A proposed state law that would attempt to lower health insurance premiums and provide coverage for the uninsured will be re-introduced in the state Legislature in January. Businesses in Wisconsin currently are spending an average of 15 percent of their payrolls on employee health care. With the proposed Wisconsin Health Plan, state businesses would have to pay 3 to 12 percent of their payrolls to fund the new health care system.
The concept has some bipartisan support. Rep. Jon Richards (D-Milwaukee) has pledged to bring the proposal to the floor, and state Rep. Curt Gielow (R-Mequon) is a co-sponsor of the bill. However, Gielow is not running for re-election in November.
The Wisconsin Health Plan aims to cover Wisconsinites younger than 65 years old. The plan, if approved, would be funded through assessments of Wisconsin businesses and employees. Those assessments are intended to replace the health care premiums that employees and businesses currently pay.
Earlier this year, Richards and Gielow introduced the plan in Assembly Bill 1140. Although it was not approved, Richards and Gielow said the introduction started a dialogue among lawmakers.
Gielow and Richards also have been working throughout the year with officials from the Wisconsin Health Project, a nonprofit agency dedicated to helping cover uninsured people and lowering health care costs in the state.
About 500,000 state residents —about 10 percent of the population — are without health insurance at some time during the course of the year.
The elected officials, along with Wisconsin Health Project director David Riemer and assistant project director Lisa Ellinger, have been meeting with business owners, health care providers, residents and elected officials around the state, slowly building support and gathering more information.
Their mission has been to listen, gather input on the proposed Wisconsin Health Plan and identify changes that need to be made to it before it could be approved.
“The plan needs to make sense for providers and the people who get health care,” Richards said. “The way we’ve been working on the project, we are refining it based on the best ideas people give us. And that’s true to our aim to cover everybody in Wisconsin and bring down the cost of health care in Wisconsin, particularly in southeastern Wisconsin, where it’s outrageously high.”
“We’re keeping notes,” Riemer said. “At a certain point there will be some changes,” Riemer said. “It’s too early to say (what they might be). I’d be surprised if there weren’t some changes.”
The Wisconsin Health Project has formed two different work groups to help it refine the plans – one made up of purchasers of health products, such as employers, and another comprised of health care providers. One of the project’s next steps is to bring the two sides together, Ellinger said.
“This fall, we’ll pull both groups together to go through some of the suggestions we’ve gathered on our travels,” Ellinger said. “The major (change) is that the financing mechanism will have to be included.”
A financial mechanism was not included in AB1140, but the current idea is to charge employers and employees an assessment to pay for health care. Employers would be charged an assessment based on their payroll amount.
“The assessment is not on top of what the employer is paying,” Riemer said. “It replaces it. For the average employer, this will be a reduction.”
Under the Wisconsin Health Plan, employees would be charged a 2 percent assessment of their wages eligible for Social Security deductions. Wisconsin’s total payroll is around $100 billion, Riemer said.
Under the Wisconsin Health Plan, employers’ pools of employees will be offered to the private health insurance market. Participants will then have choices of health care plans and providers, the plan states.
One of the key benefits from the plan is that it also will cover the state’s uninsured, Riemer said. Self-employed workers and the owners of small companies also would be included, he said.
Riemer said municipalities and other local governmental entities also will likely be able to share in the savings.
“The reductions could be big in property taxes, because local governments are spending a lot more than they would with the assessments,” he said. “And when they don’t have to pay as much (for insurance, the savings) could go into property taxes.”
Detractors
However, not everyone is convinced the Wisconsin Health Plan will work.
Jon Rauser, president of Milwaukee-based The Rauser Agency Inc., a health care broker to businesses, says the plan will add another level of governmental control that will be less efficient, not more.
“In my opinion, health care will continue to increase in cost,” Rauser said. “Look at the demographics of our society – we aren’t getting any younger. A lot of people will need health care, and technology is evolving.
“The payroll tax that is part of the funding vehicle is grossly underestimated to begin with. As the cost of health care increases, they will not be able to raise the payroll tax fast enough to keep pace with health care costs,” Rauser said. “The (oversight) board would become Big Brother and would have the final say of what is covered and what is not. I don’t want the government allocating health care to Jon Rauser when I turn 80 and I need it.”
Political football
One important difference in the winter session of the Legislature will be that Gielow will no longer be working as an elected official on the proposal. Gielow is working to find one or more members of the Legislature who will carry the torch of health care reform in his stead.
Finding a legislator willing to work across the aisle on a bipartisan solution on any issue is becoming a rare feat in Wisconsin. Sources told SBT that Gielow was criticized by Republican legislative leaders for agreeing to work with Richards on a program for which Democrats could take some credit.
Gielow has vowed to continue to work behind the scenes, lobbying his former colleagues for support.
“Right now, I am methodically trying to educate some of my colleagues,” Gielow said. “I have been trying to identify representatives and senators that will carry this ball once I am gone. The effort is underway. I don’t know if I have that ball carrier yet. But there are a lot of interested candidates who want to talk about this.”
To gain approval, a plan would need the endorsement of several stakeholders, including businesses, organized labor, health care providers and legislators, Gielow and Richards acknowledged.
“It will have to coalesce in some fashion,” Gielow said. “The product of that coalescing will be the 70 percent solution. About 30 percent of any plan (we come up with), everyone will hate. About 70 percent of it, they’ll like. If it’s 100 percent Republican or 100 percent Democratic, it will never pass. We will have to give up on that 30 percent we’ll never have.”
The Wisconsin Health Project is helping to identify elected officials in the Legislature who might help sign the plan into law, Ellinger said.
“We’re working now to firm them up,” Ellinger said. “We’re confident we can get there. Gielow has been approached by other legislators who are interested. Now it’s just a matter of identifying who the most logical leads are.”
Instead of trying to solve the state’s health care problems themselves, Rauser says elected officials should get out of the way and allow the markets to correct themselves.
“There is no magic bullet,” he said. “The solutions are coming from many different segments. The pharmaceutical companies are coming out with more generics. The Wisconsin Collaborative for Healthcare Quality and the Wisconsin Hospital Association are working to bring more quality and transparency. Insurers have designed high-deductible plans that have brought consumerism to the market.”
And if legislators were truly interested in helping health care costs, Rauser said there are other areas they could focus their energy on, including putting more pressure on Democratic Gov. Jim Doyle to approve state tax deductions for HSAs. Doyle and other critics contend HSAs are for the “healthy and wealthy.”
Rauser disagrees. “They could ease up on some of the mandates,” Rauser said. “And if they could get the governor to sign the HSA legislation, which he vetoed three times. They could provide additional tax incentives for the purchase of insurance (so more people would buy it). If we can eliminate or reduce the number of uninsured, we will save the government money.”
Wisconsin Health Plan
Key components
• Employers would pay an assessment of 3 to 12 percent of their payrolls into a pool. Most employers are paying about 15 percent to fund their employee health care costs today.
• Employees would pay about 2 percent of their wages eligible for Social Security taxes.
• Private insurers would submit bids to do business with the pool, and participants would have a choice of health care plans and providers similar to the current state employee health plan.
• All Wisconsin residents age 64 and younger would own a health insurance purchasing account.
Benefits
• Annual deductibles of $1,200.
• A health savings account for adults (18-64) of $500 per year.
• Co-insurance between 10-20 percent for medical and hospital care.
• Co-insurance and co-pays for prescription drugs.
• Annual out of pocket maximum of $2,000.
• Annual “family” out of pocket maximum of $3,000.
Oversight
• The Wisconsin Health Plan would be administered by the Private Health Insurance Purchasing Corporation of Wisconsin, which would be governed by an eight-person board of directors. Board members would include two gubernatorial appointees and one representative from the following groups: Wisconsin Manufacturers and Commerce; Milwaukee Metropolitan Association of Commerce; National Federation of Independent Business/ Wisconsin; Wisconsin AFL/CIO; Service Employees International Union (SEIU) Wisconsin State Council; and the Wisconsin Farm Bureau.
