Health care costs in Wisconsin remain among the highest in the nation. Those costs continue to erode the bottom line for businesses in the state.
Gov. Jim Doyle, facing a tough re-election fight from Republican Congressman Mark Green, says he has a plan, called Healthy Wisconsin, to lower health care costs in the state. Doyle wants to create a massive buying pool for catastrophic health insurance. Businesses and individuals could join the pool with state workers. The more who join, the more bargaining power the state would have to negotiate lower catastrophic health insurance prices for members of the pool, Doyle says.
The plan is pattered after a similar program in New York (see accompanying story), that was offered for businesses that did not provide health insurance. However, Doyle wants to create a plan in which all businesses in the state can participate, including those that are already providing health insurance benefits to their employees.
Gov. Jim Doyle recently formed the Healthy Wisconsin Council to develop the details of his plan for a catastrophic health insurance pool. The council, a bipartisan group including several business professionals, held its first meeting on July 31.
Based on the success of a similar plan in New York, Doyle says his goal is to reduce the number of uninsured residents in the state by half in 2010 and reduce health insurance premiums for businesses by as much as 30 percent. In an interview with SBT, Doyle acknowledged that the 30 percent goal may be overly optimistic, but he said he believes the program would result in significant savings for businesses that participate.
"I can’t say whether 30 percent is achievable, it’s a target," said Dr. David Kindig, emeritus professor of population health sciences at UW-Madison, who is co-chairing the Healthy Wisconsin Council. "If you control those catastrophic cases, costs should go down and rates should be lower."
The governor’s goals to reduce the number of uninsured residents in the state can be accomplished by incorporating the catastrophic health insurance pool with other state programs, Kindig said.
The Healthy Wisconsin Council will closely study the New York program and a program in Arizona, Kindig said.
"We’re going to have to look at New York very carefully to determine what will work for Wisconsin," he said.
The council is expected to complete its work by the end of the year.
But by then, Doyle could be on his way out of office if he loses to Republican challenger Mark Green in the November election.
"If he is not re-elected, I would hope we will have designed a plan in such a way that a new Republican governor could be supportive as well," Kindig said. "Any time you can pool, that generally is a sound idea. I don’t think that is a partisan idea. It’s really spreading the risk of these high-cost cases over a larger number of people."
However, Green has criticized Doyle’s creation of the Healthy Wisconsin Council.
"The fact is that when Jim Doyle was presented with ways to actually lower health care costs in Wisconsin, he vetoed them," Green said in a release. "He vetoed legislation to provide tax credits for health savings accounts three times. And, he only signed a cap on non-economic damages for medical malpractice cases after he was presented legislation that passed by veto-proof margins."
Green says, if elected, he will support tax credits for health savings accounts and he "won’t waste taxpayers’ time and hard-earned money announcing a plan to organize a committee to create a plan. I will work to make our health care system more transparent, so that individuals are in a better position to make the health care choices that are right for them."
Doyle recently talked with Small Business Times managing editor Andrew Weiland about his Healthy Wisconsin plan and the role that the Healthy Wisconsin Council will play in moving that plan forward. Following are portions of that interview.
SBT: Tell me a little about your Healthy Wisconsin initiative and how it will benefit businesses in the state.
Doyle: "It is a focus on putting together the biggest buying pool that we can for catastrophic (health) insurance. And to include in that pool already existing health care policies to have those insurers come into the pool to re-insure as well as to offer a basic catastrophic product so that individuals and businesses, and in many cases small businesses, will be able to at least have catastrophic insurance.
"I understand that no one state is going to correct the whole health care crisis in this country. And, we really have waited a long time for the president and Congress to try to do something about it. But in Wisconsin, I think there are some pieces of this that we can get done, very important pieces.
"There is a program that we are really looking to work off of in New York that has 100,000 participants (see related story). At least in the early results, the indications are that it has brought health care costs for businesses (participating in the program) down by 30 percent, and for individuals (participating in the program) down by 50 percent. Again, the idea here is we bring the bargaining power of the state by being able to pool not only the state purchases of health insurance, but also many other business and private (individual) purchases into one large pool to be able to try to bring some real savings.
"When small businesses have to make choices, in order to remain profitable, between not providing their employees with benefits or cutting back on the benefits dramatically because of the rising cost, that’s not a very good choice. Obviously, if they are not profitable they are not going to be in business for very long. This is a way that I believe, and I think we can do it on a pretty expedited timeline, that we can provide a method for at least at the catastrophic end of things, where 50 percent of the health care costs are, that we can help to bring forward a product that allows business to provide that insurance at a lower cost."
SBT: This will be similar to the New York plan? My understanding of the New York plan is that it only covers businesses that previously had not been offering health insurance to their employees. Would this be like that, or would this be an expansion of that available to all businesses?
Doyle: "My goal is to make this an expansion of that. Obviously those that aren’t providing health care, we want to provide them a cost-effective way for them to do it. But there are a lot of good businesses out there that have been providing health care. I want to find a way that we help them. The businesses that have been doing it shouldn’t be penalized here.
"The basic premise of this is the bigger the pool, the lower the cost. We have successfully done this with prescription drugs where we really bring market forces to bear by using the state’s bargaining power and putting it to work on behalf of private businesses and individual citizens."
SBT: Is that really the key to making this work, creating that larger buying pool?
Doyle: "Yes. I think there are a couple of things that really are the key to it. Definitely at the center is creating the larger buying pool.
"Frankly, that’s going to involve some dealing with some difficult insurance regulations and laws that have tended to put small businesses in very narrow bands for insurance purposes. I really want to help small businesses break out of those little, narrow bands and for us to be able to spread the risk for these catastrophic illnesses much more broadly than just a small group of employees in a business. So, that’s one of the real keys.
"The other thing I have asked the task force to explore is, how does the state, not only by using our bargaining power in the marketplace, how can we through a variety of different tools that may be available, tax credits or leveraging some additional federal money, so the state can help underwrite this to some degree, how can we actually provide some incentives here so that it really is attractive to businesses to come and join?
"We’ve done it in the area of drugs very effectively. What we did is we started with the state. The state employees and the state retirees were all in one big purchasing pool. Then we opened that pool up to private businesses. We now have over 300,000 private employees in the pool. We opened it up to other municipalities. The city of Milwaukee, for example, has joined it, and they think they may save as much as $1 million on their drug purchases as a result. And then we opened it up to private citizens so an individual citizen who does not have coverage for prescription drugs can, for $25, get a card from the private company that we work with, Navitus, and they can go into their local pharmacy and buy the prescription at the same cost that the state purchases them, with the same discounts. That to me is the model that we want to bring to this.
SBT: What would the cost be to the state to do this?
Doyle: "Well, this is what we really have to look at very carefully. Conceivably the cost could be nothing.
"If in fact the pool is large enough and the savings are there, the incentive to the businesses would be the savings that are available. So it is conceivable that you design one that doesn’t cost the state anything.
"But again, I’ve asked the task force to look at a range of options on whether there are some other incentives that we might be able to put forward to help businesses be able to provide health insurance. But, for example, the prescription drug program that I mentioned to you doesn’t cost us anything. What it does is it just says to businesses, you know it’s pretty hard for you to go out there and bargain as well as it is for the state to bargain because we’ve got tens of thousands of people that we are bargaining for and we can bring you along with us. It will help you."
SBT: In doing this, would the state be competing with the private health
insurance market?
Doyle: "No. We want to work with the private insurance market and in fact on the task force are a number of representatives of major Wisconsin health insurers.
"What I see us doing is going out into the insurance marketplace. The vision I have does not make the state the insurer. What it does is go out into the marketplace with a big, big book of business and hope that we can drive a pretty good bargain."
SBT: One of the things some of your critics have said is that you should not have vetoed the tax deductions for health savings accounts (HSAs). Why have you not supported that?
Doyle: "Well, first it’s a very minor little aspect of this. It’s not to say they may not have value. HSA (tax breaks) that are in existence at the federal level, I don’t think anybody could argue have brought down health care costs or have been a significant player in the health care market.
"Again, not to say they don’t have some virtue. What I have said all along on HSAs is, I told the Legislature over and over, I’m willing to sign an HSA (bill) if you are willing to sit down and work more comprehensively on health care issues. I don’t want you to pass an HSA (bill) like they were doing and that’s it and then walk away and say that they’ve taken care of health care.
"So, I think for example what we are talking about here, HSAs may well be one of the package of alternatives that are available to help people and help businesses with the purchase of catastrophic insurance. I think that they have a role to play, but I think we have got to include them in a broader health care package, and that’s what I have been telling the Legislature over and over to do. Don’t just pass HSAs and tell me you’ve taken care of health care."
SBT: What are you hearing from your constituents, particularly those in the business community, about the high health care costs in this state?
Doyle: "Obviously, what I am hearing increasingly is of businesses who are currently providing health insurance and are constantly having to cut back on it, higher deductibles, lower benefits. It pains them to do it.
"I hear from businesses that are very concerned about the competitiveness of this. Increasingly, a person with real talent that a number of businesses are looking for is going to go where the benefit package is the best. That’s becoming increasingly the determining factor, as opposed to salary. So businesses that are not in a position to provide a good package are feeling that they are losing out on people that they want to be hiring.
"I’ve had a lot of discussions with businesspeople, big and small, about the catastrophic effort here and have found just incredibly strong support for it. I think most of us recognize the place to start on this is to have something so nobody in Wisconsin has to go to bed at night worrying that one illness could cause them to lose everything they’ve worked for.
"That’s particularly true for a small business, particularly for a small, small business. You know, a sole proprietorship where everything a person has in the world may be tied up in the value of that business. And if the wrong virus happens to hit that family, it could mean the business is gone or the equity in the home that they’ve built up is gone or the college fund is gone. So, I think there is very widespread agreement that if there is an area that would sort of help everybody, it would be catastrophic, and that’s why we are focused on that."
SBT: What is the Healthy Wisconsin Council’s job?
Doyle: "Their job is to design the package. What I want them to do is to report back to me with a detailed proposal that will provide a mechanism by which businesses that are already providing health insurance, that their health insurance can be part of and lower the overall cost of health insurance.
"And, a mechanism that will provide a method of reasonably priced low-cost catastrophic insurance for those people that don’t have any.
"So, they’re going to have to work through a lot of insurance regulations and they’re going to have to work with economists and health care providers. A lot of this work has been done. We have been focused on this for quite some time. So, they’re not starting from scratch. Their job is to come up with the package, so that when the Legislature comes in in January, there is something that I believe will have strong bipartisan support that we’ll be able to move on, that we can then take to the federal government to get the appropriate federal approvals for and hopefully by the first six months of next year it can be implemented."
Healthy Wisconsin Council
• Co-chair Dr. David Kindig, emeritus professor of population health sciences at UW-Madison
• Co-chair Michael Weiden, partner of Quarles & Brady
• Al Jacobs, executive director of WEA Trust
• Wayne Corey, executive director of Wisconsin Independent Business
• John Torinus, CEO of West Bend-based Serigraph Inc.
• Mickey Judkins, owner of Eau Claire-based Details Inc.
• Kristine Seymour, senior vice president of Humana
• Jim Riordan, CEO of WPS Insurance
• Mary Starmann-Harrison, CEO of SMSS Health Systems
• Dr. Rene Settle-Robinson, president of Cream City Medical Society
• State Rep. Curt Gielow (R-Mequon)
• State Sen. Julie Lassa (D-Stevens Point)
• David Newby, president of the Wisconsin State AFL-CIO
• Bob Bass, board vice-chair of the Wisconsin Federation of Cooperatives
• Tim Cullen, senior vice president of Anthem BlueCross/Blue Shield
• Gregory T. Troy, vice president and chief human resource officer of Racine-based Modine Manufacturing Co.
• Dr. Tito Izard, chief medical officer of Milwaukee Health Services Inc.
• Randy Smith, president of La Crosse-based City Brewery
• Dan Velicer, director of global benefits for Kohler Co.
