Columbia St. Mary's Gets a Freebie

Come on, Dorn, get in front of the damn ball. Don't give me this "ole" bullshit!
- Lou Brown, Major League

That's the line I kept thinking about while reading this article that appeared in the Journal Sentinel on Sunday. The premise of the article is pretty straightforward -- Columbia St. Mary's is building a new hospital to combine two of its three campuses, and the project is largely on target in terms of time and money.

That's all well and good, but at a couple of important points in the article, comments are slipped in about this project somehow lowering health care costs. The last two lines sum it up the best:

But increasing efficiency is essential in any effort to slow the rise in health care costs. Columbia St. Mary's has repeatedly said the new hospital will help do that, and, so far, it's on track to fulfill that promise.

Let's see. Columbia St. Mary's is constructing a new hospital that cuts patient beds by 33 percent, increases room sizes, makes all rooms private (most with a lake view), includes the latest medical technologies, and focuses on specialty care, and that's supposed to lower health care costs?

Not too surprisingly, the only quotes in the article come from the Columbia St. Mary's CEO and the Columbia St. Mary's COO.

No outside expert voice was quoted, which is something the JS wisely did in the article it was spoon-fed by Columbia St. Mary's and Froedtert a couple of months ago on the still-undefined merger plans (it even published a follow-up emphasizing the question marks surrounding the claims that the merger would lower costs, and both pieces were by the same writer as the article from yesterday).

In actuality, the emphasis on fewer patients, lush surroundings, and more specialty care suggests Columbia St. Mary's is following the nationwide trend toward aiming services at privately-insured patients and away from uninsured and Medicaid patients who tend to have a difficult to impossible time getting access to specialists.

And the simple fact that Columbia St. Mary's will have 1/3 fewer beds under its new set-up may mean lower overall costs for the system, but it doesn't seem likely per patient costs will go down at all. In fact, the emphasis on specialty care -- the most expensive and increasingly expensive kind around -- suggests those per patient costs will actually go up.

What'll also likely go up in this new set-up are the profits reaped by the non-profit health system, which has done pretty well lately as is, taking in a total of $161 million in profits over the past three years alone.

In the end, the suggestion that the direction of Columbia St. Mary's is going to reduce health care costs in any meaningful way for the people of SE Wisconsin is on the verge of ridiculous.

Hopefully the JS will publish a follow-up to flesh out this side of the story.

It Depends How You Define "All In"

Jo Egelhoff over at FoxPolitics has been following up on the questions I raised about the numbers John Torinus used in his recent columns critiquing the Healthy Wisconsin plan.

Torinus claims that "per employee" costs are "less than $6,000" for KI in Green Bay, where he is on the board of directors, and around $7,400 for Serigraph, which is the company he runs.

My response focused on the fact that high deductible health plans (HDHPs) have lower premiums -- the bulk of which are typically paid by the employer -- and, true to their name, higher deductibles, the bulk of which are typically paid by the employee. As a result, comparing premium costs for a HDHP to premium costs for a traditional comprehensive plan is comparing apples to oranges.

Another issue is using "per employee" costs. The trouble with that is it doesn't account for those employees who opt out of the company plan, and it also doesn't allow for any distinguishing between those employees who opt for a less expensive single plan and those who opt for a more expensive family plan.

Egelhoff acknowledges the "per employee" issue, though not by explaining it for her readers; rather, she just tells them there are "good additional questions" that have been raised about the figures cited by Torinus.

But I think Egelhoff mistakenly believes that the other issue about comparing HDHPs to traditional plans was addressed when she received this response from Torinus about what exactly "all in" costs mean:

[It] includes every drop of health cost, employee and employer, dental, mental, drugs, HRA, prevention, wellness, disease management, on-site nurses, administration -- everything.

Notice the key word missing from that list is "deductible." Sure, the deductible is alluded to in the reference to an HRA -- or Health Reimbursement Account -- but that really only covers the employer-funded portion of the deductible since employees can't contribute to HRAs.

According to a report in the medical journal Pediatrics, the average employer HRA contribution is $1,556, while the average deductible amount is $3,686. That leaves a $2,100 doughnut hole for the employee to fill in each year.

Who knows, perhaps KI and Serigraph are very generous with their HRA contributions and put in well over the average while still keeping costs down to $6,000-$7,400 "per employee." Or maybe the two managed to convince the health plan to keep the deductible lower than the average while simultaneously decreasing the premium well below $8,530, which is the average for a family HDHP with a HRA.

But, in the end, I'm struggling to see how an army of cost-conscious consumers is going to lower premium and deductible rates that are privately negotiated with health care providers in advance of care.

I can see how that army could avoid overutilization (the key would be simultaneously avoiding underutilization, which can result in an increase in costs) and potentially shop around for the best price on certain non-immediate treatments (although studies suggest that even with pricing data, consumers really aren't in a good position to shop around for care, nor do they really want to shop around for it).

But how does that affect pre-set premium and deductible levels? Seems to me it's just about stretching your deductible dollar further. In terms of contracting with the lowest cost provider in the area, health plans already typically try to do that, hopefully while considering some quality measures at the same time. And in that game, what really makes a difference is the size of the health plan. The bigger the pool, the more negotiating power it has.

The key to lowering overall costs -- rather than just focusing on non-immediate procedures that tend to be relatively inexpensive, anyway -- is by addressing administrative inefficiencies on both the payer and provider sides (streamlining billing procedures, utilizing electronic medical records, etc.), along with reducing or ending the cost-shifting that takes place between uninsured and insured patients.

In any event, I've put in an email to Torinus to find out for sure what his numbers actually represent, and I'll update if I hear back.

And if it turns out KI and Serigraph are providing employees with adequate family coverage that runs $6,000-$7,400 per plan when you include the total premium and deductible costs for the employer and the employee, then I'll gladly lobby to include whatever steps they implemented within a universal structure. As I've explained before, I'm certainly not adverse to the use of HDHPs, as long as certain protections are in place.

Ultimately, I'm just after an honest and open debate about fundamental health care reform in the state, and that includes critiquing the Healthy Wisconsin plan with an apples to apples comparison. I know Jo Egelhoff is after the same.

On the topic of contacting Torinus, I want to mention an online forum that's being sponsored by the Journal Sentinel next Wednesday, August 1 from noon until 1:30pm. Torinus and David Reimer will be engaging in a moderated debate using questions sent in by viewers. It should be interesting, so check it out and submit a question if you get a chance.

Torinus Swings and Misses Again at Healthy WI

Serigraph CEO, WMC board member, and Journal Sentinel business columnist John Torinus took his second swing at the Healthy Wisconsin plan yesterday using the same misleading argument he did a few weeks ago.

In his July 1 column, Torinus compared the premium costs of his company's high deductible health plan (HDHP) with the premium costs of the state's traditional comprehensive health plan; the latter is similar to the plans that would be offered under the HW plan.

As I pointed out at the time, the trouble with such a comparison is that HDHPs are premium light and deductible heavy, while traditional plans are premium heavy and deductible light (or deductible non-existent, as is the case with the state plan).

According to a report in the April 2007 issue of the medical journal Pediatrics, the average traditional comprehensive health plan has an average family premium of $11,090 per year and an average family deductible of $646 per year. The average family HDHP, on the other hand, had an average premium of $7,909 and an average family deductible of $4,070.

So, in other words, each plan costs about the same in relationship to the benefits that are offered. The only difference is how the money is being paid (and who's doing the paying, since the bulk of premiums are typically paid by the employer while the bulk of deductibles are typically paid by the employee).

Torinus never mentions this in the July 1 column, or when he trundled out the same argument yesterday by comparing the premium cost of a HDHP offered by the company KI in Green Bay and the premium cost of the average traditional plan in the state. The cost of the HDHP offered by KI, according to Torinus, is less than $6,000 per employee, which, expectedly, isn't as much as the $11,000-$12,000 premium for the average traditional plan.

Of course, there's another little wrinkle in Torinus' argument since he claims the total cost of covering the 1,429 KI employees who get insurance through the company is $8.8 million per year, which comes out to $6,128 per employee (a little over $6,000 per employee, not a little under). This is important because unless all of KI's employees are under a family plan, the $6,128 figure is going to be skewed low by everyone who is on a less expensive single plan.

But even setting that wrinkle aside, the fundamental point Torinus tries to make for a second time is simply off the mark. If we're going to have an honest debate here, why not also share how much the employee is paying into the premium and how much is being paid through the annual high deductible?

With two down, hopefully the JS is keeping track of Torinus' swings because he really shouldn't have that many left.

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Side-Note: I won't have access to my home computer for most of the week, so postings probably will be sparse. In fact, unless something big or frustrating happens -- the column by Torinus is an example of the latter -- this may be the only post for the week. Next week I'll be back to my typical 3-5 posts per week.

Critics Continue to Reach for Arguments Against Healthy WI

If the critiques of it are any indication, Healthy Wisconsin (HW) must be one good fundamental health care plan.

Initially there were the critiques that came up short trying to attack the way the HW was structured. Now they're developing into shots at what might happen if the plan was instituted.

According to a number of conservatives in the past few days (here, here, and here), the HW plan will result in a tide of out-of-state people looking to scam the system by getting menial jobs just to meet the minimum requirements for insurance under the HW.

Christian Schneider sums up the conservative position with a question and warning:

Why would any poor person in Illinois or Minnesota with a serious illness not immediately pick up, move to Wisconsin, and get a job at Dairy Queen? How hard can it be to claim you’re “self employed” or work for a farm? OB/GYNs could be flooded with out of state pregnant women seeking free care, as they are immediately eligible.

To be honest, I'm surprised the flood of OB/GYNs out of the state hasn't already happened considering pregnant women under 185 percent of the FPL can already get free coverage through the state's Medicaid or BadgerCare programs.

And that's where the conservative charge falls woefully short. Since BadgerCare already picks up the health care tab for all low income families with kids, yet without a flood of them into the state, that really leaves childless adults as the big concern.

Of course, if a low income childless adult from Illinois or Minnesota wanted to come here now and get care without even getting a job, they could always move to Milwaukee County and wait 180 days to qualify for GAMP (and if you do land that gig at Dairy Queen, just make sure it doesn't pay you more than $902 per month). I'm sure there are a number of other medical programs out there for low income people in other areas of the state.

And even if the HW plan is scrapped, our concerns over a flood of poor childless adult scammers at our borders isn't over since it's really Doyle's BadgerCare Plus plan -- which is incorporated into the HW plan -- that's the driver of universal health care. It would get us up to 98 percent insured by increasing the current BadgerCare FPL maximums and extending care to, you guessed it, childless adults up to 200 percent of the FPL! Dairy Queen managers across the state aren't going to know what to do with all of those applications.

I don't mean to be glib about this, but I'm having a tough time putting a lot of stock in this argument.

Once you widdle down the population of potential flooders to sick and poor childless adults with the means to move across state lines -- a population that becomes virtually non-existent under BadgerCare Plus -- it appears to be quite a logical leap to frame this as a significant issue that could bankrupt the system. Add to that the somewhat obvious fact that health coverage is only one of many factors that could prompt someone to move across state lines, even if they have the economic ability to do so, which is why thousands of uninsured people remain in states with less generous Medicaid programs when they could move to another state and get covered.

Another argument against HW that is less of a logical leap, yet equally as unconvincing, is coming from a recent press release by Senate Minority Leader Scott Fitzgerald (R-Juneau) who is now dubbing the employee payroll assessment as the "Success Tax." As Fitzgerald sees it, "The $15.2 billion government-run health care plan included in the state budget by Senate Democrats would punish Wisconsin workers every time they received a pay raise or a promotion by forcing them to pay more for the same health care coverage."

It's true that as a flat tax on social security wages, the employee assessment would increase with any raise as long as the total salary remains under $97,500. This is no different than how the income tax works -- except the employee assessment is flat and has a cap -- which comprises the bulk of GPR dollars that go to fund all sorts of services that remain the same for people regardless of their earnings, including public education. Does that mean UW tuition should be income-rated so that wealthier residents pay less in tuition because they pay more in taxes?

A raise is still going to be a raise under the HW plan, and no one is going to mistake it for a bad thing because they'll pay more under the flat employee assessment.

In the end, I just can't believe these are some of the discussions we're having about the prospect of fundamental health care reform. It could be that HW is just that good of a plan, but I think the more likely culprit is that while conservatives will recognize health care as a significant problem, conservative ideology just doesn't allow them to offer a significant solution.

Rep. Nass Wants Say on UW Research

Evidently it wasn't enough that UW-Madison professors Erica and Rich Halverson cleared their new research project through the MacArthur Foundation, which gave them a grant to do it.

Assembly Colleges and Universities committee chair Steve Nass (R-Whitewater) apparently thinks he needs to approve it, too.

The press release by Nass tries to make a connection between the research by the Halverson's -- which focuses on studying competitive fandom and gaming through an exploration of fantasy baseball leagues -- and the need for adequate funding for the UW in the biennial budget.

Setting aside the fact that the research is funded through the private MacArthur Foundation, it is breathtakingly arrogant for Nass to think that he can judge (or even has any business judging) the validity of a study based upon a single article on it -- which he grossly short-changes in his press release -- that ran through the UW news service.

Here's Nass: "Maybe with higher taxes the Ivory Tower elites at UW-Madison can solve the great psychological mystery posed by the joy that adults and kids get while playing dodgeball or kickball. It couldn’t be that most simple of reasons – it’s fun."

Ivory Tower elites? Does Nass think that by attacking a university he's shielded from sounding pompous himself?

The Halverson's are taking time to critically examine an aspect of a much larger cultural phenomenon, fantasy gaming, that has grown extremely popular in recent years amongst a wide swath of the American public. Elitism would be to shun the fantasy phenomenon as the mindless meddling of the working classes, and it wasn't all that long ago that academia would've done just that.

Nass, meanwhile, is barking out press releases from his Capitol office with the notion that he has special oversight of and insight into how UW professors should run their research simply because he was given a chairperson post by his caucus leader.

And it's a good thing Robert Putnam didn't stop at just considering whether "it's fun" when crafting one of the most important studies on public society in recent memory, which started with an interest in bowling leagues.

Closeout Sale on Emergency Appendectomies

State Senator Kathleen Vinehout (D-Eau Claire) relayed to the Journal Sentinel a not-too-uncommon situation regarding her family's health care before she entered public office.

As a farm family, there was no option for employer-sponsored health coverage. Given the choice between $1000 per month family health insurance or sustaining their farm business, the family opted for the latter.

A little over a year later, Vinehout's son was rushed to the hospital for an emergency appendectomy. The family had to refinance the mortgage on the farm to pay the $10,000 bill.

When told of this story, here was the response by Sen. Ted Kanavas (R-Brookfield):

"Senator Vinehout's story is heartfelt," said Republican Sen. Ted Kanavas of Brookfield. "But their plan is completely misguided. They've decided to blow up a health care system that is the best in the nation."

Instead, Republicans back what they call a "consumer-driven model" of health care reform in which Wisconsin residents would get more information, compare costs of procedures and insurance, and make informed choices that would cut health care costs.

Huh? Was Kanavas even listening to the story?

Vinehout's response is right on the mark:

That's a fine goal, Vinehout said, but it doesn't work when someone you love is critically ill in a hospital emergency room.

"The whole idea that consumers would actually be able to shop around for that particular surgery looks a little silly when my husband was in that emergency room and said to me: 'What am I supposed to do? Call a La Crosse hospital and see if they have a special on emergency appendectomies?' " Vinehout said.

"It simply doesn't work. . . . The patient doesn't have the power to be able to negotiate."

There is absolutely a place for consumerism in a health system, but the reality of health care and the health care market is simply too complex for it to be the same type of consumerism that's applied to purchasing common household appliances. The completely off-the-mark response by Kanavas and the right on-the-mark reply by Vinehout exemplifies that perfectly.

Economist Alain Enthoven's ideas for managed health care competition represent a far more responsible way to use the market for cost reductions. By linking payers to providers -- e.g., the Dean Health System is serviced by the Dean Health Plan in Madison -- the health plan cost most accurately represents the actual prices of the provider.

Consumers are then given a choice of health plans that all contain a uniform set of minimum benefits. If they opt for the least expensive plan -- which, in turn, would service the most cost effective provider -- they pay nothing per month aside from what they pay into the system as a whole through some form of taxes or assessments. If consumers opt for a higher cost plan, on the other hand, they pay the difference between that plan and the lowest cost plan.

This system offers significant economic incentives for consumers to pick the lowest cost plan and for the providers to be the lowest cost network so that consumers pick the plan that's associated with them.

The system can further use the market by including a responsible cost sharing formula that drives consumers toward procedures that have proven to reduce long term health costs -- like most preventive care -- while driving them away from unnecessary over-utilization of care.

Utilizing this type of nuanced consumerism within a centralized universal system has the capability to answer the complex issues like the one the Vinehouts faced a year ago, as opposed to the standalone consumerism of Kanavas and other conservatives that acts as if getting health care is no different than buying a TV.

The GOP's School Funding Shell Game

***UPDATED BELOW***

When the GOP budget was being debated on the Assembly floor earlier this week, Rep. Sondy Pope-Roberts (D-Madison) commented on the cuts to K-12 education in the budget, and Rep. Brett Davis (R-Oregon) responded that the GOP proposal includes $464 million in new money for schools while Governor Doyle's budget only includes $448 million.

Really? Well, it depends on how you define "money for schools."

According to a LFB memo released yesterday, it's true that the GOP budget spends $16.3 million more in what's typically defined as "support of K-12 education." But, at the same time, the GOP budget would actually send $83.7 million less to schools than the governor's budget.

The issue is that state support of K-12 education comes in four ways:

1. General school aids
2. Categorical aids
3. School levy tax credits
4. State residential schools

The GOP budget and Doyle's budget spend the same on state residential schools and virtually the same on categorical aids (the GOP budget spends $1.6 million more). On general school aids, however, Doyle's budget spends $85.4 million more than the GOP budget, while on school levy tax credits, the GOP budget spends $100 million more than Doyle's budget.

That all washes out into a $16.3 million lead for the GOP budget; but, the thing is, school levy tax credits aren't actually spent on the schools. These are payments made to municipalities based upon a formula that considers (see page 33) a municipality's three-year school levy average in relation to the average statewide municipal three-year school levy average.

The municipalities then pass this credit on directly to their property taxpayers; none of it goes to the school districts. So the $100 million more that the GOP budget spends on the school levy tax credit than Doyle's budget is really a property tax cut, not an increase for the schools.

And that's fine; in fact, I'm sure most property taxpayers would cheer it on the surface. Except it's not funding for schools, as Rep. Davis and other conservatives have made out, and the fact is the bulk of that $100 million is coming on the back of $83.7 million less in overall state aid to schools.

It seems the GOP wants to have its cake and eat it, too, on this one. But, as with trying to eat a cake twice, you just can't take credit for cutting costs and improving on the services that those costs would've funded.

UPDATE (7/16): I was wrong. The shifting of funds from general aids to the school levy credit in the GOP budget wasn't an attempt to short K-12 education as a whole. Based upon my understanding now, the effect actually will be to short property-poor districts and benefit property-rich districts based upon the way the levy credit is dolled out in relation to the distribution formula for equalization aid.

Check out the comments for more.

Scott Walker's Measured Take on the Budget

I was wondering how Milwaukee County Executive Scott Walker was going to respond to the shared revenue and other county aid cuts in the Assembly GOP budget. Here it is, in its entirety:

Both the Assembly and Senate versions of the state budget have items that are good and bad for Milwaukee County. Now, I want to encourage the members of the Conference Committee to do more for local governments than just create a committee on mandates. We need relief from state mandates or the resources to meet them during the next two years, specifically in areas like juvenile justice and mass transit.

I can't blame Walker for the ambiguity or brevity. Milwaukee County arguably has more riding on this budget than any county in the state due to its tenuous fiscal position, and it isn't difficult to see that the budget passed by Walker's own party would only add to the problems.

The "do more for local governments than just create a committee on mandates" line is the only explicit shot at the GOP budget, but the lack of details about what's good and what's bad about each version speaks volumes.

If Walker wasn't a GOPer with aspirations for running the party from the governor's mansion someday, you have to imagine he'd have a little more to say about decisions that could either help float or help sink the county he's running today.

Assembly GOP Budget: Mission Accomplished

If I can pass a budget in the Assembly that has no tax increases, I will certainly go to the conference table and show them how we can do it.
- Assembly Speaker Mike Huebsch

Our focus was to make sure Wisconsin had a no-tax budget; we met that goal.
- Assistant Assembly Majority Leader Mark Gundrum

Well, the state GOP now has its show budget. It's one Republicans can trundle out to the fire-breathing fiscal conservatives as a sign of good faith. But the bulk of it isn't going to stick.

Sure, a handful of Republicans in the Assembly will hold out for a budget like this one, but enough will ultimately side with a budget that looks far more like what came out of the JFC last month.

All in all, the Assembly budget doesn't include much that wasn't expected. When you need to cut $1 billion to meet a self-imposed goal, not many stones are going to be left unturned.

Working from the budget that passed out of the JFC, the GOP cut K-12 funding by $85 million, the UW budget by over $100 million, shared revenues to local governments by $58 million, county circuit court support by $19 million, county youth aid by $27 million, low income child care subsidies by $52 million, Family Care for the elderly by $61 million, and those are just some of the big ones.

Dozens of other areas have tens of thousands to millions cut from their funding, such as $8 million from public radio and television, $1.2 million from the state's child abuse prevention program, $3 million in grants to community health centers, and $3.2 million from the school breakfast program.

And there are policy items galore, ranging from altering state laws on self-defense to pushing abstinence-only education to naming a major stretch of US Hwy 14 after Ronald Reagan.

I could go on and on.

But, of course, none of this is worth getting worked up about, although it is an interesting glimpse into what the actual budget could've looked like if Mark Green was elected last November and the GOP would've held onto the Senate.

Nevertheless, in the end, the Dems will drop a couple of big ticket items such as the Healthy Wisconsin plan and perhaps the oil company assessment, and the GOP leadership will back away from the vast majority of their proposed cuts.

And, once the ink is finally dry, we can all sit back and watch some football. Let's just hope it's not the playoffs.

UPDATE: Righty Jo Egelhoff of FoxPolitics.net on the long-term impact of the Assembly budget:

The Assembly budget ends in 2009 with a paltry surplus of $5.6M – including $0.00 proposed for what is currently a required $65M rainy day fund. Compare that to the Senate budget, ending 2009 $180.7M in the black, including a rainy day fund of $130 million.

The Fiscal Bureau is still massaging the numbers a bit, but the structural deficit in the Assembly budget is over $900 million! $900 million that’s directed to be spent in this biennial budget, but to be paid in July, 2009, a brand new budget year. What a mess. The structural deficits projected in the Governor’s, JFC and Senate budgets were bad enough – but “just” in the $700M range.

It isn't difficult to picture the GOP leadership crawling to the finish line when crafting this budget. After scrapping together enough cuts to reach the bottom of the $1 billion crater required for a no-tax-increase budget, there just wasn't anything left to dice up for a healthier long-term outlook.

Cracks in the Risk Pool

Hewitt Associates -- a national firm that helps companies manage their health benefits -- has completed an analysis that projects HMO premiums could increase by 14.1 percent in 2008. The highest increases are projected for here in the Midwest at 18.4 percent.

It's worth noting that Hewitt predicted the 2007 increase would be 11.7 percent, and the actual increase was just 8.2 percent.

But the fact that the projection is higher for 2008 than it was for 2007 suggests that the actual increase will be more next year -- Hewitt says at least 10 percent.

What's particularly noteworthy about this report is one of the major reasons given for the increase. According to a director for Hewitt, as younger and healthier employees opt for high deductible health plans (HDHPs), HMOs are left with a sicker risk pool. This, in turn, has led to rate increases since the HMOs have "become conservative in their trend assumptions and less willing to bend on negotiations."

This is the reality of a fragmented health system at work. Unless everyone's playing in the same pool -- which is only possible through a centralized structure -- the system will become increasingly less affordable for those who need it.

And the real kicker is that virtually everyone needs it, at some point.

New Healthy Wisconsin Website

Just wanted to make a quick plug for a new website on the Healthy Wisconsin plan. It was put together by the folks at the Institute for One Wisconsin.

The site includes an overview of the plan, the plan details, news about the plan (including in the blogs), some handy links to plan documents, and a section to write to your legislators about the plan.

Check it out.

Why No GOP Budget?

Initially, Assembly Republicans were scheduled to release their version of the budget today. But late last week, after the close of the "working groups" that members broke into to discuss the budget, a decision was made to postpone the release until next week.

Hmm. Maybe I'm just reading into it, but I keep coming back to something the Recess Supervisor wrote about a week and a half ago (emphasis mine):

Word is the informal target for the Assembly Republican working groups looking for budget cuts is around $800 million - $1 billion. The Governor's budget rang in at just over $58 billion (excluding bond revenue), which means that the fierce fiscal hawks of the Assembly are trying to come up with a whopping 1.5% in cuts - and so far, they're mostly failing. There are some working groups in the Assembly that feel they shouldn't have to cut anything, some members have resigned from their working groups in protest, and still others have reportedly offered - get this - spending motions. Tuesday's closed caucus should be a real hoot.

I'm not sure where the "word" was coming from, but, if accurate -- and the delay seems to support it -- it sounds to me like Assembly Republicans are engaged in an intense reenactment of their TABOR battles from last spring.

I hope they're able to finish in time for parade duty tomorrow.

Critiques of Healthy WI Keep Coming Up Short

As expected (by me, at least), Serigraph CEO and WMC board member John Torinus took a shot at the Healthy Wisconsin plan in his weekly JS column yesterday.

At the start of the column, Torinus makes a curious claim. He writes that the HW plan is solely about coverage and not costs. This is curious because the Lewin Group actually found that HW would reduce health care spending by over $750 million in the first year alone.

The thing is, Torinus has a monolithic view of health care costs. It's like every other market to Torinus in which consumers purchase a service for a price that's entirely driven by the cost and value of that service from the perspective of the seller.

There is certainly some of that in the health care market, but the reality is much more complex. Since health care typically works with third-party payers -- which is necessary if you want to distribute risk -- there is the added cost of paying for those third-parties. Also, since health care is unlike most other markets in that its services are often required to sustain life, people's ability to pay does not always dictate whether they receive the service. And when they can't pay, others pay more to compensate.

In short, when consumers pay for their health care -- or, more accurately, their third party payers pay for it -- they're not just paying for the health care they received. To be sure, in its recent review of the Wisconsin Health Plan (WHP), the Lewin Group estimated (page 13) that health care services actually cost private payers 70 percent more, on average, than the true cost of those services.

So when we talk about reducing health care costs, there's much more that needs to factor in the equation than simply the literal cost of that care.

But, actually, the literal cost of care is something that the HW plan addresses, Torinus just doesn't acknowledge it. He laments that the HW doesn't include a higher deductible with a HSA like the Wisconsin Health Plan does. On that we're in agreement.

But Torinus ignores the fact that there is a significant deductible -- $300 for individuals and $600 for families -- included in the HW for non-preventive adult care. So there is some incentive to shop around for care under the HW plan; and, if it's raised as a substantive issue, perhaps Dems would be willing to include a HSA option in the mix.

However, the majority of cost savings under the HW plan comes from increased administrative efficiencies and reduced cost shifting. And this is really the most appropriate place to target cost savings. As studies have shown, even with pricing data, consumers really aren't in a good position to "shop around" for health care, nor do they really want to shop around for it. And with the increasing geographic disbursement of different hospital and clinic systems -- a byproduct of provider consolidation -- the options for shopping around are decreasing by the year.

The rest of Torinus' column relies on a numbers game in an attempt to demonstrate how businesses are already handling health care costs in a much better way than the HW would. He writes:

The Democratic rhetoric is that every citizen of Wisconsin should have the same coverage as do state employees. The problem is that many private companies are offering essentially the same level of benefits as does the ETF plan, but at about half the cost. Last I checked, the ETF plan was more that $11,000 per employee.

Best practice private sector plans are at about $6,000 per employee for all-in costs. (My company is at $7,400.)

This is disingenuous on a couple of levels.

For starters, when Dems say every citizen of Wisconsin should have the same coverage as state employees, they truly mean coverage, not cost. Under the HW plan, health care costs would increase for state employees (although they would decrease significantly for their employer). The 4 percent payroll assessment would be a lot more than virtually any state employee currently pays in premiums, and while co-payments would be about the same, the deductible would be something new for state employees that would significantly increase their cost sharing.

So that $11,000 figure Torinus cites is little more than a red herring since that number, from the ETF perspective, would decrease under the HW plan even though coverage would remain the same.

What's more, the "best practice private sector plans" that Torinus refers to are high deductible health plans (HDHPs) that may or may not include a HSA. The thing about HDHPs is that they're low on premiums and -- true to their name -- high on deductibles.

According to a report in the March 2007 issue of Pediatrics, the average traditional comprehensive health plan -- which is what the HW plan would involve -- had an average family premium of $11,090 per year and an average family deductible of $646 per year. The average family HDHP, on the other hand, had an average premium of $7,909 and an average family deductible of $4,070.

So when Torinus puts these "best practice private sector plans" up against the ETF plan -- which, again, isn't the same in terms of employer cost as the HW plan -- he's really comparing apples to oranges since the figures are weighted toward premiums (which is always going to be higher in a traditional comprehensive plan) rather than deductibles (which is always going to be higher in a HDHP).

There's more. Torinus writes:

My company, where management and co-workers aggressively and collaboratively manage health costs, spends about 14% to 15% of payroll on overall health costs. The Riemer plan calls for an initial payroll tax of 14.5% - 10 1/2 % from the employer and 4% from the employee.

The Senate bill allows, however, for 16% - 12% from the employer and 4% from the employee. You just know that the 16% - or more - will become the assessment once the government is in charge of the system.

For the life of me, I can't find where Torinus is getting that "16%-12% from the employer" figure. Here is what the HW bill literally says about the employer assessment (page 48): "Subject to sub. (4), the board shall calculate an assessment, based on its anticipated revenue needs, that is a percent of aggregate social security wages that is at least 9 percent and not more than 12 percent."

That's 9-12 percent of social security wages, not even payroll, so any portion of an individual employee's pay that exceeded $97,500 (in 2007) wouldn't be subject to the assessment. When you add in what employees would pay, the percentage goes to somewhere between 11 percent and 16 percent, but that's not what Torinus wrote. He wrote that employers alone would pay 12 to 16 percent, with employees contributing 4 percent more, which just isn't the case.

So Torinus' company right now has health care costs at 14 to 15 percent of total payroll, and he fears a universal health care plan that would run his company 9 to 12 percent of social security wages?

In the end, a couple of things about the Torinus column did make me happy, though. One, he speaks pretty highly of the WHP, which is certainly still an option that's on the table (actually, the HW isn't all that much different than the WHP to start). And, two, his inability to make solid points against the HW is, to me, little more than a demonstration of the plan's overall strength.