Tax the sick

The following is from the Wisconsin Club For Growth newsletter. I thought it timely as another reminder how the governor's actions do not live up to his words.

Tax the Sick - Feed the State

On April 15th, hundreds of thousands of taxpayers turned out at Tea Party rallies across the country to protest higher taxes and to tell government officials that they've had enough.

Governor Jim Doyle, intent on spending ever increasing amounts of our money, ridiculed Wisconsin’s tax watchdogs during a Capitol rally.
Doyle said that those at the Madison rally were "protesting against the biggest middle-class tax breaks that we have seen in decades in this country.

And at the state level, despite the horrendous economy and the situation we're in, (under) the budget I proposed, if you make less than $300,000 a year, you're not going to face any kind of tax increase."

Of course Doyle's assertion is contradicted by the facts. His budget would raise taxes on everyone who drives a car, owns a home, smokes, pays tuition to the University of Wisconsin, lives in a nursing home, or talks on cell phone, just for starters.

Earlier this year, the Governor signed a new $400 million sick tax into law. Doyle claimed the tax would help lower health care costs for consumers by increasing the state Medicaid reimbursement rate to hospitals. Yet before the ink is dry on his new sick tax, the Governor is raising the tax again in order to keep state spending high.

Following is a summary of the new budget plan prepared by Wisconsin Manufacturers and Commerce:

The new budget agreement will increase the recently-enacted hospital assessment by 20 percent and use some of the money to support other government spending. The $165 million in hospital assessment changes the administration cites appears to be a combination of more diversions of assessment revenues and other, unspecified Medical Assistance changes. Earlier this year, Governor Doyle signed into law a new hospital assessment. For 2009, the assessment was to be nearly 1.3 percent of gross patient revenues. The assessment was projected to generate, over the 2009-2011 biennium, $650 million from Wisconsin hospitals and attract, over the 2009-2011 biennium, $635 million in new federal Medicaid dollars to Wisconsin in order to increase hospital Medicaid reimbursement rates. The state was planning on diverting $225 million of the assessment revenues and using these dollars to pay for other government spending.

Full details on the new hospital assessment have not been released. It appears, under the new agreement, the assessment will be in the range of 1.5 percent and 1.6 percent of gross patient revenues. WMC has been told the proportion of the assessment dollars going to increase hospital Medicaid reimbursement rates and the proportion of the dollars going to support other spending will not change. By this calculation, the assessment is now projected to generate, over the 2009-2011 biennium, $780 million from Wisconsin hospitals and attract, over the 2009-2011 biennium, $760 million in new federal Medicaid dollars to Wisconsin. Under the new agreement, it appears the state will divert $270 million in assessment revenues and use these dollars to pay for other government spending. When actual figures from the administration are released, WMC will report them to you.

While final details of the plan are not yet available, one thing is clear: the Governor’s new sick tax will mean higher health care costs for Wisconsin families when they can least afford it.

Next they'll impose an extra tax on chicken soup and band aids

I'm catching up on my e-mail this week and I thought you would be interested in reading State Representative Kevin Petersen's (R-Waupaca) commentary from his newsletter regarding the proposed hospital tax:

Wisconsin – Taxing its Sick and Elderly

Last week, Governor Doyle, along with his Department of Health Services, touted a plan to increase Medicaid reimbursement to Wisconsin hospitals by approximately $300 million per fiscal year.

Under the plan, a 1.4% assessment would be levied on patient revenues at 72 hospitals. For every dollar Wisconsin assesses, it is anticipated it will be matched with $1.65 in additional federal Medicaid assistance.

Of those 72 hospitals assessed, 59 would end up getting more state aid for treating Medicaid patients. Thirteen will actually lose money in their operating budgets.

They are hyping this as an assessment. Don’t be fooled. Assessment is just another fancy term for tax. This time, the tax is going against people in need of hospitalization. In other words – a sick tax.

Currently, when taking in patients on Medicaid, hospitals around the state are reimbursed 55 cents on a dollar for Medicaid services. Referred as a “hidden tax” by the Wisconsin Hospital Association, this gap increases health care costs to you by forcing hospitals to shift the additional 45 cents in costs to higher expenses for your services paid for by private insurance.

This new hospital assessment - “sick tax” is planned to be 1.4%. Hospitals, like any other business, do not pay these added costs themselves. Who then, will be picking up the tab? As always, the answer is you. The cost will be charged to health insurers. Just like hospitals, insurers will shift their costs to their consumers – those purchasing policies.

Essentially, you will now be paying two hidden taxes. The first being the cost shift described above by the state not paying in full its bills for Medicaid services. And second, the higher cost of insurance premiums because the state is now mandating a tax on hospitals.

If by chance you still think imposing a sick tax is a good idea, go talk to the administrator of your nearest nursing home. Ask this question: “How well do you feel the nursing home bed tax is working?”

Beginning in the 1991-1992 Legislative session at $32 per month, the imposed bed tax was accessed on occupied nursing home beds. This tax was used to leverage federal matching funds for nursing homes in the same manner Governor Doyle is proposing the hospital assessment.

In his first budget, Governor Doyle increased the nursing home bed tax from $32 to $75 per month, assessed on all beds – occupied as well as unoccupied. Furthermore, in previous state budgets, the same provision which taxes our elderly in nursing homes also contains a clause that diverted millions of dollars to Wisconsin’s general fund to spend on unrelated government programs.

Presently, President Obama is looking to allocate $87 billion dollars of the approximately $1 trillion dollar bailout plan to states’ Medicaid budgets. Other states are seeking this additional Medicaid funding without a hospital assessment. Why then, is Governor Doyle proposing a tax on our sick?

The additional federal Medicaid money can only be spent on Medicaid related programs. In other words, Governor Doyle cannot raid the federal funding to spend in other areas of his budget.

By imposing a sick tax, the Governor can bypass the federal stipulation because he can now raid the money collected in the upfront 1.4% tax. For anyone that doesn’t think this will occur, you are already wrong.

As I had mentioned previously, only 59 of the 72 hospitals paying this tax end up with more Medicaid reimbursement. In the first year 13 hospitals lose money. It might be your local hospital that moves to the losing category in the next budget.

Shifting the burden to you the taxpayer as another hidden tax is not the way to dig our state out of its financial hole. Nor is the answer borrowing federal money against our kids’ future.

Priorities must be set. Medicaid funding is a priority. We must meet this priority by funding it – one dollar for every dollar it costs for the health care provider’s services. If Governor Doyle feels the state cannot afford these programs without raising taxes, you the taxpayer should know the truth and transparency of what his expanded programs actually cost.

Hospital tax in intensive care

Bruce at Badger Blogger caught this. The proposed hospital tax is about to be dropped from the budget negotiations.

Democrats may be ready to jettison their demands for a proposed hospital tax, one of the key sticking points over a deal to fix the broken state budget, leaders said.

A spokeswoman for Senate Majority Leader Russ Decker, D-Weston, one of the strongest supporters of the proposed tax, said Friday that it would be difficult to win over Assembly Republicans who adamantly oppose it.

"I don 't think they 're going to be able to go there, " Carrie Lynch said of GOP lawmakers. "We 're working to keep (the hospital tax) included but at the end of the day, I don 't think we can hold up the entire budget process for it either. "

The $416 million hospital tax, favored by Democratic Gov. Jim Doyle and Senate Democrats, lies at the heart of how to resolve a projected $527 million state budget shortfall. Decker has been critical of a decision by his predecessor, Sen. Judy Robson, D-Beloit, to agree to drop the tax in order to reach an agreement with Republican lawmakers on the long-delayed state budget that was finally signed in October.

Decker's not finding things so easy at the top of the greasy pole. And his friend Chuck Chvala made it look so easy.