Will Washington state take Wisconsin's health care sloppy seconds?
By Jeff Emanuel Posted in Government-run health care | Health care | Policy | The Nanny State | Washington | Wisconsin — Comments (45) / Email this page » / Leave a comment »
At the beginning of this legislative session, State Senator Karen Keiser (D-Kent) introduced legislation that would radically increase government control of health care in the state of Washington. The legislation was based almost entirely on a plan that had been considered – and rejected – a year before by a state halfway across the country.
Thanks to the efforts of pro-market legislators like Wisconsin State Rep. Leah Vukmir (R-Wauwatosa), who spent a great deal of time, resources, and political capital educating their fellow representatives, and the state’s voters, about what a poor policy decision it would be to enact the expensive and inefficient program, the 2007 attempt at government-run health care was removed from the state budget it had been inserted into, and was scrapped entirely.
Though Wisconsin managed to avert the debacle that the “Healthy Wisconsin” program would have caused in the state’s health care market, the program’s authors did not give up on their dream of subsuming the health care and health insurance markets entirely into a government-run framework. Instead, remaining true to government’s penchant for rehabilitating failed ideas and policies and presenting them – unchanged, but under slightly new names – as new solutions, they simply exported their idea to Washington, where Sen. Keiser was happy to adopt them and to present them as a "solution" to Washington’s health care woes.
Read on for more.
Keiser did not attempt to hide the fact that her proposal was the exact replica of a horribly failed measure from another state – instead, she flaunted that fact, by actually having Wisconsin State Senator Jon Erpenbach (D-Middleton), primary sponsor of the failed Healthy Wisconsin program, appear in the Washington State Senate with her when she introduced her legislation.
Keiser’s bill, SB 6221 (also known as the “Washington Health Partnership”), would, of course, be as bad for the state of Washington as its original form would have been for Wisconsin. Volumes could be written on just why this is, but the simplest explanation can simply be made by dealing with the issue of cost.
The Washington Health Partnership is expected by its proponents to cost, at the beginning, around $15 billion per year – most of which would be funded by an increased payroll tax, the rate of which would be set by a board established to oversee the program. The payroll tax rate necessary to raise the $15 billion needed to initially fund the program has been estimated at no less than 14 percent – a significant increase in Washingtonians’ tax burden. In fact, the $15 billion in additional tax revenue needed to get the Washington Health Partnership off the ground represents more in tax revenue than the state currently takes in through sales, income, and corporate taxes combined.
As Michael Tanner, the Cato Institute’s director of health and welfare studies, explained during his October 2, 2007 testimony to the Wisconsin Assembly Committee on Health and Health Care Reform (when the Badger State was considering the exact same proposal), the payroll tax would theoretically be “split, with the employee paying four percent and the employer paying 10.5 percent.
“But, while it might be politically appealing to claim that business will bear the new tax burden, nearly all economists would see it quite differently. The amount of compensation that a worker receives is a function of his or her productivity. The employer is generally indifferent to the composition of that compensation. It can be in the form of wages, benefits, or taxes. What matters is the total cost of hiring that worker.
Mandating an increase in the cost of hiring a worker by adding a new payroll tax does nothing to increase that worker’s productivity. Employers will therefore seek ways to offset the added cost by raising prices (the most unlikely solution in a competitive market), lowering wages, reducing future wage increases, reducing other benefits (such as pensions), reducing hiring, laying off current workers, or outsourcing. In the end, one way or another, workers will bear the full cost.”
Further, small businesses – the life’s blood of America’s state and national economies – will be hardest hit by the severe payroll tax increase. Most small businesses pay less than ten percent payroll tax, and few provide health insurance. Therefore, these businesses will see their tax burdens per worker skyrocket without any corresponding savings that would come from no longer having to provide employee health plans.
In order to relieve themselves of this added hardship, businesses can – and will – leave the state as a result of the Washington Health Partnership’s passage. Given that Washington’s tax burden is already significantly worse than its neighboring states, the increased weight of the Washington Health Partnership is an almost certain recipe for slowed economic growth and lost jobs. The non-partisan Tax Foundation currently ranks Washington 16th in the nation in terms of state and local tax burden (rankings go from 1=highest tax burden to 50=least tax burden). By comparison, Idaho ranks 35th, Oregon 37th, and Montana 41st.
Washington state has been enjoying moderate job growth in recent months and years. Passing a bill like SB 6221 would do much to reverse that trend, and would severely damage the state’s economy – not to mention the state’s health insurance and care market. Even if businesses do not relocate to escape the increase in their payroll costs, the national rate of health care inflation is too far ahead of projected wage and revenue increases for the Washington Health Partnership to avoid running a sever deficit within the next few years.
Further, with its health care-by-geographical-area framework, Sen. Keiser’s retread proposal would not only eliminate consumers’ ability to choose their providers, but would, in Tanner’s words, “set up a perverse set of incentives that will encourage healthy and insured residents to move out of state, while also encouraging uninsured and sick from out of state to relocate to, or at least take jobs,” in Washington.
This would significantly strain the health facilities in the state’s border areas, acting as a magnet for those to whom it alone extends coverage, such as undocumented immigrants and extends low-income pregnant women. This outcome would increase program costs exponentially, while also creating several other problems for Washington state.
Beyond these issues, the Washington Health Partnership would create a situation in which health care is rationed and prices are inflated due to the outlawing of competition. Rather than cause serious damage to the health care market and to the state’s economy as a whole, Washington should seek common sense reform to help solve the health care crisis. Opening up the market to greater competition, decreasing the number of procedures and operations whose coverage is mandated by law from the current total of 23 – including “port wine stain” birthmark removal – would do a great deal to alleviate the current biggest problem with health insurance: its affordability. Further, the state should amend its insurance laws to allow the sale of any health insurance plan approved for sale by any state – something which is not allowed by most states, but which would work wonders in bringing down health insurance costs through the tried-and-true method of simple competition.
Regardless where Washington goes from here, further regulation of its health care market will only serve to exacerbate the state’s problems. Instead of repackaging recently failed attempts to legislate an area of the market that is already suffering from over-regulation, the state legislature of Washington should seek out real reform – reform that would decrease government involvement, increase consumer choice, and work to the benefit of the market as a whole.
Disclosure: Jeff Emanuel is Research Fellow for Health Care policy at The Heartland Institute and is managing editor of Health Care News.
There wouldn't even be this discussion if they hadn't stole the election from Dino Rossi in '04.
Go Rossi '08!!!
John Bolton for President
"FEAR THE 'STACH!!!"
When posting a story about Washington State politics, there is no need to indentify a senator withan R or a D. There are so few R's as to not even be noticed. Just had a discussion about this with a fellow employee at lunch today. She doesn't understand how I could not want health care for everyone. Where in the heck do these people think the money's coming from???? I tried to tell her about Hillary wanting to garnish wages to pay for her plan, and she didn't think too much about that. People are just uninformed. We as conservatives need to get out the truth and make people see what is really going on. My wife asked me after super Tuesday how McCain keeps winning when poll after poll show Americans don't want amnesty. Because they aren't informed. I read where Florida elections commission got over 100 phone calls asking where they could vote on super Tuesday. Florida voted a week before !!! Knowledge is power.
Oh, there are a few R's - mostly in the Eastern area. I'll be writing to her and keeping an eye on this - this being my home state. Thanks for the info Jeff.
Erik
What is the conservative response to the issue? The only plan from a republican I've heard is Rommney's Massachusetts plan. Is that the only one?
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"If we want to take this party back, and I think we can someday, let’s get to work." – Barry Goldwater
Other countries have a much lower cost to employers for health care, this really hurts our manufacturing base, accelerates job loss, and constrains new job creation. Plus all of the democrats are talking about a new entitlement program, so the nominee will have to have a response to the issue in a debate. So what should we do about the issue?
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
As far as I know, there isn't a Law requiring them to offer Insurance. However, I don't think that argument would go over very well as a response to Hillary or Barak's plans in a debate. I understand the argument that real economics are difficult to explain tot the general population, as is any real policy matter. Right now the economics favors employer participation, as there are great economies of scale from a larger group of people negotiating better rates than individuals could get.
Usually, you get things cheaper per item, the more of the items you purchase at one time. However Health care does not share much in common with most goods. Its not a banana, light bulb, or phone call. We throughly understand those markets and its not too difficult to explain them.
For employers and is not considered part of payroll ? This isn't asking them to pay for it, this is almost forcing them to provide it as a benefit.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
But, its still a huge burden on them. Are you suggesting that we remove the exemption ... raising their taxes?
To extend those tax benefits to those who purchase their own health insurance. The Democrats don't like that idea because they are after a single payer system.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
It would allow more people to voluntarily obtain Health Care. But I don't think that will have much of an impact on the costs that Employers pay. If they stop offering it, they'll have to transfer that amount of money to the employee ( or royally tick off the employees). Now the burden of escalating price increases is entirely burdened by the employee.
Which might help people move towards HSA's. .. Which might help reduce over all costs.
But that effect might be slow, causing some real gnashing of the teeth as the the premiums increase and their wages don't compensate for the rise. And there still are the problems of malpractice lawsuits, new really expensive life saving procedures, and prescription drugs.
But its a good start. It sounds like that might be possible Good job team.
As they used it, they would use less, it would cost less etc.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
That's usually the only way things change is when it hits home.
Fighting for conservatism one day at a time.
People want, nay demand a quick fix to their economic problems. They might abandon the best long term solution as it is worse in the short term.
Then it's our job to make sure we are ready when they are ready. If we have the "quick fix" that also follows good long term logic...bingo.
BTW, anyone who thinks that Universal Healthcare will be a quick fix...just remind them about the [redacted] that the launch of Medicare Part D was. No one, not even the Medicare spokespeople knew what the heck was going on. Some areas didn't have plans approved. Beaurocracy at its best.
Fighting for conservatism one day at a time.
No I would go with a pass through for the average amount in a given bracket now.
This Allows the recipients to spend the money as they see fit. I really suspect a good portion of our demand for doctor provided healthcare is artificial. (Some because of laws regulating the practice of medicine, others because they are the only people insurance companies will deal with)
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
Part of the problem with our current system is many people who do have insurance, act in their own economic interest and try to maximize their benefit from their investment in premiums. They go to the doctor whenever they have a cough and the insurance company pays for some of the visit. People increase their demand for health care investment, insurance companies see increase payouts and raise rates to cover, employers raise the employee contribution to pay for the increased rates, and employees invest more in their premiums and go to the doctor more often. And the whole thing becomes an escalating affair.
Thats an overly simplistic model that leaves out the high cost of lifesaving procedures that simply weren't available a few years ago, Medical malpractice rates, and prescription drugs.
As someone already said, its complex. I was hoping some one would have some answers. I hope our nominee does in the fall, otherwise will be stuck with similar tax hikes.
Are an excellent way to deal with these issues, if the contribution limits were expanded. They require a high deductible plan. You don't have a high deductible plan... you can't contribute to an HSA. They'll take a long time to have any effect, though. HSAs are great for young workers who can open them when they are 19 or 25... not so great for those who are 50 today, using lots of health care, and starting with a $0 balance.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
Some insurance companies are offering an indemnity policy that will help offset what isn't in the HSA. UnitedHealthcare for one has a one time premium policy that has a decreasing benefit to offset the missing monies.
I agree, contributions limits need to be drastically expanded (on top of the $900 catch up that those over 55 can add to it). I wrote a couple of days ago that one of the best ways for HSAs to really take off is to allow for payment of insurance premiums through the HSAs. You would see a lot more people willing to get coverage if they knew that they could deduct the premiums from their income.
Fighting for conservatism one day at a time.
You can rollover from an IRA one time... and you are limited to the maximum annual contribution. So you roll $2900 (the IRS max) into your HSA when you open it and you can contribute $0 for the rest of the year. So they give us HSAs but no way to to get a head start on building an account that will pay for all your medical expenses down the road... unless you are 19, anyway.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
At least it is a step in the right direction. And they are becoming very popular now. I think as they get more widespread there will be more of a push by the public to expand their use and limitations.
On the flip side of your problem, I actually find more people who drastically underfund their HSAs. They buy it to get the cheaper coverage, but forget that they need to save the $$$ to pay for the increased out of pocket should something happen.
Fighting for conservatism one day at a time.
Do you think Americans want or will accept anything less than the current gold plated care?
Until that changes, there's nothing that can be done.
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"If we want to take this party back, and I think we can someday, let’s get to work." – Barry Goldwater
HTML Help for Red Staters
"If we want to take this party back, and I think we can someday, let’s get to work." – Barry Goldwater
Numbers, economic reality, and the advantages of the free market are less easily communicated -- especially in a way that resonates with people -- than are pleas to emotion and to people's sense of fair play.
There are free market solutions -- and Mittcare from Massachusetts is absolutely not a market-based NOR a conservative solution. However, these take economic explanation to communicate, which is both blessing and curse, since the economic explanation prevents them from being quickly communicated (or from resonating with average people), but the economic fundamentals on which they are based means that they are far more sound than the appeal-to-emotion-but-not-to-reality attempts at "universal health care" made by the Left.
I think the election was fixed.
Character is much easier kept than recovered.
Thomas Paine
Gregoire is Pelosi's mini-me. The only thing keeping me here is the hope that Rossi will win again, but they won't count the votes of the deceased in the inevitable recount.
I guess if anything good comes fom this, Washington will start this up, it will fail without discrimination, and the whole nation (if not blinded by the MSM) will see what a pathetic idea this was.
Courage becomes a living and an attractive virtue when it is regarded not only as a willingness to die manfully, but also as a determination to live decently.
I'm a former resident who has been condemned to live in parched South, and who is moving from Georgia to Texas, where I'll be for the foreseeable future. My one wish in this life is to get back to the PacNorWest while I still have the youth and health to climb Rainier again, and to enjoy the rest of the amazing outdoor gifts that Washington has to offer.
However, the government there is seventeen kinds of effed up. It's not enough, to me, to outweigh the good that corner of the country has to offer, but it's pretty darn insufferable.
I love the kayaking, fishing, hiking, snowboarding, etc up here. But between Seattle's liberalism and Bellingham's greenpeacery, these people drive me crazy. Eastern Washington's people have their heads on right, but I can't stand the dessert.
Courage becomes a living and an attractive virtue when it is regarded not only as a willingness to die manfully, but also as a determination to live decently.
The sea kayaking is something else, and Western Washington is a physical paradise on earth -- but the wackos there can just be too much.
I went to SERE school in Eastern Washington; our Survival and Evasion phases were out in the high desert and the mountains there. It's an interesting place to be for a while, but for living, the West is the place for me.
Thanks for your commitment to the military Jeff. I'm right near SERE school now, and originally attended at AFA.
Erik
from a '93 graduate. I guess I'll have to pay even more attention to what I write here - can't let USAFA down.
Erik
Only red county on I-5.
Nice places up there too.
Unfortunately, you have to drive either all the way to Everett, or maybe even all the way to Seattle to get a decent job.
Bummer.
"I ain't never votin' fo no Democrat so long as I draw breath! I'll vote for a dog first!" - Leola Thomas
Wisconsin has some of the highest health care costs in the country. Why? We pretty much agree that it's driven by our monopolistic health care system and the high rate of new hospital construction. How did this occur? Government deregulation. Years back the requirement for governmental review for new hospital construction was eliminated. Guess what? We have new hospitals being built when the general public doesn't even want them. The public even tried to stop some hospitals from being built. It's hard to find a solution to your problem when you can't recognize what caused them to begin with. It's kinda like not recognizing that government deregulation of the banking industry fueled the subprime crisis. I see that Bernanke quietly put new regulations back in place. I at least give the man credit to be able to recognize how we got into the mess in the first place. Most people can't.
Regulation = lower costs...WRONG
Regulation = lower prices...YES [which also means lower profits...which then turns into less competition...less competition in health care is a bad thing...fewer providers]
Fighting for conservatism one day at a time.
Presumably there are sick people filling the beds in the hospitals.
SO if the healthcare burden is rising either your population is getting sicker or there is a lot of fraud going on. The later argues for getting the government out of paying for it.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
It's kinda like not recognizing that government deregulation of the banking industry fueled the subprime crisis.
Per the usual way of doing things in government, long before the current situation -- where people are hauled up onto the Hill to explain why they need government bailouts for the subprime fiasco -- Democrats were hauling lenders before Congress to demand that they do< engage in such risky schemes.
Just about every time something goes horribly wrong in a market, at least part of the reason can be traced back to governmental involvement.
Jeff Emmanuel is exactly right. I have to work with these liberals every day. To liberals, business has two purposes: (1) pay taxes (2) serve the public good. That's it. Make money for shareholders? That's depraved and exploitative. Oh and "serve the public good" doesn't mean to them what it meant to Adam Smith, it means "social justice"-type things. So yes, when banks don't give loans to risky borrowers, they are (a) discriminating against the poor and (b) keeping the rich shareholders richer while the poor wallow in poverty; and then when banks DO give loans to risky borrowers, they are merely tricking and exploiting them. Inherently social justice is incompatible with capitalism because social justice is such a nebulous term. That is why these people really are socialists.
Not even close. Deregulation? That's a laugh. There isn't a state that has anything approaching a deregulated health care system.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
Such a hard thing to dispute. Well don zuiko.
[BTW, I'm sensing troll here.]
Fighting for conservatism one day at a time.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777