sure would please a number of conservative commentators, but it wouldn't deal with the fundamental problem of rising health care costs or the economic troubles that come as a result.

The "just cut taxes" line is great for a stump speech, TV commercial, or press release, but it's fundamentally short-sighted at best, and at worst it misses an opportunity to address one of the fundamental causes of high taxes and economic distress, which is our inefficient and inequitable health care system.

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Thursday, June 21, 2007

Feeling the Need to Post

I've looked far and wide over the past two mornings for something to write about, and both times I've come up with nothing. My feeling is that if I can't write something fresh and substantive, I'm better off not writing anything at all.

But, yet, there's still this nagging feeling I have during the stretches where I haven't posted anything for two or more days. I feel as though I'm doing my voice a disservice by not saying anything, even if I don't feel I have anything worthwhile to say.

Part of this is driven by an article I read by one of the MyDD writers -- I think it was Chris Bowers -- just as I was starting this blog. Among the points Bowers suggested for generating and maintaining readership was the need for continued and consistent blogging. If you have stretches where you don't say anything, people will stop coming back to your blog.

I can see where this is very true on the national scene, particularly a few years ago, which is when I think Bowers (or whoever it was) wrote that article. There are literally hundreds of national blogs to choose between and you need a very large number of readers in order to be considered successful. Plus, there's usually something newsworthy happening every day on the national scene, and readers are going to be turning to their favorite blogs for commentary. If that commentary isn't there, they'll learn to start turning elsewhere.

But with the advent of blog readers, like Bloglines, I'm not so sure that's as much of an issue anymore. I have roughly 70 political blogs on my Bloglines -- about 25 national and the rest local -- and I simply read the posts as they pop up. If someone didn't have anything to say for three, four, or five days, I probably wouldn't even notice.

In addition, the local blogosphere is different than the national scene in the sense that it's just flat out smaller in terms of blogs, readers, and -- perhaps most importantly -- significant news stories that are deserving of commentary.

And I get the vast majority of my hits from WisOpinion, typically when one of my posts is featured there, and most of the rest come from LeftyBlogs. Even if I take a few days off, I can get my readership back up pretty quickly by landing a link on WisOpinion and LeftyBlogs.

In spite of knowing all of this, the feeling that I need to post something still persists on days like today.

What do all of you think? As a reader, do you prefer it when a blog only says something when the blogger has something fresh and substantive to say, or is it more important to you that bloggers are consistently demonstrating they have a pulse by getting something out there just about every day?

And, if you're a blogger, do you feel a similar pressure to get something out there and, if so, does it bother you if that something really doesn't say all that much?


Tuesday, June 19, 2007

Health Care Reform in the Budget

It appears the Senate Dems are getting set to include fundamental health care reform in the version of the state budget they pass in the coming weeks.

The GOP is attacking this move because it won't guarantee public hearings on the plan. On the surface, Republicans have a point. Something as significant as health care reform deserves to go under public scrutiny (real public scrutiny, not the conveniently-orchestrated stuff). Republicans clearly aren't interested in repeating another situation like we had with the Milwaukee school voucher program where a major public policy was passed through the budget without a single public hearing.

But, on the other hand, the Dems spent the entire spring bringing their three health care reform plans before the public in countless cities and towns throughout the state, and the plan that's going to be in the budget is an amalgamation of those plans and the input lawmakers received from the public hearings on them.

Plus, the Dems freely admit that fundamental health care reform is not going to be a part of the final budget that gets signed by the governor. It's not like they're going to stall the budget until they get their way; I mean, who does that?

Fundamental health care reform is going to need to wait until the Dems control the Assembly, the Senate, and the Governor's office. Before then, it doesn't matter if the bill is a standalone or part of the budget, it's just not going to pass.

Including the reform plan in the budget does, however, have one important difference than simply introducing it as a standalone bill: media coverage.

The media -- at least the political media -- is going to be all over the budget for the next few months, especially considering how contentious the talks will be between the Democratic Senate and the Republican Assembly. Tossing fundamental health care reform into the mix is sure to bring it a decent amount of press, as opposed to the cricket chirps that accompanied all three standalone measures the Dems introduced during the last legislative session.

In the end, though, this is just a set-up year. Next year the task will be to leverage the lack of health care reform -- among other points -- in the election. And, if all goes well, fundamental health care reform will be in a position to make it all of the way through the next budget process (with its own public hearings, of course).

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Thursday, June 14, 2007

GOP to Force a Mark Green Budget

A little over a year ago, while campaigning for governor, Mark Green made a pledge to freeze state spending levels in the '07-'09 budget if he was elected.

Many observers didn't put much stock in Green's pledge considering he also pledged to decrease revenues through tax cuts and increase costs through some new programming, most of which was never detailed. All-in-all, the Journal Sentinel estimated that Green would've needed to cut state operations by over $1 billion to make all of his pledges work.

But even though Green lost the November election by around 160,000 votes, it looks like his campaign promise for a frozen state budget might come true, at least for awhile. Assembly Speaker Mike Huebsch (R-West Salem) has been making the media rounds to tell everyone about the possibility of a budget impasse over new tax revenues in the budget that made it out of the JFC last week.

I tend to agree with the Recess Supervisor that stalling the budget process is going to create significant PR problems for the state GOP. Those on the right side of the blogosphere will almost certainly celebrate the move, but they're also the ones who enthusiastically supported TABOR and Mark Green's candidacy.

Although much of the state surely doesn't like the idea of tax increases, they also won't like the idea of risking important public services on the grounds of maintaining ideological purity. For most people, there's a balance that needs to be made between what they pay and what the public gets back in return. This is a balance that's completely ignored by one-sided arguments for either increased services regardless of cost or -- the avenue the GOP is heading down -- one-sided arguments for tax freezes regardless of services.

But, then again, Huebsch really isn't talking about a true freeze, certainly not in the way that Green talked about a freeze that wouldn't even touch normal revenue growth.

Huebsch has raised the prospect of passing a budget for some big ticket items, like schools, while holding back the rest, and he's suggested that while the Assembly budget will include no tax increases, fee increases -- which amount to a little over $270 million in the governor's budget -- are still very much on the table (much to the chagrin of the fiscal conservative base).

Nevertheless, it's still going to be a tightrope walk for the GOP leadership. Even setting schools aside, there are still a number of other issues ranging from child care subsidies for low income families to GPS tracking of sex offenders to health coverage for all children through BadgerCare Plus to expansion of the state crime lab, among many more, that will remain stagnant until a budget passes and become jeopardized unless a budget passes that includes adequate funding.

And, even more than that, what's probably most detrimental to the GOP heading into this confrontation is that it will be perceived as fighting for ideology above all else.

The language will be populist -- "The taxpayers can't afford it" -- but the overriding perception still will be that Republicans are standing in the way of funding necessary and popular services since the GOP formula for what the taxpayers can "afford" doesn't ever actually consider the "it" portion of that ambiguous tag line.

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Wednesday, June 13, 2007

School Voucher Funding: The Circus is in Town


Last winter, Milwaukee Mayor Tom Barrett proposed increasing state funding for new voucher students so that Milwaukee taxpayers would pay the same amount for those new voucher students as they do for MPS students.

At the time, the governor and Republican legislative leaders agreed with Barrett in principle, but said that the funding fix would need to wait until the 2007-2009 biennial budget.

Fast-forward to this winter, Governor Doyle included in his '07-'09 budget proposal the exact funding fix that Mayor Barrett asked for last year. However, now Mayor Barrett and other leaders in Milwaukee feel that plan doesn't go far enough and want the funding fix to apply to all voucher students, not just new ones, a decision that's helped to split the Dem position on the issue and create a space for the GOP to play it like a political fiddle.

Republicans on the JFC let out word that they were prepared to support the plan to have the fix apply to all voucher students, but they didn't want to actually make the motion during budget deliberations. Dem legislator Pedro Colon was expected to raise it, but he didn't because JFC co-chair Russ Decker (D-Weston) told him that doing so would cost Milwaukee other funding proposals.

As a result, the Doyle proposal made it through the JFC intact. However, some predictions are that Doyle's proposal may get axed in conference committee, possibly because outstate Dem legislators, like Decker, aren't too fond of the voucher program to start, while Republicans -- who do support the voucher program -- don't really care if Milwaukee residents need to pay more for it.

To be sure, while Republicans on the JFC pledged to support the more expensive (for the state, that is) proposal to fix the funding flaw for all voucher students, they also all voted against the less expensive proposal by Doyle to only have the fix apply to new voucher students.

Why? Well, in the end, Republicans are more than happy to feed a situation that has the Dems fighting amongst themselves to the point that the voucher funding comes out of the budget in the same form that it went into it: inequitably. And the Dems, apparently, are more than happy to go along with it.

Oh, and to top it all off, some expect that those other Milwaukee funding proposals -- the ones Colon was trying to protect in the JFC budget deliberations by not proposing the funding fix for all voucher students -- may get cut, anyway, in conference committee.

Too bad the Ringling Brothers already have the copyright on that "Greatest Show on Earth" line.

UPDATE: I received a note from Mayor Barrett's office today clarifying that the mayor's position always has been that fixing the funding flaw for new voucher students was a minimum fix.

This is a distinction worth noting because it suggests Barrett's position didn't change, exactly, but rather he viewed his proposal last winter as a start to correcting the funding flaw, which is a position backed by comments Barrett makes in this Journal Sentinel article.

That said, the effect of the situation is still the same -- the GOP is gladly exploiting a rift in the Dem position on fixing the funding flaw. It's just that the rift is more a result of proximity to Milwaukee than political shifting, as I made out in the post.

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Monday, June 11, 2007

A Soundbite's a Soundbite

Cost is unquestionably a factor that deserves top consideration with any budget. But right alongside cost is another top consideration: What are you getting in return for the cost?

An informed decision on any budget, whether it's a state budget or a personal budget, takes consideration of both cost and what you're getting in return for that cost.

The GOP has left the latter part of that equation out of its criticisms of the governor's budget proposal over the course of the spring. To an extent, this focus on one half of the equation from state Republicans is understandable, at least politically speaking.

The GOP thrives on making public finance about taxes alone. And it's an efficient political strategy that's played well for many years. Few people like paying taxes, and even fewer people like the idea of paying more in taxes.

(Side-Note: Tax rhetoric makes for good campaign fodder, but not, however, good governing. Case in point, Tommy Thompson didn't become one of the most popular governor's in Wisconsin history by living up to the fiscal conservative message he ran on during the mid-80s; that just helped get him elected. His broad popularity came by opening up the state wallet as governor in the mid-90s.)

So that's the GOP's excuse. What do you suppose is the Journal Sentinel's excuse?

On Saturday, the biggest daily in the state ran an article on the JFC's passage of a budget that's virtually the same size as the one the governor proposed. Nearly the entire article was focused on cost.

After a subtitle that reads, "$58 billion spending plan includes higher car registration, cigarette tax," here are the two lead paragraphs:
The Legislature's Joint Finance Committee on Friday forwarded a $58 billion budget that largely strengthens Democratic Gov. Jim Doyle's position on many key issues.

Hundreds of budget provisions are a step closer to becoming law, including higher fees for residents registering their cars and renewing their driver's licenses; a rise in the cigarette tax; and increasing University of Wisconsin System tuition.
There was a small section on the goal of the hospital assessment to generate more federal Medicaid dollars to better reimbursement rates, but, other than that, proposed services were absent from the discussion. Even the section on the proposed Stewardship fund extension failed to explain to readers the purpose of the program; instead, it just focused on how much that extension would cost.

The JS followed-up that article with another on Sunday that asked readers to consider: "What will survive budget battle?" Here's the second paragraph:
The budget drafted by the Legislature's budget-writing panel includes Democratic Gov. Jim Doyle's plans to impose new taxes on oil companies, hospitals and cigarettes. It also includes proposals that could mean higher fees for residents registering their cars, renewing their driver's licenses, selling their homes or paying tuition at University of Wisconsin System schools.
The article goes on to explain a variety of instances where costs would go up, and, in a few, it does explain what the increased revenue would fund. But the overriding emphasis is clearly on cost, just as it is exclusively in the lead paragraphs.

Getting back to my question about the JS's excuse, some may read it as the workings of a right-wing news desk. And there may be some truth to that. But I'd say what's an even bigger driving factor is the plain old desire of the JS to sell newspapers.

If you want to catch a reader's attention on a story about the budget, you're not going to ask them to consider a nuanced equation of cost relative to services to determine the most equitable route for the state to head. Nope. You're going to hit them with a $58 billion price tag and how much more in individual taxes and fees they're going to need to pay in order to fund not the services, but the price tag.

In this sense, the paper's aims are tied to the GOP's not in ideology, but in expediency. The GOP wants voters; the JS wants readers.

And who can blame them? Soundbites make great business sense for media outlets, just as they make great electoral sense for politicians.

So what if they don't make a whole lot of civic sense? Civics is boring, anyway, right?


Friday, June 08, 2007

The WHP: A Level Playing Field with Choice & Personal Responsibility

If nothing else, the new Lewin Group report on the Wisconsin Health Plan makes the WHP the most well-vetted of any of the three fundamental reform proposals being considered by legislators.

All fundamental health care plans level the playing field for consumers, and the WHP is no different on this front. Leveling the playing field for health coverage is most beneficial to the less healthy, which tends to be the older population.

This chart from the Lewin report demonstrates how average health care costs increase with age:

Putting everyone in the same boat regardless of health status is the idea of community rating. The more healthy essentially subsidize the less healthy and in return they get the security of knowing that if (or, more likely, when) they or one of their dependants move into the category of less healthy, they will retain a solid set of benefits at an affordable price.

Community rating is going to be an aspect of any fundamental health plan, but there are a couple of aspects that distinguish the WHP from the rest of the field: choice and personal responsibility.

While the other two fundamental health care plans are essentially single payer, the WHP retains the multiple payer system. There are some downsides to this on the administrative side -- costs are typically higher under a multiple payer system -- the advantage is that it retains some level of consumer choice.

This choice is heightened under the WHP by the tiering that's involved; consumers can choose between plans in the first tier, which would be funded entirely through the WHP, or they can opt for broader coverage in one of the higher tier plans by paying the difference in the premium between that plan and the first tier plans.

In addition to choice, the WHP also retains a strong level of personal responsibility through its implementation of cost-sharing, specifically in the form of a high deductible. This cost-sharing ensures that while there is a social safety net for the less healthy that will be largely subsidized by the more healthy, there is still a place for personal responsibility in terms of both health care costs and a focus on wellness.

I've been critical of High Deductible Health Plans (HDHPs) before on this blog, but I've also noted that when structured with proper patient and consumer protections -- such as a reasonably low deductible, at least partial annual funding of the HSA, and no cost sharing on preventive care (all of which the WHP includes) -- they can be a good tool for keeping health care costs in check. More specifically, studies have shown that HDHPs can lower some of the unnecessary health care utilization costs that have contributed to our expensive system.

But the same leveling that makes the WHP -- and all fundamental reform -- so attractive is also what makes it a politically challenging issue. In any fundamental reform there are going to be winners and losers.

That's not to say there isn't plenty of winning and losing in our current system, and it's hardly questionable that the winning and losing would be less drastic after fundamental reform. Nevertheless, under fundamental reform, some people are going to see their coverage go up, while others will see their coverage go down. And that fact alone is going to cause political problems, even if it puts us in a better position than we are in today.

And the troubles don't end with just coverage. While those who are seeing their coverage decrease are also seeing their costs decrease -- although in the WHP they could always increase their coverage by moving to one of the higher tier plans or putting more money into the HSA -- those who are seeing their coverage increase are also seeing their costs increase. And it's this latter point that will probably prove the most politically difficult to overcome in the upcoming health care reform debate.

As the Lewin study makes clear, employers who do not currently offer health care benefits to their employees are going to get hit harder under the WHP than those who do. This isn't really a surprise. The Lewin Group predicts that most employers will be able to withstand the cost increases for health care benefits by reducing some other form of compensation, most likely wages.

Lewin estimates the average employer who doesn't offer health benefits now will reduce wages by about $2,800 per worker, while the average employer who does offer health benefits now will reduce wages by about $173 per worker (mostly because the WHP payroll tax will include wages for part time and seasonal employees who typically don't get health coverage today). But since employer costs would be tied to payroll level, Lewin estimates that the bulk of the wage cuts would be focused on the higher income levels, as this chart demonstrates:

This isn't to say, however, that the most paychecks would necessarily drop under the WHP. This is particularly true when tax cuts are taken into consideration. Not only would personal property taxes for busineses be eliminated entirely, businesses would also see their general property taxes drop by $213 million while households would see their property taxes decrease by $550 million in the first year. After these tax cuts are taken into consideration, it's likely many employers wouldn't find any wage cuts necessary.

It's also important to note that, in relation to the wage question, the savings associated with the WHP -- which the Lewin report placed at $8.9 billion over the first decade -- aren't really realized for the first couple of years after the plan is in place (see chart below). So while some wages may be impacted initially, the long term effect should be to strengthen wages in the state.

And it's also necessary to remember that these wage effects do not take into consideration the increase in worker assets that would come from the funding of HSAs by the state, which starts off at $500 annually and accumulates from year to year.

But, nonetheless, is it fair to expect that wages might decrease for some workers as a result of the WHP, even if only initially? If you consider health benefits to be a part of compensation, which most economists do, then the answer is "yes." In fact, many unions have opted for wage freezes, or sometimes cuts, in order to avoid greater cost sharing for health care benefits -- it's the same idea here.

But is it fair to those who really don't want health coverage and would prefer to just get the money in wages? There the answer -- at least on the surface -- is probably "no," but that can't be the only consideration when it comes to health care coverage. After all, just because someone chooses not to get health insurance doesn't mean that person isn't going to need health care at some point.

And when the uninsured person eventually does need health care -- and all of us do, at some point -- it's not like the costs of that care just go away. Instead, those costs get shifted to those of us who do have health insurance. How fair is that? It's the same basic idea as requiring everyone in the state to have car insurance if they own a car.

In the end, there are many complex and important points to debate and consider when it comes to health care reform. Fundamental reform will unquestionably have great overall benefits in the future -- over 99 percent coverage and $8.9 billion in health savings in the next decade highlight that fact -- but, as with any change, there will be some costs, especially up front, and those costs will effect certain segments of the population more than others.

It will be interesting to see what aspects of the WHP get included in the "unity plan" that's expected to be announced by Senate Dems in the next month. It's sure to level the playing field in a similar way as the WHP, but how much choice and personal responsibility it includes will be important aspects to focus on.

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Thursday, June 07, 2007

The WHP Goes Through the Actuarial Wringer

I'll leave the details to future posts, but it looks like the Wisconsin Health Plan stood up well in a 170-plus page review by the gold standard of health care actuaries, the Lewin Group.

There wasn't anything new to the overall structure of the WHP, which the Wisconsin Health Project discusses here and I discuss here, but some of the funding details were altered and the Lewin Group also provided a definitive say on the savings from the WHP, which amounts to around $8.9 billion over the first decade. And that's with providing coverage to over 99 percent of the Wisconsin population.

And the Lewin study also details how the WHP would result in a hefty property tax cut for homeowners and businesses -- to the tune of just under $1 billion -- which would be funded through pulling the "Rolls Royce" public worker health benefits into the WHP fold. I imagine that would be music to a fiscal conservative's ears (but I know better than that).

More to come later...

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Wednesday, June 06, 2007

Time to Renegotiate UW/UM Reciprocity

Every so often, you'll hear talk of the University of Minnesota system pulling out of its reciprocity agreement with the UW System. Now is one of those times.

The U of M's Board of Regents is getting set to vote on June 27 on whether to phase itself out of the reciprocity agreement. If it decides to start doing so in the fall of 2008, it would need to tell the UW of its plans by July 1 of this year.

The issue is that U of M tuition has grown faster than UW tuition in recent years. And since participants in the reciprocity agreement pay their home state tuition rates, this has resulted in Minnesota students paying slightly more than Wisconsin residents at UW schools -- the way it should be -- and Wisconsin students paying slightly less than Minnesota residents at U of M schools, which is understandably an issue for Minnesota.

I wasn't a big fan of U of M president Bob Bruininks when I was a grad student there a few years ago -- mostly because of the poor way in which he handled renegotiating a contract with clerical staff on campus, which resulted in a strike in 2003 -- but he did come up with a reasonable proposal for how to handle the reciprocity agreement with the UW.

Rather than simply paying home state tuition in all instances, reciprocity students would pay either their home state tuition or the resident tuition of the receiving campus, whichever was higher.

That way tuition for students from both states would remain at reasonable levels, and it would eliminate the need for compensatory payments from the UW to the U of M to cover the cost to tuition differences in the current set-up. And, if the UW wants (and the state approves), it could transfer these compensatory payments -- which amounted to $7.8 million last year -- into subsidizing the tuition costs of Wisconsin reciprocity students, thereby keeping those rates at roughly the cost of attending an in-state UW campus.

This route also has the added bonus of making sure the extra funds are going to U of M campuses via tuition, rather than into the Minnesota state general fund as the compensatory payments currently do. And, by going to the campuses rather than the general fund, the money could be used to reduce tuition levels, enhance educational offerings, or some of each.

In the end, it would be a fairer and, as a result, more sustainable arrangement than the one we currently have, and that's something that's beneficial to the systems and the families in both states.

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Tuesday, June 05, 2007

WI Hospitals Fight for Their Right to the Privately Insured

The trend of hospital systems seeking privately insured patients over those on Medicaid is pretty obvious to most observers.

In the last year, for instance, Milwaukee has seen one of its city hospitals close -- St. Michael's -- while the big systems in the area have fought over control of outlying areas in Waukesha, Ozaukee, and Washington counties.

And, to be sure, the decision to move outward is a sound business strategy. The fact is privately insured patients pay more than Medicaid patients and significantly more than uninsured patients. Typically, you're going to find privately insured patients in the 'burbs and Medicaid patients in the city, so the move outward is clearly the way to go from a business standpoint.

Enter the governor's proposal to leverage an assessment on hospital revenues in an attempt to generate more federal matching dollars for Medicaid. The ultimate purpose of the plan is to increase the Medicaid reimbursement rate for hospitals from a paltry 63 percent to a more reasonable 83 percent.

Hospitals have questioned the likelihood that they'll be the sole benefactors of the matching federal dollars, while others -- myself included -- have questioned how wise it is to bank on the federal government for money, at least for the long term, considering even the slightest administrative change on its end can result in costly problems on the other end of the equation.

But all this is masking the broader shifting that's taking place in our existing fragmented health care system toward a focus on care for the privately insured on the provider side and coverage of the healthy on the payer side.

In spite of its questionable long term viability, one good thing that the governor's hospital assessment would do is close some of the cracks that create incentives for our health care system to cater to some segments of the population over others.

Indeed, those health systems that see a lot of Medicaid patients would do quite well under the hospital assessment. Children's Hospital, for instance, would be looking at a $50 million increase in revenue over the biennium. The Waukesha-based ProHealth Care, on the other hand, would lose $1.1 million over the biennium because it cares for a much smaller percentage of Medicaid patients.

Some may view this as unfair that some hospital systems would lose out over others, but it's not exactly a zero-sum game. For starters, there would be more winners than losers under the hospital assessment (again, at least in the short term); overall, the net increase for all systems and individual hospitals in the state, put together, would be $284 million.

Secondly, due to the existence of the "hidden health care tax" -- which is the amount privately insured patients pay to cover the loses hospitals take on by caring for Medicaid and uninsured patients -- what the hospital assessment is really doing is helping to level the playing field for those privately insured people who go to hospitals that also have a large Medicaid population.

In fact, according to the Journal Sentinel this morning, Children's Hospital has pledged to reduce prices for privately insured patients should the hospital assessment go through. The same should be true, ostensibly, for every health system that's coming out ahead under the assessment.

Nevertheless, Children's Hospital is remaining neutral on the hospital assessment. Why? If it can lower health care costs for its customers, why wouldn't it support the proposal?

The simple answer is that it's closing ranks. The Wisconsin Hospital Association is against the plan, so it would be a really bold move to go against the grain.

But, again, there's more to it than that. After all, the biggest health system of all, Aurora, is scheduled to make $47.7 million off the hospital assessment over the biennium. And not only is Aurora not supporting the plan, it's actually opposing it.

Why? For them the answer is likely a little different than the answer for Children's. While Aurora may be pulling in $47.7 million in 2007-2009, that number is probably going to be a lot less in the future when it gets its hospitals built in Waukesha and, eventually, Ozaukee counties.

And compared to how much it'll make from all those privately insured patients in the 'burbs, $47.7 million over two years is next to nothing.

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Monday, June 04, 2007

A TABOR for UW Tuition

Chairperson for the Assembly Colleges and Universities Committee, Rep. Steve Nass (R-Whitewater), has proposed to the GOP members of the JFC a number of motions concerning the UW.

First and foremost on the list is capping tuition increases to the level of inflation, which is essentially a TABOR for tuition.

According to the press release by Nass:
Over the last ten years, the annual increase in UW System tuition has been 8.5%, while inflation has been running about 2.5% per year during that period. In 1996-97, UW System students covered only 35% of their instructional costs. Today, UW System students now pay for 58% of the instructional costs.
It's true that tuition now covers a larger portion of instructional costs. But it's also true that state GPR dollars cover a smaller portion of it. In fact, according to the LFB, while the UW System generated 34 percent of its total funding from the state in 1996-1997, only 24 percent came from the state in 2006-2007.

Yet, not once does Nass suggest putting more state money into the UW to make up even a portion of the cuts that would come through tying tuition to inflation.

And why would he? According to Nass, the difference is just waste, anyway. As he sees it:
Families in this state have no problem with paying the lion’s share of the costs of higher education. However, these families have the right to know that their hard earned money won’t be wasted on continuing the scandalous behavior and poor management that has plagued the UW System. The problem isn’t with the rank-and-file faculty and staff, it’s with the leadership of the System and it starts right at the top.
While Nass doesn't provide specifics on what wasteful scandals he's referring to, it's probably safe to assume that among the list would be the failed HR computer system and the hubbub over back-up jobs for executive level administrators like Paul Barrows.

The HR system ran up a tab of $26 million (which includes the salaries of permanent state employees who worked on the project) and Barrows was paid about $110,000 while on personal leave for seven months a few years ago.

These are troubling, indeed. And I'm sure Nass could come up with a few others to add to the list.

But I'm wondering if he could come up with enough in the past 10 years to justify the roughly $1.8 billion that an inflationary tuition cap would've cost the UW System between 1996-1997 and 2006-2007?

Yep, a little over $1.8 billion is what the UW System would be out in funding if tuition was limited to the inflation rate during each of the past ten years. You can check the math using the tuition numbers on page 18 of this LFB report and the inflation numbers on page 7 of this LFB report.

It's truly no problem to examine how we can keep UW tuition down, just as it's no problem to examine ways to keep general taxes and fees down for the state as a whole.

But we need to do so with realistic and fiscally responsible proposals that consider cost and services, as opposed to those with rigid adherence to restrictive revenue caps or uncompromising budget pledges.

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Friday, June 01, 2007

The Relevant Question: What Do You Want to Cut?

I don't want to get into whether or not the proposed oil assessment would be passed on to consumers. It's certainly an important question to consider before passing a budget with the provision included, and already a number of attorneys have weighed in on the issue with far more insight than I could provide here.

But it's also important to consider another question if the decision is made to not include the provision in the budget: What should be cut to allow it to be removed?

The oil assessment is scheduled to bring in about $272 million over the biennium. All of the revenue is slated for the transportation fund.

When Republicans on the JFC proposed deleting the oil assessment yesterday, they included a few other additions and subtractions that would've led to a net decrease in $160 million in revenue over the biennium.

As Rep. Mark Pocan (D-Madison) pointed out, the JFC has already added $50 million in GPR spending to the governor's budget over the course of its deliberations, yet the GOP side of the table was now proposing to simply eliminate $160 in revenue from that budget. So where are these cuts going to be made on the services side?

Rep. Kitty Rhoades (R-Hudson) offered a campaign trail type non-response, claiming that Pocan's comments highlighted a basic philosophical difference between Republicans and Democrats. As she sees it, Dems want to spend more, and Republicans want to spend less.

It's a bit of a curious defense to merely say your side is about spending less considering that Pocan was specifically asking where the GOP intended to spend less.

As I wrote back in February: "[T]he easy part where the GOP gets to talk only about what revenue it doesn't want to raise will eventually come to an end. Soon it'll need to start talking about what programs it wants to cut."

But the response by Rhoades suggests that in all the time the GOP spent hammering Doyle's budget over the course of the spring, it still hasn't figured out exactly how it plans to live up to its uncompromising talk on cutting revenue.