Friday, September 28, 2007

Huebsch Needs Dem Votes...Lots of Them

A Journal Sentinel article this morning on the budget talks highlighted an interesting point.

It's been known that eventually it would happen, but now that Speaker Huebsch has agreed to at least increase the cigarette tax, it effectively neutralizes the 24 Assembly legislators who signed "no-tax increase" pledges, assuming none of them go back on their word.

Twenty-two of those legislators are from the right side of the aisle, which puts the number of GOPers able to vote for a budget compromise at 30 and the number of Dems at 45.

That means Huebsch needs at least 20 Dem votes to pass a budget compromise, and Assembly Democratic Leader Jim Krueser had the perfect response. According to the JS, Krueser said he could deliver those needed votes, but "that the more votes Huebsch needs, the more the budget would have to reflect Democratic initiatives."

It's not too unlikely that Huebsch could lose a few more GOP votes with his agreement on the medical malpractice fund transfer, or any other agreements he might make in the coming weeks, which could bring the total vote tally needed pretty close to an even split between Repubs and Dems in the Assembly.

Considering the Dems will be providing all of the needed votes in the Senate, at least 40 percent of the needed votes in the Assembly (and maybe more), and the governor's signature on a budget compromise, what do you suppose that should mean for the priorities of that budget?

It's becoming pretty apparent why Huebsch and the other GOP leaders cringed when those pledges were making the rounds last spring.

UPDATE (9/29): From today's JS:
Twenty-five Assembly Republicans have signed pledges saying they would not vote for tax increases, though two of them - Rep. J.A. "Doc" Hines (R-Oxford) and Rep. Eugene Hahn (R-Cambria) - said Friday they could tolerate a budget that raised the cigarette tax. Seven others said they would not. The remainder could not be reached or said they would have to see the overall package.
Two said they would vote for increased taxes, and others said they'd consider it? I'm just not following the political logic on this. Why would you sign a pledge to do something in an attempt to curry political favor, and then announce your willingness to go back on your word less than 6 months later?

Oh, well, it's their re-election...

But this does change the equation a bit by at least giving Huebsch a few more willing GOP legislators to work with when trying to pull together a vote on a compromise budget.

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Thursday, September 27, 2007

More on the Milwaukee-Madison Divide

The Journal Sentinel is running another story this morning on the economic divide between Milwaukee and Madison.

At the center of it, once again, is UW-Madison. As an example of how the Madison economy has grown since the 2001 recession, the article notes:

The local GDP data was compiled by the Bureau of Economic Analysis based on information from individual business establishments.

When they were gathered in 2001, Virent Energy Systems Inc., Madison, contributed nothing because it did not exist.

It was started in 2002 to work on making fuels and chemicals from sugars, using technology developed at the University of Wisconsin-Madison, said Eric Apfelbach, president and chief executive officer. By 2005, it had 18 employees and added half a million dollars in sales to Madison's GDP. Now, it employs 60, has sales of about $4 million and just raised $21 million in venture capital.

"All that money comes into town from out of town and pays for salaries and contractors and leases," Apfelbach said. "These high-tech start-ups that can raise venture capital are really economic multipliers."

It was essentially the same story that the JS ran last December, except that one was based on a Wisconsin Taxpayer Alliance report on the growing income disparities between Milwaukee and Madison.

According to that article:

Madison has some "built-in advantages," such as the major research center of the University of Wisconsin-Madison and that it's the state capital, said Ryan Parsons, a research associate for the Wisconsin Taxpayers Alliance.

"But I think what Milwaukee needs to do if it wants to regain some of that balance that was lost in the last 50 years is more of a focus on education and retaining good college graduates," Parsons said. "One of the reasons Madison has such an edge over Milwaukee is having people who can fill high-tech science research jobs. A lot of that work force is missing from a city like Milwaukee."

When commenting on this article back in December, I concluded that reports like this "need to be kept in mind come budget time."

So here we are with a similar report that's released in the midst of budget talks, and part of what's on the table in those talks is the UW System's Growth Agenda, which includes provisions for both expanding the number of graduates and funneling money into the development of research capacities at UW-Milwaukee and the other campuses.

In spite of all the public squawking politicians on both sides engaged in regarding the differences over K-12 education in the budget, it's really higher education where the true budget differences exist. To be sure, the biggest difference between the Dem budget and the GOP budget on K-12 education is where the money should be spent.

In terms of higher education, on the other hand, the two sides are closer to $100 million apart on how much should be funded in the first place, including around $10 million that was dedicated specifically to enhancing the research proposals focusing on engineering and biotechnology made by Chancellor Santiago for UW-Milwaukee.

Part of the problem is how the two sides are discussing the funding issue. On the GOP side, funding is discussed as if it's just aimed at an operating budget to keep the UW System afloat. The talk is about what the UW System needs.

And that fits with the Assembly budget proposal for the UW. As the Dems have rightly pointed out, the $62 million increase for the UW budget that the GOP has proposed would only leave around $6 million in truly new funding outside of what is needed to pay off bonds and increased utility bills.

But, the thing is -- and the reports outlined above support this -- the funding for the UW System doesn't stop with the UW System. Funding for the UW System isn't just paying for stuff, it's also investing in a state resource that has a proven track record of driving and, just as importantly, transforming the economy in this state.

And attacking these investments as nothing more than money grabs isn't providing any real "protection" for the taxpayers, particularly in the long run.

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Wednesday, September 26, 2007

Health Care Reform is Coming Back

Not in the 07-09 budget, of course. That ship has sailed (or, at least, it sounds like it's sailing).

But, as expected, legislative Dems are making clear that fundamental health care reform is still in the works. As Senator Erpenbach put it bluntly: "It's not going away."

I hope this time away from the spotlight also prompts the Dems to give the Healthy Wisconsin bill a bit of an overhaul. I'd really like to see them come back with the Wisconsin Health Plan and call it a day, but that doesn't seem to be too likely.

There are, however, a couple of key areas that could be altered in the proposal to improve it and make it more politically palatable.

First, allow for HDHP options. These options could mirror those in the WHP where cost sharing isn't applied to preventive care, the deductible is set at a reasonable annual level, and there's a pre-set level of funding in a HSA to allow for first-dollar coverage.

Managing this alongside comprehensive options could be difficult, particularly if people are allowed to switch between plans during an annual open enrollment period. Nevertheless, it's something that should be explored.

Second, explore new funding mechanisms. This is a big one, but it's also the one that would be most difficult to realize. Clearly the biggest substantive objections to Healthy Wisconsin were related to its funding, particularly mandating that all employers contribute a fixed amount to health care.

The reasoning for this mandate is simply that employer-sponsored health care has developed over years and years in this country, and simply abandoning it in one swoop is difficult. But, as I discuss in more detail here, severing the tie between health care and employment should be a goal that's right up there alongside universal coverage in any reform plan.

Third, get some active state Republicans on board. I realize it's highly unlikely anyone in the GOP leadership will sign on, but Republican support for fundamental health care reform isn't impossible.

After all, former Rep. Curt Gielow was a co-sponsor of the WHP and Rep. Terry Musser was a co-sponsor of the Wisconsin Health Care Partnership Plan. And, on the national level, Sen. Bill Bennett -- one of the most conservative Republicans in Congress -- has jumped on board with Sen. Ron Wyden's sweeping Healthy Americans Act.

And, along the same lines, the support of the business community is also key. Healthy Wisconsin and the WHP have some solid business support, but more always can be done. Wyden's Healthy Americans Act is another example on this front; it has the backing of some key national corporations, most notably the CEO of Safeway.

There are other details that also should be examined, such as including more health professionals on the board that oversees the new system, eliminating the use of special affinity groups, creating a mechanism for new businesses to be phased into the plan, and loosening or eliminating the restrictions on insurance company profits.

Needless to say, let's hope the Dems use this break from pushing health care reform as a working vacation.

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Friday, September 21, 2007

The Dubious Claim of a Public Worker Gravy Train

Prompted by a recent report by the Wisconsin Taxpayer Alliance (WTA), Jo Egelhoff of got on the topic of public sector vs. private sector compensation in Wisconsin.

According to the WTA report, average public sector benefits are 50.1 percent greater than the average cost of benefits found in the private sector in the state. This, Egelhoff concludes, is a sign that public sector workers are on a "gravy train" in Wisconsin.

Such a conclusion, however, doesn't tell the whole picture.

For starters, simply comparing "average" benefits packages misses a key point, which is that not all private sector packages are worse than their public sector counterparts. To be sure, a number of top executives in the private sector ride a pretty nice gravy train of their own when it comes to benefits.

And I'm not mentioning that as a "gotcha," but rather as a means for pointing out a fundamental difference between benefits in the public sector and benefits in the private sector.

As a relatively low-level administrative employee at UWM, I get paid a heck of a lot less than the chancellor (and justifiably so); but, in spite of the salary difference, I still get the exact same health care package as he gets, and so does every receptionist on campus, every custodian on campus, every full-time food service worker on campus, etc. That's not something you could say about top executives and lower-level employees at too many private sector corporations, particularly ones that come close to the size of UWM.

Just to clarify, I'm not trying to make the point here that private corporations should need to give the same benefits packages to all employees -- that's an entirely different discussion -- but rather my point is that while a wide gap has developed in much of the private sector when it comes to your position and the benefits you receive, the public sector has opted to keep everyone in largely the same boat when it comes to benefits, which is a big reason why "the average" cost of benefits for the public sector is so much higher than the private sector.

But even more fundamental than that is the issue of total compensation -- that is, benefits plus salary.

Jo addresses the issue of salary in her post, citing some average salary figures from 2005 that were included in the WTA report along with some figures crafted by the conservative Maine Heritage Policy Center (MHPC). Both suggest that even when you factor in salary, Wisconsin public sector employees are still making out better than employees in the private sector.

But, really, you don't need the WTA or the MHPC to relay the total compensation figures for Wisconsin -- the Bureau of Economic Analysis (BEA) publishes those figures on its website for everyone to see, and it even breaks it down by industry and individual county.

Using the BEA data, we can see that total compensation for the private sector in Wisconsin grew 17.6 percent between 2001 and 2005, while total compensation for the public sector grew 18.7 percent in the same period.

And, if you look at the data prior to 2001, when the economy was still kicking in high gear between 1998-2000, private sector compensation grew at 12.1% in Wisconsin while public sector compensation only grew at 9.7 percent. And if you take out the big recession years of 2001 and 2002, and just look at the last three, private sector compensation again outpaces public sector compensation in Wisconsin, 9.1 percent to 6.8 percent.

But, of course, these macro-analyses are complicated because -- although we can see in the BEA data that total private sector employment increased by 7.5 percent between 1998 and 2005, while total public sector employment jumped 6.7 percent in the same period -- that data doesn't tell us what type of jobs exist in each sector or what type are being created and, as a result, driving compensation increases.

Indeed, just as an example, it seems likely that the private sector includes more minimum wage positions than the public sector (think fast food, retail, etc.). And, even beyond wages, the lowest paid positions in the public sector are still receiving excellent benefits packages, just like the higher ups, while it's a pretty safe assumption that those minimum wage workers at places like Dairy Queen or ShopKo aren't getting much of anything in terms of benefits, especially in comparison to the management at their respective companies.

When that's factored into the aggregate -- thereby increasing the "average" compensation for public workers and decreasing it for private workers -- does it necessarily mean that all or even most public sector workers are riding a gravy train?

All in all, there always should be an eye towards how the public sector is being compensated. But using aggregate data to create alarm about a so-called special gravy train for an entire sector of workers is more problematic than it can be made to appear, particularly considering that aggregate data, in and of itself, isn't even all that alarming.


Thursday, September 20, 2007

Dan Cody Running for County Supervisor

I usually don't spotlight candidates on this blog, but I wanted to put in a plug for Dan Cody and his run for Milwaukee County Supervisor in the 15th district.

For those who don't know, Dan writes the "Left on the Lake" blog, and he's also a colleague of mine at UWM. We don't cross paths on campus very often, but every time we have I've been impressed by his professionalism and the respect he garners from others at the university.

Dan is a good guy, and a smart guy. He's also really good with technology, as you can see from his campaign website. Most important, though, is Dan's obvious commitment to Milwaukee County.

So, if you live in the 15th district of Milwaukee County -- see map below -- check out Dan's campaign site and listen to what he has to say if you see him out and about in the community.

(Click for larger view.)

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Wednesday, September 19, 2007

Piecemeal Proposals Would Delay Budget

The GOP leadership has caused a bit of a stir in the political media the past couple of days by pulling K-12 education funding and local government aids out of the budget; so far, at least two newspaper editorials have sung the praises of this move.

The Janesville Gazette takes its support the furthest, claiming: "We believe the Republican plan is a smart move, rather than a tactic from the conservative fringe."

I'm not so sure why "a smart move" and "a tactic from the conservative fringe" are the only two options for describing a piecemeal budget; in fact, as I've argued before, I'd say it's a smart move intended to further appease the conservative fringe.

A truly eye-raising part of the Janesville Gazette editorial is when it discusses a meeting the paper had last Friday with two Republican legislators, Reps. Brett Davis (R-Oregon) and Robin Vos (R-Racine).

Davis and Vos peddled the line that a piecemeal budget isn't unprecedented, citing how the 1994 transportation budget and the 1999 education budget were split off from the rest of the budget in those years.

Of course, the 1994 transportation budget was a case of the bulk of the budget being set first -- prior to July 1 even -- and just the transportation section was delayed due to a dispute over the gas tax. And, in 1999, the JFC did set a funding level for K-12 education on October 1 -- a mere two days prior to the agrement on the entire budget -- but, according to news reports, that was just setting the level, not actually passing a bill, which isn't even something the JFC could do on its own.

Why the Janesville Gazette -- as a news outlet that surely covered the budget in those years -- decided not to mention these finer points is beyond me.

But what was most off-the-mark in the editorial was the last line: "The 'Property Taxpayer Protection Act' might be the best hope to force compromise."

This line was echoed in another editorial that praised the GOP's attempt at a piecemeal budget, this one appearing in the Tomah Journal. The title of that editorial says it all: "Republican compromise should pave way for budget agreement."

This assumption is wrong on more than one front.

For starters, until the GOP states its willing to bend on its strict funding cap and "no tax increase" budget pledge, any additional funding for any one piece of the budget simply means there's less remaining for the rest of the budget.

As the LFB found, the piecemeal proposals by the GOP would require $115 million worth of cuts to the rest of the GOP budget or abandoning the "no tax increase" pledge. I'm sure Huebsch & Co. would gladly sit down and find $115 million more to cut, but the point is that by agreeing to the GOP piecemeal proposals without addressing the GOP's strict funding cap, the Dems would be effectively pinning themselves into a corner for the rest of negotiations.

And while K-12 education and local government aids are surely important -- arguably the most important aspects of the budget considering how they affect virtually the entire state directly and through property taxes -- that still doesn't mean the rest of the budget isn't important.

This leads to the second problem with assuming a piecemeal budget will kick-start the negotiation process. Once K-12 funding and local government aids are out of the way, a big chunk of the incentive for GOPers to pass a budget in a timely manner -- or even at all -- is largely out the window.

To be sure, if no new budget passes, funding simply continues at previous year levels. Although there are a few alterations that the GOP was on board with making -- such as the expansion of the state crime lab -- a zero-increase budget is largely what Republicans, particularly the fiscal conservatives, have wanted from the start.

And let's not forget that a flat-revenue budget is exactly what Mark Green ran on during his campaign for governor last year.


Friday, September 14, 2007

A Piecemeal Budget Avoids the Big Picture

A few thoughts on the GOP proposal to split funding for K-12 schools, tech colleges, and shared revenue from the rest of the budget.

For starters, it's probably the best option Republicans have politically-speaking. Once those parts of the budget are out of the way, thereby neutralizing much of the general public's concern over the budget, the GOP wouldn't have any trouble holding firm to most of its other demands to please its fiscal conservative base.

That said, it would be foolish for the Dems to go along with it, which explains why both Doyle and the Senate leadership have already rejected the idea outright.

But even beyond making sense in political terms, rejecting the idea also makes sense in policy terms.

To be sure, from the beginning of budget talks -- even before the conference committee took up deliberations -- the GOP has demanded a "no tax-increase" budget with a strict cap on total funding. Until that stance is addressed, there is simply no way the Dems can know what they're agreeing to on any individual piece of the budget.

Take the K-12 budget as an example. While total K-12 funding was about the same under the Dem budgets -- the governor's and the Senate's -- and the GOP budget to start, there was a significant difference in where the money was being spent. The Dem budgets put about $85 million more into general school aids, while the GOP budget put $100 million more into the school levy credit. You can read more about the differences in those choices here.

But the standalone proposal that the GOP is putting forward now includes the general school aid amount proposed by the Dems and the school levy credit amount proposed by Republicans. There are some cuts to categorical funds in the new GOP proposal, such as (unfortunately) a grant to help develop more K-4 programs in the state, but a funding difference still exists.

So unless the GOP has also announced a willingness to bend on it's "no tax-increase" policy and strict funding cap, it means that the extra funding is going to need to come out of somewhere else; yet, "somewhere else" is nowhere to be seen.

In other words, while the GOP may be mostly agreeing to the Dem proposal on K-12 funding -- as Speaker Huebsch has stressed for the media in recent days -- unless they're also bending on their strict stances on overall funding, it just means they're going to agree to even less down the line.

And therein lies the difficulty with piecemeal budgets, which is why state budgets -- at least in Wisconsin -- simply don't get passed that way (the feds have the comfort of same year deficit spending).

In fact, the last time it happened, according to LFB chief Bob Lang, was in 1995, and that was a case where the vast majority of the budget was passed on June 30, and just the transportation budget was held back due to some disputes over the gas tax.

That's notably different than the current situation where the proposal is to pass a few sections of the budget first -- in mid-September, no less -- and leave the rest for...well, whenever.

UPDATE: The LFB finds that the piecemeal proposals by the GOP would require $115 million worth of cuts to the rest of the GOP budget or abandoning the "no tax increase" pledge.


Thursday, September 13, 2007

Blog Slowdown

Just wanted to toss up a quick note about my recent few-and-far-between postings.

While they're mostly driven by the fact that I've struggled lately to find something poignant enough to write about, for those of you who've ever ventured over to the "View My Profile" section, you've probably seen that one of my interests is fantasy football.

So, now that the season is officially underway, much of my free-time reading is being directed toward the (often bad) advice of the "fantasy experts" at Yahoo, CBS Sportsline, and any other viewpoints I can get my hands on.

At any rate, I apologize for the sporadic blogging, but, as I've noted before, I'd rather keep my virtual mouth shut if I don't have anything interesting and at least fairly original to say (today would be one of those days).

Pretty soon I'll just end the charade and make this blog a weekly, similar to Murphy's Law, which is something I've been considering for awhile.

But, in the meantime, thanks to the handful of folks who continue to stop by on a regular basis. I'll continue to get something out there as much as I think it's worth your time.


Wednesday, September 12, 2007

Looks Like Lena Taylor Is In

I'm not aware of an official announcement, but word on the street is that state senator Lena Taylor will be running against Scott Walker for Milwaukee County executive this coming spring.

Conventional thinking is that to defeat Walker, the Dems need a candidate who can reach into the suburbs to take a chunk out of his base.

But while the suburbs might be Walker's base in terms of percentage of support and campaign donations, it's arguable that the city is what won him the election in 2004; and this makes Taylor a solid choice to upend him in 2008.

In the 2004 spring election in which Walker defeated David Riemer, the total vote was 251,158 with 88,132 coming from the suburbs and 163,026 coming from the city. And while Walker won most overwhelmingly in the suburbs -- 57,373 to 29,342 -- he also won the city by a margin of 78,726 to 71,647.

What makes this even more important is turnout. Although some may believe the suburbs would be more likely to get out to vote for a spring election, it was actually the city that had the best turnout.

In comparison to November 2004 when the presidential race was on the ballot, the suburban totals from April 2004 were only 42 percent of the suburban totals from November 2004, while the city totals from the spring were a full 59 percent of the city's fall turnout.

And in comparison to the turnout this past fall, the suburban totals in April 2004 were 59 percent of the suburban totals from November 2006, and the city totals in April 2004 were 97 percent of the city totals in November 2006.

In other words, it was really the city that showed up to elect the county executive in 2004, while the suburbs, which are often credited with being the part of the county that's kept Walker on top, largely stayed home.

So this means that Walker's opponent really needs to focus on changing, as opposed to getting out, the city vote (see UPDATE below). And Taylor is a great candidate for this task considering the wide swath of Milwaukee that she represents as state senator, including 33 wards that Walker won in 2004.

By focusing on a couple of key points, such as transit and the parks, Taylor should be able to capitalize on the media coverage of proposed cuts to these areas by Walker and, as a result, clearly differentiate herself from Walker when it comes to issues that are of high concern for much of the city.

And Taylor will have the added bonus of being recognized as a known Democratic politician, unlike Riemer in 2004, which will highlight the fact that Walker is the Republican in the technically nonpartisan race (voters don't get the handy "D" and "R" listed on the ballot for them).

Doyle won 72 percent of the city vote last November. If Taylor matches that, or even a little less, along with the suburban totals netted by Riemer in 2004 -- which shouldn't be difficult considering the bluing of the 'burbs in recent years -- then she should win the race handily.

And, if not, she goes back to her position as state senator. But, if Walker loses, he won't have such a comfy fall -- it'd be a long two years out of office before the next governor's race in 2010.

UPDATE: Xoff makes a good point in the comments that the hotly contested mayoral race for Milwaukee in spring 2004 was a big reason for the strong city turnout in that election, which suggests Taylor will need to do some getting out the vote work since there doesn't appear to be a heated race for mayor on tap, though it could get hot if David Clarke enters the fray again (this potentially creates a bit of a quandry for Clarke, who is known to be tight with Walker).

But there is still the significant issue of city voters pulling the lever for Walker once they were out to vote in April 2004, which something Taylor has the strong potential to remedy.

And even if you split the difference in the city turnout for the county exec special election in 2002 with the turnout in 2004 -- which would drop the number to around 125,000 -- garnering around 70 percent of the city vote like Doyle did last November still seems to be a pretty solid benchmark for Taylor, and that's not even considering potential gains she could make in the bluing 'burbs.

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Friday, September 07, 2007

Does WI Right to Life Know Something We Don't?

Throughout the summer, Wisconsin Right to Life has been pushing the line that a health care reform plan like Healthy Wisconsin would increase the number of abortions performed in the state because it follows the covered benefits currently offered to state employees.

In its latest release, titled "Wisconsin Abortions Will Skyrocket Under 'Healthy Wisconsin'!" the group states:
"[S]tate employees currently have what amounts to unrestricted coverage for abortion," said Susan Armacost, Legislative Director for Wisconsin Right to Life. "It is bad enough that Wisconsin taxpayers are currently reimbursing abortionists for the abortions of state employees and their dependents but under 'Healthy Wisconsin' they would be reimbursing them for all abortions in the state and the number of abortions will rise dramatically."
As a state employee, this was news to me, so I grabbed my handy benefits guide for 2007 and looked it up. Here's what I found about abortions in the statement uniform benefits under the "Reproductive Services" section (emphasis mine):
Maternity services for prenatal and postnatal care, including services such as normal deliveries, ectopic pregnancies, Cesarean sections, therapeutic abortions, and miscarriages.
The word "abortion" doesn't appear again in the rest of the statement of benefits. As Cory Liebmann pointed out the other day, only therapeutic abortions -- that is, abortions to preserve the health of the mother -- are covered for state employees.

But, just to be certain, I called my health plan, WPS, to double check. And, yes, only therapeutic abortions are covered; all elective abortions need to be paid out-of-pocket.

So where exactly is Wisconsin Right to Life getting its information?

Thankfully, it appears the abortion line has been a lame duck in the fight against health care reform. Wisconsin Right to Life has been pushing it in press releases since at least June, yet I haven't seen it picked up as a feature story by any major media outlet in the state.

Yet, still, simply flooding the press release sections of WisPolitics and the Wheeler Report with misinformation to further a pet cause at the expense of needed health care reform seems bad enough.

UPDATE (9/9): Rick Esenberg has come across an article that claims the state's Standard Plan that's operated by WPS covers all legal abortions, which is apparently the basis upon which Wisconsin Right to Life was making its claims.

This is worth noting, and I should've done that in the post, but I'm not sure how it really changes my basic point.

That is, the RTL aim is to drum up opposition to Healthy Wisconsin -- along with other reform plans like the WHP -- by making people think that all abortions would be covered by taxpayer money if a plan like that was implemented, which would surely, it argues, result in a sharp increase in the number of abortions performed. And, in the case of at least one person who attended a health care forum in Wausau last week, the line worked.

But I'm wondering if it would've worked so well if Wisconsin Right to Life explained that the Standard Plan is Tier 3 coverage, meaning it's the only option out of twenty-plus plans available to state employees that isn't required to follow the uniform benefits policy. And, as such, the Standard Plan costs state employees $290 more per month than Tier 1 coverage, which is enough to fund one or more elective abortions each year out-of-pocket.

This is important because it explains why the vast majority of state employees -- and state citizens, if the tiering system was implemented on a statewide basis under Healthy WI or the WHP -- don't have the Standard Plan (see UPDATE II below for exact figures). And, since the vast majority don't have the plan, the vast majority don't have access to coverage of elective abortions, which pretty clearly deflates the point RTL is trying to make about the "skyrocketing" effect Healthy Wisconsin would supposedly have on abortions in the state.

But Rick assures us in his post that RTL is a professional group, so I'm sure it won't have a problem clarifying its press releases with this important caveat.

And, what's more -- in the interest of moving the discussion forward rather than dragging it down with misleading sensationalist claims -- the group could also aim its releases at simply asking that all plans under any reform strictly adhere to the state's uniform benefits policy, at least when it comes to abortions, which would assure that only therapeutic abortions are covered.

UPDATE II (9/10): According to ETF figures, 2.6 percent of active state employees -- or 1,773 of 69,413 -- had the Standard Plan in 2006. The other 97.4 percent of state employees only have access to coverage of therapeutic abortions.

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Wednesday, September 05, 2007

The Good and Bad of Cost-Sharing

The Business Journal had an article the other day on hospital profits in the Milwaukee area. Here's the chart that accompanied the article:

Click for larger view.
The focus of the article itself was on the losses experienced by some hospitals, though all systems in the area except for Wheaton Franciscan -- whose losses were mostly attributable to the close of St. Michael's last summer -- did manage to turn a profit in 2006.

Another more nuanced theme in the article look into why profits decreased for most hospitals and systems between 2005 and 2006. To be sure, the only system to experience increased hospital profits across the board in 2006 was Children's Health System, and that's at least partly due to the fact that the board for that system consists of just one hospital.

The article pointed to four primary factors that have driven decreases in hospital profits:
  1. Costs associated with hospital expansions
  2. Continued poor reimbursement levels from state programs
  3. Increased amounts of charity care due to more uninsured patients
  4. Bad debt resulting from insurance plans that require significant cost sharing, such as high deductible health plans (HDHPs).
The last point is probably the most politically potent. On the one hand, it's a good reminder that simply making HSAs state tax free -- a major plank of the state GOP health plan -- isn't going to make health care any more affordable and, in fact, can have the reverse effect.

But, on the other hand, news that bad debt is increasing due to an increased use of HDHPs can unfortunately give others the false impression that high deductibles are inherently faulty.

To be sure, it's not the existence of cost-sharing that's the problem. But some key pieces need to be in place for cost-sharing to effectively reduce overutilization, which is its big promise.

For starters, there need to be tangible protections in place to ensure that preventive care isn't applicable to the cost-sharing and that the cost-sharing amounts are affordable for the participant, the latter of which can be done by setting the cost-sharing amount based upon income, ensuring that a significant portion of the high deductible is pre-funded, or, better yet, some combination of the two.

But just as important as these structural points is educating participants on their responsibilities. Much of the focus on educating participants is often on price transparency, which is certainly important, but there also needs to be some concern for simplifying and standardizing policies and procedures so that people know what to expect during the billing process.

According to the Business Journal article, part of the increase in bad debt is due to the simple fact the people don't understand what they're going to owe when they head in for care. This has prompted hospitals to start hiring financial counselors to work with patients when they get to the hospital to discuss payment responsibilities, which is decent, yet reactive, approach.

A proactive response would be to simplify and standardize health plans across the board, which is exactly what the Wisconsin Health Plan (WHP) does for HDHPs. In addition to fully covering preventive care and pre-funding every participant's HSA with a significant portion of the deductible, the WHP would put everyone in the same boat when it comes to cost-sharing, thereby reducing confusion when people go in for care.

Of course, there still would be some variance in coverage options depending upon the health plan that the participant selected, but what wouldn't change is cost-sharing levels -- everyone would know what to expect, which still ensures the personal responsibility desired by the right without sacrificing the necessary protections desired by the left.

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Tuesday, September 04, 2007

Another Shot at Healthy Wisconsin Falls Short

John Torinus took another swing at Healthy Wisconsin in his Journal Sentinel column on Sunday. And, again, he missed the mark.

Torinus tries to use a Lewin Group report to criticize the Healthy Wisconsin plan. He writes:

The payroll tax to fund Healthy Wisconsin has been pegged at 14.5% - 4% from every employee in the state and 10.5% from the employer.


Now, 14.5% is a big number, but it's not the whole story.

On page 57 of the final Lewin Report, the initial payroll tax percentages are shown as 11.55% for the employer and 3.95% for the employee. That's 15.5% going in, not 14.5%.

It's true that page 57 of the final Lewin report puts the initial payroll assessment at 15.5 percent to start. But that report deals with the Wisconsin Health Plan (WHP), not Healthy Wisconsin.

This is an acknowledgement that Torinus awkwardly makes a few paragraphs later, and he tries to use it to his advantage by saying that the use of high deductibles in the WHP should really make it less expensive than Healthy Wisconsin; hence, the 14.5 percent assessment projection for Healthy Wisconsin must really be low.

To bolster his point, Torinus cites an insurance broker who makes the obvious point that premiums decrease as the deductible increases.

On the surface, it appears that Torinus has struck gold -- he's managed to use a key piece of evidence for fundamental health care reform against the Healthy Wisconsin proposal. However, if you read that evidence a little more closely, the point virtually crumbles.

The most basic reason that the WHP costs more than Healthy Wisconsin is because it covers more people -- 225,000 more, to be exact. That's a 6 percent difference, which is due to the fact that Healthy Wisconsin incorporates the BadgerCare Plus plan that would increase participation in state health programs, thereby decreasing the number of people who would be eligible for Healthy Wisconsin.

This has an impact on the assessment rate since the WHP would have more low-income participants than the Healthy Wisconsin proposal, at least as they're both currently written.

What's more, while it's true that the premiums for plans under the WHP should be cheaper -- and they probably are -- the fact that the proposal includes funding each participant's HSA with $500, at a total cost of $1.5 billion in the first year, dries up a good chunk of that savings. There are also administrative differences between the two proposals that have an affect on costs.

Here's (page 59) the cost breakdown for the WHP:

Click for larger view.
And here's (page 12) the cost breakdown for the Healthy Wisconsin proposal:
Click for larger view.
Bottom line, David Riemer and the people at the Lewin Group aren't trying to pull a fast one on the public with the Healthy Wisconsin proposal. The numbers make sense, though sometimes it takes a little more than just cherry-picking particular points in the 170-plus page Lewin report to see that.

But it was encouraging to see Torinus continue to speak positively, though in a veiled way, about the WHP. If he -- or, more importantly, the state GOP -- preferred to use that proposal as a starting point for discussions, it would be a big step in the right direction for health care reform in the state.

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