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8/17/2007
EXACTLY why Healthy Wisconsin won't save money

One big huge claim about the wonders of Healthy Wisconsin is that it will save money. Lots of money. Healthy Wisconsin supporters claim, for example, “$1.3 billion in savings in property tax relief to lower health care costs for Wisconsin families, businesses and local governments.” (Erpenbach press release, July 9, 2007)

These property tax savings result because currently, benefits to municipal employees are much more costly than the 10.5% employer tax that would be levied for Healthy Wisconsin. In most cases, the premiums are higher than 10.5% of salary because Cadillac municipal coverage is richer even than coverage offered by Healthy Wisconsin.

This article from Thursday’s Eau Claire Telegram explains exactly why any fantasies that Healthy Wisconsin will save money are very wishful thinking.

According to Brad Bryan of the Leader Telegram staff, the City of Eau Claire “faced a 57% increase in health insurance costs effective July 1. Their provider offered a policy that would bring the cost down to a 20% increase. However,

“Local 284 rejected the policy because it required additional co-pays and participation in a wellness program. [Imagine that.] The union requested a return to the level of benefits offered under the previous policy.

"’The city is retaliating against the employees of the 284 because the local stood up to the city's illegal mid-term health insurance implementation,’ said Steve Day, spokesman for Local 284.

“Day said the union plans to amend a previous complaint filed after the city first threatened the work reductions in July, and it will file a separate grievance over the reduction in hours.”

The point is that cost savings for municipal employees, as claimed by Healthy Wisconsin proponents are for now, illusory, as most unions will demand supplemental policies and/or an equivalent quid pro quo. Also, the Alliance for Cities suggests that most municipal employees, paying premium contributions of 4.5% of their salary as called for by HW, would be paying more than they’re currently paying. Do you think Local 284 would stand for that?

(I’ve noted in a previous commentary that many municipal employees are currently paying less than 4.5% of their salary for insurance premiums. Wow.)

The Eau Claire situation is a perfect illustration of $1.3 billion in savings claimed by the Healthy Wisconsin folks that just won’t materialize. It’s also a case study in appropriate response. The City of Eau Claire has been forced to reduce hours (and paychecks) of some workers to save the dollars necessary to pay for the extra health insurance premiums.

Interesting. Somebody gets it that the taxpayer is not a bottomless pit.

COMMENTS

With all due respect, Jo, Healthy Wisconsin is EXACTLY what the City of Eau Claire needs. If all of their workers were covered by this plan the only thing that might be up for negotiation is "who pays for the mandated co-pays and deductibles." Employees and employers can still negotiate for coverage above the basic coverage, as with all companies.

So Eau Claire's basic coverage will indeed become less costly and give them more latitude to negotiate. Argue if you will that workers should not be freed of co-pays, but that has nothing to do with the basic savings. And remember that the 4% employee tax on wages (up to $97,500) provides them and their families with ADDITIONAL coverage for limited dental, vision, mental parity and prescription drugs!

And if I'm not mistaken, the city has already stated that HW would offer a substantial savings, which would mean a healthy reduction in property taxes.

Also don't forget that the 10.5% tax on company wages will be more than offset by the 15% most companies will save in insurance premiums. Healthy Wisconsin is a good plan for everyone except the insurance industry, whose inefficiencies would be eliminated from the system.

We do, however, need a small business tax break to help those businesses that have not been able to provide health care in the past, but the Republicans are adept at giving tax breaks and I'm sure can handle that part. That is, if they can first get out of the pockets of the health savings account industry.
First Jack, whether an employee pays co-pays has everything to do with the cost of a program. An employee must have skin in the game to impact costs. Jack, everything you say about EC makes the point that the claimed savings is illusory. Employees would demand increased coverage and taxpayers paying for co-pays.
There is no such thing as a free lunch Jack. Some employers pay less, and you're asking for a subsidy for those then that end up picking up the difference. You're good at this Jack, I know. But I don't buy what you're saying here. The error of it is as clear as day. JE

Jack Lohman (Fri Aug 17 08:14:14 2007)

The mandatory participation in wellness programs is probably a requirement that everyone in the program to be nicotine free and that there may be periodic testing for nicotine.

I really feel for people that are unable to quit smoking. Both my Mom and Dad died of smoking related illness.

Requiring people to quit smoking and enforcing it through madatory testing is the first step toward testing DNA for illnesses and I am against that.

I can buy into cigarette tax increases so that we can get the money along the way to clean up the mess of the tobacco industry.
Interesting. Yes, wellness is so critical. Literal skin in the game. Now we've got to put a steel fiscal wall around the fund funded by the increased cigarette tax. How will we fund the needed programs when cigarette purchases decline? JE

Vic (Fri Aug 17 12:34:25 2007)

(Looking around in the corners) Sniff, sniff, sniff.

Are there still profits for insurance companies in the Healthy Wisconsin Plan?

Still 'co-pays'?
Still levels of service and treatment?
Still a big cut for the multiple payer middlemen?

That's a bad smell.

Yes. Healthy Wisconsin, being a multi-payer model with provision for 30% in profits (or whatevs) over expenses and salaries for the paper that is pushed in those big glass offices, is a bad plan.

The only acceptable plan is the single payer model run like Social Security called Wisconsin Health Security.

The only security that is not provided for in the plan is the future of the for-profit insurance companies anywhere in the health provider model.

It's a service and should not be an industry.

Jo, if you looked at Sicko before twanging on it, you'd hear Nixon okaying the Health Maintenance outfits because they would provide less care.

Healthy Wisconsin is a TINA plan. TINA stands for There Is No Alternative (to the insurance for-profit payer model.) TINA and Healthy Wisconsin is caving in to another for-profit protectionist flim flam.
Doggone you anti-profits tongue-waggers. Who do you think employs people in this country? When you eliminate the last corporation, and squeeze the last cent of profit, who will pay your workers? More importantly to your ilk, who will pay the taxes that will pay for all the employees on the government payroll?<br>It's a service, so it shouldn't make a profit? Lon, what in heck are you thinking? The service segment of our economy has been growing for decades. Please, please don't use SiCKO in trying to make any credible, researched point on these pages. JE

Lon Ponschock (Fri Aug 17 12:48:31 2007)

Jo, I know that "skin in the game" will help reduce utilization of the health care system, even sometimes to the detriment of the patient. Co-pays will indeed keep patients away from the doctor, but often their problem gets worse or becomes untreatable. Or they die, which the insurance industry would prefer.

But this has nothing to do with Healthy Wisconsin as it applies to EC. If EC has been paying employee co-pays in the past and continue doing so under HW, their costs will still go down because the savings from HW will still apply.

The savings, incidentally, are due to the elimination of the 31% of wasted insurance bureaucracy costs. And this applies to expanded coverage for 100% rather than 90% of the population.

But the whole problem of overuse must be addressed both at the patient and physician levels. I prefer a system that has zero co-pays for, say, the first half dozen doctor visits per year, and when overutilization is determined a "patient facilitator (nurse)" steps in to either guide the patient or apply co-pays from that point forward.

But physician overuse is probably 80% of that problem, where physicians who make money based on the number of tests they order, order more tests whether they are needed or not. Sometimes because of defensive medicine but more often because they are money-makers.

That said, I trust physicians far more than I do CEOs and shareholders, and if we don't fix the system soon the latter will be controlling all health care and physicians will be on the outside looking in. Or they'll be seeking other careers.
I buy almost none of this Jack. JE

Jack Lohman (Fri Aug 17 13:47:41 2007)

This e-mail exchange does not address problem number one. We must get control over health care costs. We have about 200 years of economic history that frankly tells us what works and what does not. There's an old saying that locks keep honest people honest. There should be another similar saying: "competition keeps honest people honest. Economic history provides endless examples that proves competitive free market capitalism works for every good and service provided by people.

It is impossible to keep costs at the rate of inflation without consumer driven competition.

We have not had consumer driven health care for decades. Consumers covered by health insurance have no incentive what--so-ever to "shop" for the best available health care value.

If we don't change that fundamental flaw in our health care system we will never ever get control of rising costs.
EXACTLY. JE

Russ (Fri Aug 17 20:53:19 2007)

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