Hospital assessment makes fiscal sense

    Recently, to much media furor, the Metropolitan Milwaukee Association of Commerce (MMAC) announced that our board of directors had taken a position in support of the Hospital Assessment included in Gov. Jim Doyle’s proposed budget repair bill. This was not an easy position for MMAC to take, but in the end we supported the proposal for the following reasons.

    Wisconsin hospitals are significantly under-reimbursed for care they provide to low income, uninsured patients whose health care bills are paid by Medicaid. The portion of hospitals’ costs for care not reimbursed by Medicaid is passed on to our members and other individuals who have private health insurance. This "hidden health care tax" has the twin impacts of artificially increasing health care costs in our region and negating the positive cost-saving effects of health care reforms pursued by individuals and business through wellness efforts, consumer-based health plans, and other market-based health care reforms.

    The Hospital Assessment addresses this concern by leveraging additional federal funds to use for Medicaid reimbursement. These federal funds are not new tax dollars. They are existing funds sitting on the table in our nation’s capitol. Sitting there unused, they are an attractive target for other states to take and thereby further reduce the return Wisconsin taxpayers get on the dollars they send to Washington.

    According to the non-partisan Legislative Fiscal Bureau, here are how the numbers under the Hospital Assessment work to our advantage:

    • Dollars taken in by the Hospital Assessment – $203 million.  
    • State general fund skim from this assessment – ($58 million)
    • Net state dollars returned to hospitals for Medicaid – $145 million.
    • Additional federal dollars leveraged for Medicaid – $196 million.  
    • Gross additional dollars to Wisconsin hospitals – $341 million.
    • State Hospital Assessment – ($203 million)
    • Net gain for Wisconsin hospitals – $138 million

    The bottom line is the Hospital Assessment will generate additional revenue to reimburse hospitals for the cost of Medicaid. A higher rate of Medicaid reimbursement means hospitals – particularly in southeastern Wisconsin – have less costs to shift to those of us who do pay for health care.


    We do not like the general fund skim off this assessment and would prefer that lawmakers work their way out of the current budget deficit by reducing spending, not raiding other state funds. Unfortunately, we don’t always get pure choices in the legislature, and we realize this skim may be the political price we need to pay in order to generate these much-needed additional federal dollars.

    In the end, with our members facing ever-increasing health care costs, we felt that it was not responsible to leave $138 million in additional Medicaid reimbursement dollars on the table. In order to ensure that health care consumers benefit from this higher Medicaid reimbursement, we are working with the hospitals to track their costs and measure those costs on an annual basis. Our goal is to hold our health care systems accountable for how they use this new revenue and drive regional hospital costs down to the Midwest average. The hospitals have indicated that they intend to be willing partners in this accountability project.

    At MMAC, we realize that our position in support of the Hospital Assessment takes a bit of trust.  As you can see, however, we fully intend to verify that trust with real numbers. Please be assured we have one primary goal in mind: reducing health care costs. Part of reaching this goal is better cost transparency, part is more efficient delivery of care, part is better consumer actions and wellness, but a large part is also better Medicaid reimbursement. 

    Finally, I want to assure you that despite our support for a proposal opponents have labeled as the "sick tax," the MMAC remains steadfast in our commitment to creating a tax and regulatory climate conducive to economic competitiveness. In the end, we believe that by increasing Medicaid reimbursement and thereby reducing the "hidden health care tax" currently passed on to our members, the Hospital Assessment is consistent with that overall tax climate goal.

    Tim Sheehy is president of the Metropolitan Milwaukee Association of Commerce (MMAC).

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