Wisconsin Council 40
LEGISLATIVE ALERT
AFSCME Green Sheet
Rising Health Care Costs

www.afscmecouncil40.org
 

August 8, 2008                                                                       Volume #30, Issue #24

The increasing cost of health care is one of the biggest challenges facing working families, retirees, and employers alike.

The factors that drive up the cost of health care are many. Among them - a large population of uninsured (nearly 500,000) and countless under-insured citizens costs us all when they don’t seek medical attention until costly medical intervention is necessary. Inadequate Medical Assistance payments to nursing homes, hospitals, and other health care providers result in higher service charges imposed on the rest of us. Insurance companies that overcharge for insurance coverage and out-of-control hospital building and spending on fancy “hospital boutiques” also contribute to high health care costs. These are but a few of the drivers of costly health care that we all end up paying for, directly or indirectly.

THE HIGH COST OF HEALTH CARE HURTS PUBLIC EMPLOYEES - Public employees, who largely enjoy good health care benefits, also are affected by the high cost of medical care, both at the kitchen table and at the bargaining table. Time and time again, in bargaining, AFSCME members have given up pay raises to keep adequate health care benefits. A medical inflation rate of 10% a year far outstrips workers’ and employers’ ability to pay.

Severely constrained county and municipal budgets are hurting public employees, and the rising cost of health care is making a difficult situation even worse for us. Local officials predict that 2009 will present the toughest budget challenges in decades. The state budget picture is not much better – revenues are projected to fall short of commitments to the tune of some $1.6 billion in the next budget cycle (2009-2011).

HEALTH CARE REFORM PROPOSALS UNDER CONSIDERATION AT THE STATE CAPITOL - To solve this problem and protect our membership, AFSCME has been looking at various health care system fixes that have been advanced by Wisconsin lawmakers and Governor Doyle. In addition, AFSCME is working with a coalition of like-minded organizations, such as the AFL-CIO, seeking health care reforms.

To their credit, the Governor and some legislators are trying to do something positive and different about the health care problem, with the goal of ensuring that all residents have access to affordable, good quality health care services.

Last year, Governor Doyle initiated a series of health care reforms including an expansion of the popular “BadgerCare” program, which provides basic health care services to families with limited income, under 185% of the federal poverty level (FPL). His plan, known as BadgerCare Plus, expands access to families up to 200% of the FPL.

Many legislators back comprehensive reform as a solution to the rising cost of health care. Two distinct plans have been under consideration. One was drafted by the AFL-CIO and another was offered by David Reimer, former City of Milwaukee administrator and former State Budget Director under Governor Doyle.

The AFL-CIO plan, known as the Wisconsin Health Care Plan, would create an employment-based health care system for all working people. It would eliminate much of the costly bureaucracy built into our current health care delivery system. The WHCP would be funded with a tax on payroll. We won’t attempt to explain the details of this plan in this Green Sheet. You can go to www.wisaflcio.org for details.

The Reimer plan, known as the Wisconsin Health Partnership Plan, would cover all Wisconsin residents under the age of 65 but would maintain much of the infrastructure of the current system. It also would be paid for with a payroll tax. See www.wisconsinhealthproject.org for details.

Last summer, Democrats in the State Senate crafted their own plan, which they call Healthy Wisconsin, and inserted it in the 2007-09 state budget bill. It borrows from parts of both the Reimer and the AFL-CIO plans. Their plan proposes comprehensive coverage for all state residents and is also funded with a payroll tax. See www.wisaflcio.org details.

Healthy Wisconsin was not included in the final state budget but it was the subject of intense debate in the Capitol for months during the budget deliberations. The Senate held a public hearing on the plan last March, and it is likely that the Senate will advance Healthy Wisconsin again next year.

Healthy Wisconsin is a bold initiative that Senate Democrats have been praised for and criticized for advancing. Supporters hail Healthy Wisconsin for its comprehensive health care reforms. Critics claim that it would be costly and impose new taxes on employers.

THE PAYROLL TAX MATTER - Like the Reimer and the AFL-CIO plans, Healthy Wisconsin relies upon a payroll tax. Opponents of health care reform, in any form, highly criticize the payroll tax as too costly for employers. Backers of health care reform say Wisconsin can no longer afford to do nothing about rising health care costs.

The fact is that employers, just like the rest of us, pay for rising health care costs, one way or another. Employers who currently offer health insurance to workers spend an average of 15% of payroll for workers’ health care premiums, which is more than they would be expected to pay under a comprehensive plan like Healthy Wisconsin. Employers who don’t offer health insurance to their workers pay indirectly for a health care system that is dysfunctional and costly.

The detractors of the AFL-CIO, Reimer, or Healthy Wisconsin plans focus solely on the payroll tax component of these plans while dismissing the possible savings and other benefits of health care reform. They fail us all by criticizing plans that have been put forth while offering few solutions of their own to fix a health care system that is broken and falling far short of meeting the needs of our citizens.

HEALTH SAVINGS ACCOUNTS UNDERMINE THE HEALTH INSURANCE BENEFITS - Some legislators in the Capitol take a completely different approach to deal with rising health care costs. They support creating state tax breaks for health savings accounts, hoping that HSAs will encourage workers to save and make them better consumers of health care.

HSAs have serious drawbacks for working people. They pose long-term threats to the employment-based system of health insurance. HSAs don’t benefit workers who live paycheck to paycheck and lack the extra income to make contributions to a health savings account. They do nothing to improve the quality of health care or provide chronic disease management. HSAs don’t address skyrocketing health care costs. Fundamentally, however, HSAs benefit the wealthy with tax breaks while encouraging employers to slash benefits for lower and middle-income workers.

HOW SOME LEGISLATORS MANIPULATE THE ISSUE TO WEAKEN OUR COLLECTIVE BARGAINING LAWS - There is also another school of thought among some legislators about how to deal with rising health care costs as they affect local government budgets. These legislators support weakening Wisconsin’s collective bargaining laws to take away the ability of unions to bargain good health care benefits for union members. This approach does nothing to reduce the cost of health care and is nothing more than thinly disguised union busting. This misguided thinking blames workers for high health care costs and aims to take away good benefits from some instead of working to improve health care access for all.

AFSCME has vigorously fended off these union busting proposals, which were advanced in several different forms by Assembly leaders during the 2007-09 budget debates last summer. Governor Doyle and many lawmakers stood firmly with us in support of maintaining Wisconsin’s strong collective bargaining laws, and these proposals were defeated.

EVERYONE DESERVES QUALITY, AFFORDABLE HEALTH CARE - When the next Legislature convenes in January of 2009, AFSCME will continue to lobby with our coalition partners and work with friendly legislators and the Governor to bring about changes in the system to ensure high quality, affordable health care. If we can achieve some systemic changes in our health system, things might ease up for our members at the bargaining table and improve health care access for us all.

This summer and fall, AFSCME members should ask candidates for state office whether they will pledge to work on comprehensive reforms to provide quality, affordable health care for all Wisconsin residents.

For more information call the AFSCME Area Office at 608-836-6666.