Deal Cuts Health Costs and Covers More Uninsured

“It’s time to get it done,” said the President of the Wisconsin Hospital Association calling for passage of a hospital assessment plan. Labeled by some a ‘hospital tax’, one might think it odd a state-wide representative for hospitals wants such action.

Two years ago hospitals fought the plan designed to gain federal dollars for Wisconsin. Governor Doyle proposed the idea in his 2007-09 budget. I and others hurried to understand the proposal.

The deal went something like this: the Governor asked hospitals for $2.00. In return, the state gave $4.00 back to hospitals. The additional money came from the federal government through our state Medicaid program – including BadgerCare. Twenty-two states have a similar plan.

The Governor’s Office estimates Wisconsin will gain $900 million federal dollars over the two year budget. As a result, hospitals will be paid more for the care they give to low-income patients. And it comes just in time – as hospitals care for more patients unable to pay their bills.

The Wisconsin Hospital Association reports charity care and bad debt increased by twenty percent over the past year.

Particularly hard hit are families whose children are grown or those without children. Even if they qualified for BadgerCare, federal rules limit coverage to only those with children under age nineteen. This rule left many families of modest means without affordable health insurance.

Last fall, Wisconsin’s BadgerCare program received federal permission to cover adults with no children at home. Many of us worried about how the program would be funded. The new federal Medicaid money provides an answer and some forty-thousand uninsured childless adults will soon be able to sign up.

Covering more people with health insurance helps all of us. So will increasing the amount the state pays hospitals for Medicaid patients.

Hospitals report it has been over a decade since they saw an increase in the state’s Medicaid reimbursement. When the state doesn’t pay the cost of caring for low-income folks or when people cannot pay because they have no insurance, the cost gets passed on to those with private insurance. This ‘cost shifting’ is called the hidden tax- the extra price added to everyone else’s bill to cover unreimbursed cost. Increased ‘cost shifting’ is one reason health costs are rising much faster than general inflation.

When everyone has health coverage, costs are less for all of us.

This week the Legislature will act on a State Economic Stimulus Plan. The proposal, which includes spending cuts for state government and the Legislature, is designed to create jobs, spur business investment, retrain laid off workers and protect tenants and home-owners facing foreclosure. The hospital assessment will be part of this proposal.

The Wisconsin Hospital Association calls the plan a win-win: the state gets more federal dollars; hospitals receive increased Medicaid payments, more people have health coverage. Still those who vote for the plan will be accused of taxing sick people. Legislators know they will be handing ammunition to their opponents for the next election.

But now you know the rest of the story.