Milwaukee Biz Blog

Why are health care costs skyrocketing? Because they CAN! Thank our unregulated free-market system…that exists in no other country.

Emily Ramshaw writes in The New York Times that too much use of the neonatal intensive care units (NICU) exists, but that’s just the beginning. Doctors that were once independent and controlled hospital cleanliness and quality, are now employed by the hospitals and are thus obligated to their employers. In fact, some receive “productivity bonuses” when they increase patient admissions and the ordering of expensive MRI testing and NICU admissions.

Get used to it!

Conservatives call it Free Market health care; others simply label them commissions; I call it “kickbacks” and a blatant conflict of interest that must be made illegal.

Don’t get me wrong. Doctors and nurses should be paid very well, and they would be under a Medicare-for-all system. But they should not be paid on the basis of how many patients they admit or tests they order or don’t order.

Where to start?

Hospitals succeeded in killing state Certificate of Need (CON) programs which prohibited unwise building in an area, so they can now do whatever they want. They can now buy up the doctor-clinics in the area and take their (previous) business elsewhere, leaving the established hospitals naked. (In Wisconsin this happened in Summit and Grafton, and is about to happen in Menomonee Falls.)  They can double beds by building in areas that have not doubled population, all because they now employ the doctors that fill those beds. It’s a good racket, but it eliminates the competition for physicians to bring their patients there. They are required to by their hospital employer.

And get this: in 100 percent of the cases, equipment utilization and hospital efficiencies go down and health care costs increase. It has never happened any other way.

The Fix: Reinstate the CON and prohibit hospitals from employing physicians who admit patients or order tests. They must remain independent. Some hospital-employed physicians are OK, like those radiologists or specialists who only interpret X-rays or nuclear studies, and who themselves do not order or admit.

Administration by private for-profit insurance companies is a total waste of dollars, like giving your pizza delivery guy a chauffeur. Health care is health care, and it does not change with the mode of payment. But private insurers drain costs for CEO salaries, bonuses, shareholder profits, marketing, broker commissions, legal fees to defend denials, actuarial costs, and even political costs that are passed on to the patient. These are not needed to provide care, and wouldn’t be present under a single-payer Medicare-for-all system.

The Fix: It is clearly a Medicare-for-all system like Canada’s but without the wait times. And since we spend 17 percent of GDP and they only 10 percent of GDP, it’s easy to do. (They could eliminate their wait times by simply upping their expenditure to 12 percent of GDP, but they haven’t yet done that.)

Tort Reform is a very small piece of the pie (like 2 percent), but easily we could replace the 12-man jury of idiots with a three-judge panel of experts. Allow legal appeals with the loser picking up the court and legal costs.
Fraud exists in both Medicare and private insurance, but more so with private because it is more profitable and involves less jail time. But rather than “fraud police” we should strengthen whistle-blower protections so the employees themselves become our eyes and ears.

Yes, yes, I can hear you say it: “Now THAT all makes sense; let’s just do it!” But hospitals and the insurance industry and liability attorneys all fund the political campaigns.

 

Jack Lohman is a retired business owner from Colgate, WI and author of "Politicians - Owned and Operated by Corporate America." He is publisher of http://MoneyedPoliticians.net.

What Egypt means to America is that ultimately we too will fall.

Americans do not like to talk of this, but it is inevitable.

We at least have a semblance of free elections, but increasingly they are controlled by the top 3 percent of the wealthy and the politicians that benefit from the payola. And the fact that our Constitution has been construed to make money = speech and corporations = people has made matters worse.

The fat cats have their personal vote, but they also control the purse strings that excite the politicians.
Looking at the Egyptian protests, it is too soon to tell whether they are going to be ahead or behind when it’s all over. In any gathering of this type, the bell curve tells us that there are some very good people at one end and some very bad people at the other.

Who prevails will dictate whether or not the “fix” has longevity, but other Middle East countries will tumble as well.

Only free and fair elections can move Egypt forward. But that’s true of the U.S. as well

Let’s hope that our politicians see the handwriting on the wall. They surely must know that they’ve pushed Americans too far.

They’ve allowed the bankers to violate security laws and thus far have refused to prosecute them. Isn’t having money great?

They’ve allowed the bankers and financial institutions to rip off taxpayers and effectively transfer wealth to those at the top. Wealthy people got even wealthier as assets from 401(k)’s, retirement plans, and housing values transferred from our pockets to theirs.

They’ve allowed corporations to send our jobs to countries whose wages are 1/10th ours. In fact they’ve subsidized them with taxpayer cash.

Good guys these. Our congressmen are this nation’s board of directors yet they are protecting only those at the top, because those at the top fund their campaigns. Can that be called anything but bribery and payola?

Only public funding of campaigns will get these jerks working for us rather than them.

President Obama is currently seeking permission to shut down the Internet in a national cyber attack. Will it stop there?

 

Jack Lohman is a retired business owner from Colgate, Wis., and author of "Politicians - Owned and Operated by Corporate America." He is publisher of http://MoneyedPoliticians.net and can be reached at jelohman@gmail.com.

So, Harley-Davison Inc. wants out? After a $22 million tax hit last year, can we blame them? They are not alone, and what else can we expect?

High health care costs, high union labor costs, and corporate taxes have all played a role in Wisconsin’s job losses, and only controlling these will put Wisconsin back in a competitive jobs position.

Indeed high labor costs play a role, and our union members must look at these realistically. Did they ask for too much, and get what they asked for? Are more reasonable wages better than no jobs at all?

Yes, workers must compete with foreign labor, and the CEOs do not. They can send overseas everybody’s job but their own. That they are legally protected behind a sweetheart board of directors is a matter for our politicians, but as long as the Pols get a piece of the action, I expect no governance.

These are always sensitive questions when we see CEOs and executives getting $10 million in salaries, bonuses and stock options they don’t deserve. But theirs is a race to the top, and zero American labor costs can help them get there. Of course, they work for conflicted boards of directors, and shareholders have no say in how their company is run.

So live with it.

There are two issues Wisconsin politicians must address:

• Business taxes: They are passed on to the consumer anyway, so those businesses that do not outsource and instead employ Wisconsin workers should pay zero taxes, or at least get a subsidy for every Wisconsin worker hired.
• Health care: Businesses should get behind a Wisconsin single-payer health care bill that will supplant the federal reform bill. ObamaCare is terribly lacking, and we can do better… for our people and our businesses.

Forget about help from your business association. They have a number of members who are either health insurers or commissioned brokers. and they certainly do not want to lose those members. And some, like the Wisconsin Manufacturers & Commerce (WMC) and the National Federation of Independent Business (NFIB) arrange or sell health insurance to their members and like the revenue stream. Both are opposite to the best interests of the remaining members, though some associations will justify their positions by ideologically lambasting “big government.”

 

Business leaders must strike out on their own when battling the health care issue. We have outgrown the need for the middle-man insurance industry, just as we have other obsolete commodities (home land lines, first class mail services, etc.). And even business co-ops to reduce costs, when - if done right - we could totally eliminate them from the business expense.

So who would pay for this new health care system?

If we are smart, the same people who are paying today: the taxpayers. Or through a surcharge on criminal fines, as they do in Arizona to fund their elections. We are already paying through higher consumer prices and lost jobs, but if we paid through our infrastructure, we’d save more than enough dollars to extend health care to 100 percent of our citizens.

 

Jack Lohman is a retired business owner from Colgate, Wisconsin, and author of "Politicians - Owned and Operated by Corporate America." He is the publisher of http://MoneyedPoliticians.net.

I can’t believe that I have no strong opinion about climate change. It’s not that I don’t want one, because I do.

It seems that at least “some” climate change is going on, but I can’t trust my politicians to give me an honest answer.

Did we cause it? Is it harmful? Can we change it? Should we change it? What are the effects on my grandchildren if we do nothing? Or if we do something???

I’d like an honest answer, and I can’t get one.

Half of our politicians are being paid by the bad-guy industries to accept studies performed by scientists that also are paid by industry to keep the monkey off their back. The other half is being paid by the bribers on the other side of the issue, who are poised to reap billions when congress lays out its demand for new Green technologies, whether needed or not.

Another group owns stock in one industry or the other, and this whole politician thingy, well, it’s just temporary for them anyway.

Of course I would prefer that my politicians were not taking cash bribes from industry, and they instead ran the country in the best interest of the public. That’s what they should be doing.

But they aren’t. We have a political system driven by special interest bribes that controls our nation to the detriment of its taxpayers. We have congress members poised to share in a piece of the action if the vote goes their way, and in some cases they win no matter which way it goes.

Surely new jobs may be created by new green technologies, but so will other make-work efforts by differently-corrupted politicians. But will those new jobs be in the US or in China and India? And if we force Cap & Trade unnecessarily, how many jobs will leave our country nonetheless?

Like all matters important to society, congress must recuse itself and turn this over to an unbiased panel of independent scientists, paid for by the taxpayers and working for the taxpayers. (And wow, if we can’t trust politicians on climate change, health care, Afghanistan, and “all matters important to society,” just where can we trust them?)

That’s an issue we must address in 2010.

In the meantime, I see from www.GlobalResearch.ca: “Much of the people in the world have been riled up with predictions of a catastrophic end to mankind and the world unless we don’t do something about so-called “man-made” climate change. Ironically enough, our refusal to adapt to a changing world, and instead a determination to fight it with our efforts to “go green” and “carbon neutral” may, in fact, cause the catastrophic end of our civilization. And sadly, in this instance, it would undeniably be a man-made disaster.”

Why can’t my Congress… my country’s esteemed board of directors… hire an unbiased, non-conflicted, non-partisan team of scientists to get to the bottom of it? Do they not understand the concept of uncorrupted analysis?

 

Jack Lohman is a retired business owner from Colgate, Wis., and author of "Politicians - Owned and Operated by Corporate America." He is publisher of http://MoneyedPoliticians.net.

Think about it. They now have a filibuster-proof congress, and if health care fails in 2009, it’s the Democrats’ fault. They can’t even blame the Republicans for their normal obstruction, as they no longer need a bipartisan bill.

President Barack Obama didn’t count on that when he was making all those campaign promises, but now it’s 100-percent his baby. He supported a single-payer plan, though he left some wiggle room in case Congress split. But it didn’t. The Dems now have total control and they don’t want it!

Single-payer is the most cost efficient system for our nation and is the most humane. You get sick, you get care and the caregiver gets paid. Nothing could be simpler. And though Medicare is not perfect it is indeed the least costly system of all with full physician choice, no wait times and no rationing.

But our politicians have a problem. Both Democrats and Republicans have shared in the $46 million in campaign contributions from the insurance industry. Needless to say, what is in the best interest of the nation is exactly opposite to the best interest of the for-profit insurers. The 22-percent saved comes right out of their pocket.

The question is how do we pay for it as a universal program? But first let’s understand who’s paying for it now.

Everybody is. We pay in cost-shifting, bankruptcy costs, and lastly, when businesses add their employee health costs to their product price and we reimburse them at the cash register.

In the process we make our businesses highly uncompetitive with foreign products, which often forces employers to build their products in countries that do not burden them with health care. We make more cars in Canada than in Michigan because their health care costs are $800 per employee per year and ours is $6500. That adds $1,500 per car.

Flat out, businesses should not be involved in providing employee health care at all, but that leaves either individual insurance or a public pool. Our politicians should create a single-payer Medicare-for-all system that is funded by our national infrastructure instead of the mish-mash of payments and non-payments. That’s what most advanced nations have done, and it works.

Over 31 percent of health care costs are consumed by the make-work insurance bureaucracy; as compared with the 9 percent needed for a single-payer. A huge savings to the public could be had.
With a single-payer system you see your same doctor and go to the same hospital as before. The only thing that changes is where they send the bill, and most people could care less about whose logo is on the invoice.

The beauty of Medicare is its simplicity. Everybody gets care, everybody pays into it through progressive taxation, companies are freed of the expense, jobs are increased, 100% of the public is covered, and consumers save $400 billion per year in reduced overhead.

The current for-profit system includes extra premiums to offset high CEO salaries and bonuses, broker sales commissions, shareholder profits, actuarial and gatekeeper costs, and even their lobbying and campaign contributions which are passed on to the patient.

Isn’t it nice to know that your politician is getting a piece of your private health care dollar? That’s why politicians always prefer private companies over government entities; one can give campaign cash and the other can’t. That’s why they choose to leave insurers in the loop.

Bottom line; most people would rather spend $500 per month in taxes to pay for an all-inclusive system than $700 per month for an exclusive system that doesn’t give better care and drives jobs out of the U.S.|

And all doctors and hospitals will be privately run and you’ll have 100-percent choice. What’s not to like about that?

But get this: our problem today is not health care, it’s political. Your politicians need to hear from you, and your voice must be loud if it is to drown out the moneyed interests. Your politicians work for you, not them.

Jack Lohman is a retired business owner from Wisconsin and publishes http://MoneyedPoliticians.net. He authored "Politicians - Owned and Operated by Corporate America."

So okay. I’ve been a CEO and I know what’s going through your mind. “I don’t want the government involved in anything! Period!" 

I understand. The government does some pretty stupid things.

But remember that the legislators writing the laws are paid to do those stupid things by special interests that want in the taxpayer’s pockets. They drive up government spending, which increases their profits and our taxes, and forces the state to cut employee pay and revenue-sharing and school spending and whatever it takes to retain the cash flow to the special interests that fund their elections.

Don’t get me wrong, I believe our state and federal government both need a thorough scrubbing to eliminate waste and unneeded departments. But giving away taxpayer dollars is not the correction I would recommend.

It’s getting ridiculous. Satisfying campaign contributors has already trashed our national economy, and has for a long time driven Wisconsin’s personal and business taxes out of sight.

There are two expenses that businesses should not incur, and for exactly the same reason. Taxes and health care (and related administrative costs) are simply passed on to consumers in the price of the product. We taxpayers pay 50 percent more for the mere pleasure of sticking it to corporations.

Both should be a zero burden on corporations because they make them uncompetitive with those in other countries that are not faced with them. As a result U.S. companies must cut jobs or outsource manufacturing and services. This is absolutely stupid.

Those opposing health care reform are usually insurance industry CEOs and sales brokers, because they are the make-work middlemen pocketing the cash. Unfortunately, many non-insurance executives can’t see the forest through the trees. Their business “partners” from the insurance sector are dipping into their health care wallets, in some cases to make up for losses in other areas like Katrina and the stock market. It is a total waste.

The smartest thing we could do -- both as a nation and business community -- is to switch to a single-payer Medicare-for-all system of health care. As a Medicare patient and former CEO, I think it’s great. I get sick, I get care and the caregiver gets paid. I go to the same private hospital and physician I have for years; they just send the bill to Medicare instead. I just don't deal with the insurance company.

Every U.S. citizen should have this level of care, including politicians. If they want anything outside of the norm, like cosmetic surgery, they can pay for it on the outside the old-fashioned, free-market way, with cash dollars.

A Medicare-for-all system would not only save consumers $400 billion per year; it would save every U.S. corporation $6,500 per employee per year in health care premiums. How’s that for a bailout? But this one isn’t going to just the bankers.

Ask the Big Three how important that is. They now manufacture more cars in Canada because they only pay $800 per employee. And 80 percent of Canadians prefer their health care system to ours, even with their wait times. But since we spend twice what they do, wait times will not be an issue.

So the government has done some pretty stupid things and they’ll continue doing stupid things on health care because the insurance industry has given Congress $46 million in campaign contributions. What else would you expect them to do? Money talks!

That insurance bureaucracy is draining 31 percent of health care costs, money that should instead be spent on physicians, nurses and hospitals. 

Unless the business community steps in and demands a single payer fix we are doomed for years of the same. Senators Herb Kohl and Russ Feingold must pressure Sen. Max Baucus and the Finance Committee to put single-payer on the table, and they must be encouraged to co-sign Sen. Bernie Sanders’ SB703 (the senate version of HR676). Only then can our economy turn around the way it should.

Jack Lohman is a retired business owner from Colgate and publishes http://MoneyedPoliticians.net. He authored "Politicians - Owned and Operated by Corporate America" and can be reached at jelohman@gmail.com.

Healthy Wisconsin is on everybody's lips, primarily because health care is into everybody's wallet. It's getting worse, but doesn't have to be that way.

Healthy Wisconsin changes the way medicine is paid for; not the way it is provided. Its only problem now is political.

Healthy Wisconsin's strengths:

• Its biggest change is in the structure. Rather than employers paying a middleman insurance company, they instead pay a flat 10.5 percentage of wages (which replaces the 15 percent many are now paying for employee health insurance). That's a 4.5 percent savings.
• Employees would pay 4 percent of wages, which would be offset by a 16-percent increase in benefits, such as adding limited vision, dental for children, mental parity, pharmaceuticals, and the extension to family coverage for all. Complete portability is provided when changing or losing jobs, and pre-existing diseases are a thing of the past.
• Employers are no longer involved in heath care, and Wisconsinites are no longer obligated to take an employer plan or even a family plan. Every family member can make their own choice between either a health care network (HCN) or the traditional fee-for-service (FFS).
• Doctors and hospitals remain private and send their bills to a central payment administrator rather than to the 450 statewide insurance companies (or 1,500, if we allow cross-border insurers). This drastically reduces their billing overhead and these savings are included in the total $1.8 billion projected.
• The systemic changes eliminate the costs that add nothing to health care, like insurance broker commissions, actuarial costs, costs for cherry-picking and gatekeeping, high executive salaries and the ever-rising shareholder profits. Even the insurer's high costs for lobbying and campaign contributions to politicians that were passed on to the patient are eliminated under Healthy Wisconsin. These are all gone, though it also explains the massive opposition from the insurance industry and their politician supporters.

Healthy Wisconsin provides major savings to most businesses and therefore fewer will outsource jobs to countries that have no employer contribution for health care. More businesses will open, remain open and relocate to Wisconsin as a result. The Wal-Marts and McDonald's of the world will now start paying their fair share, but few taxpayers will object to that.

 

While some small business owners objected to the earlier version of HW, the new version provides a three-year phase-in period, which should be quite palatable. As well, a cap of $102,000 in wages taxed has been placed on two-earner families.

In spite of the frivolous scare tactics used by the proponents of a status quo approach to health care, Wisconsin would not become a magnet for the unemployed or immigrants. Most already have free Medicaid coverage in their own state, thus relocating families is a foolish option.

No matter how important the Healthy Wisconsin proposal is to the people and businesses in Wisconsin, there remains an insurance industry that wants to continue drawing profits from the medical field, and politicians who receive their contributions. Hopefully they will all realize that as Healthy Wisconsin improves the state's economy, other insurance markets will emerge and the state will grow accordingly.

Prior to retiring four years ago, I owned a company with 70 employees in four states (40 in Wisconsin). Had Healthy Wisconsin been in effect at that time, I would have indeed closed my offices in three states and moved the jobs to Wisconsin.

Importantly, after selling my company, the buyer did move offices. They closed Wisconsin and moved the jobs to the East Coast. Had HW been in effect at that time, I seriously doubt that would have happened.

How many more jobs are we losing because of our high health care costs? My guess is, a lot.

Jack Lohman is a retired business owner from Colgate and publishes http://MoneyedPoliticians.net. He is the author of "Politicians - Owned and Operated by Corporate America."

Liberals want Medicare-for-all and conservatives say it's too costly. Some like the free-market "for-profit" system, others don't want profit driving medicine. Some don't want the government involved, others trust elected politicians more than unelected CEOs.

So, let's have both. How can anyone argue against that?

For those willing to pay the extra costs of the insurance bureaucracy, let them. That 31 percent of the dollars includes broker sales commissions, marketing and advertising costs, high executive salaries, bonuses and stock options, ever increasing shareholder profits, and even lobbying and campaign contributions that are added to the price of the policy.

If the conservatives want to pay it, let them. That's the free market they espouse, and it keeps some people in jobs.

But for those who want health "care" instead of health "insurance," let them opt into the federal Medicare system and reimburse Medicare for its actual costs. Employers can give employees the choice, and if one is more costly they pay the difference.

For those unfamiliar with Medicare, it's simple. You get sick, you get care and the caregiver gets paid. But the providers get paid by the Medicare administrator - which is Madison's nonprofit WPS - instead of the insurance company the employer has chosen. This year, anyway.

The hospital or doctor doesn't have to fight to get paid – the payment is guaranteed and there is little or no bad debt. And they remain as private contractors to Medicare, just as is WPS. It's the same private hospital and doctor you see today, just a different payer and it's portable if you change jobs.

Here's what's interesting. If Medicare truly is too costly, as its opponents claim, there'll be no takers. But if Medicare is cheaper, the private insurers will have no takers! How's that for competition and consumer choice?

Here's the rub. Medicare IS more efficient and private insurers will not want to compete with them. They can't compete now, as private Medicare HMO contractors, and it won't be any easier under this system.

However, one thing must be changed. Whether HSAs or not, private insurers must provide the same level of care as Medicare does. No pre-existing disease exclusions. No limits on coverage. No gatekeeping. No denials of care. No cancelling when costs start increasing. In other words, no playing games, no under-insuring and no cheating. Patients get care when they need care. Always!

This doesn't get us to a perfect system, just a more efficient and competitive one. There remain problems with both the fee-for-service Medicare system and the “flat rate” HMO/PPO models typically in the market. With FFS the physicians receive more income as the amount of care and ordering of tests increases. Sometimes too much care can be as bad as not enough care.

Conversely, with the fixed-rate HMO/PPO models, as more tests are ordered those costs come out of the bottom line profits. So depending on the financial relationship between the physician and HMO/PPO, needed tests could go undone so the profits increase.

All of this can be fixed if politicians have the will. Doctors and clinics should not be allowed to profit from expensive testing. Hospitals should not be able to employ physicians. The certificate of need should be reinstated and hospital overbuilding should be restrained.

Why are we hesitant to proceed? In short, we could fix the system if we removed the insurance industry and hospital campaign contributions being paid to politicians to protect the status quo. Unfortunately, private interests can give campaign contributions and Medicare can't, so the politicians will be a hard sell.

Jack Lohman is a retired business owner from Colgate and publishes http://MoneyedPoliticians.net. He also is the author of "Politicians - Owned and Operated by Corporate America" and can be reached at jlohman@execpc.com.

John Torinus has it wrong in his recent assessment of Healthy Wisconsin, and business readers are left with a misleading analysis that could send them down a more costly path.

Torinus said, "…high payroll taxes paid by employers inevitably put a damper on wage increases." Of course he's right, but very incomplete. He ignores vital, offsetting factors that good business leaders would surely include, an accuracy he would expect from his own managers.

First, the 10.5-percent employer tax (for Healthy Wisconsin) replaces the 15 percent most employers are currently paying for employee insurance premiums, thus wages are more negatively affected today than after the 4.5 percent of wage savings in HW is applied.

Since when does a 10.5-percent cost have impact but a 15-percent cost doesn't? Most business leaders would swap the higher for the lower any day, but obviously not John Torinus.

Secondly, he points to the 4-percent employee tax and doesn't mention that it offsets part of what they are already paying - and additionally, it includes coverage of limited vision, dental for children, mental parity and pharmaceuticals employees are not currently getting paid for. A 16-percentincrease in coverage, and there's no additional cost for a family plan!

Torinus scoffs that David Riemer ignores the "consumerism" in his earlier plan, which included health savings accounts. But there's a rather simple reason: according to the Bell Policy Center, "HSAs coupled with high-deductible health plans increase cost-consciousness among enrollees, but have little effect on overall health care costs."

That's obviously not what Torinus wants to hear, because he uses HSAs in his own company. Health costs will indeed decrease for his company but they will increase for employees. That's the pay cut he argues against! When employees realize that, will they then demand higher wages to compensate for lower benefits?

Healthy Wisconsin makes a systemic change that Torinus apparently doesn't like, nor does the debater he cites - Rep. Leah Vukmir (R-Wauwatosa) - and the other Republicans who share in the $600,000 of campaign contributions they've received from the insurance industry. When an industry gives this kind of money, you just know they are on the losing side of the argument. But money talks.

HW eliminates the 31 percent of wasted middleman costs that are consumed by the current insurance bureaucracy. For the same dollars we are spending today to cover 90 percent of Wisconsinites, we can provide greater coverage to 100 percent instead, so it's hard to understand why Torinus doesn't see the forest through the trees.

These systemic changes eliminate the costs that add nothing to health care, like insurance broker commissions, actuarial costs, costs for cherry-picking and gatekeeping, high executive salaries and the ever-rising shareholder profits. Even the insurer's high costs for lobbying and campaign contributions (to Vukmir and others) that are passed on to the patient are eliminated under Healthy Wisconsin.

It would be a disservice to the business community to not include all of these tradeoffs, and corporate leaders should quit listening to both sides and do their own math. Simply multiply current payroll by 10.5 percent and compare the result with what is now being paid for employee health care and its associated administration costs.  Now you have your answer.

Torinus deserves great credit for being ahead of the curve on health care, but in this writers' view, he's not far enough ahead. While he has reduced his costs, he could reduce them more because at least some of his employees are still stuck with the 31-percent burden. Torinus owes it to the business community to get all the facts on the table. Readers may not agree with mine or his facts, but they are experienced business leaders and can sort them out for themselves.

Healthy Wisconsin is not perfect, as David Kliber pointed out in his Milwaukee Biz Blog entry. But we should fix it, not trash it, and the Republicans should take that responsibility. We need a small business transitional tax break, and we should have the health board selected by the new, independent ethics board rather than the governor.
Winston Churchill once said, "Americans will always do the right thing, but only after failing at everything else." Let's prove him wrong.

Jack  Lohman is a retired business owner from Colgate and is a founding member of www.BusinessCoalition.net. He is the author of "Politicians - Owned and Operated by Corporate America" and can be reached at jlohman@execpc.com.

 

 

 

Recent news coverage by the Small Business Times has provoked excellent debate in the Milwaukee Biz Blog about the benefits and drawbacks of the State Senate's Healthy Wisconsin (HW) plan. This plan would eliminate the several billion dollars Wisconsinites spend on the health insurance bureaucracy, and spend it instead on direct patient care. It'll also include those who are currently unemployed.

HW is as close to a single-payer system as we can really get, politically, and it combines staff-model health care networks (HCNs) with traditional fee-for-service (FFS) care. There are advantages and disadvantages to each approach, and at least HW will allow them to compete, which both gives patients a choice and the public the opportunity to sort out the differences.

HCNs would receive a fixed per-patient dollar amount from the state and thus have the financial incentive to keep costs low and their "spread" high. Spread is equivalent to profits in a for-profit entity, and it is simply a surplus in a non-profit entity. In both cases it allows investments in new staff and technology.

Critics complain that the flat-fee incentive can work against the patient's best interest if expensive testing is needed because it drives up costs but not revenues. But just the opposite is true of the fee-for-service arrangement, where revenues increase at a rate faster than costs. FFS is legitimately blamed for at least some of the medical inflation because physicians are paid for what they do whenever they do it.

With FFS there is the opposite incentive to overutilize expensive testing, especially when the physician owns the lab or equipment. Overutilization can be as bad as underutilization because it can create problems that didn't exist. Conversely, there is an incentive to underutilize when the physician is employed by a health care network. But here the so-called "market forces" will play out as patients select or deselect on the basis of perceived quality of care.

Medical mistakes often have a perverse affect as the HCN suffers losses from the additional corrective treatments while the FFS providers continue to be paid for the additional services that they themselves caused. As a result HCN's are more likely to monitor the lesser skilled physicians.

In any event the FFS program needs to be updated. The once-effective Certificate of Need (CON) program must be reinstalled and physicians must not be allowed to self refer patients to their own testing lab. Actually, sending patients to independent hospitals worked quite well in the past, and that should be reinstituted. Alternatively there are very qualified independent labs that apply excellent competitive pressure on the entrenched health care market.

How to pay for it

By now most business leaders know that the HW costs will be borne by a 10.5% tax on the employer's wages, which in most cases will be more than offset by the elimination of the 15% they pay for health insurance premiums today. Another 4% tax on wages is paid by the employee, which in most cases is offset by the additional coverage of vision, dental and mental parity.

But not everybody is happy with this, especially those businesses that currently provide no coverage or inadequate coverage. The Wal-marts of the world will have to step up to the plate and begin paying their fair share. Even Aurora Healthcare is high on the list of companies whose employees receive taxpayer-funded BadgerCare.

HCNs will also be required to guarantee coverage and not be able to cancel the more costly patients, which the Blue Cross plans on the west coast have been charged with doing.

Most common is the legitimate complaint by small business leaders who by necessity have sought coverage on their spouses plan, or they simply go without. Our politicians must find a solution that allows them to survive this much-needed guarantee of public health care, and the best way is to provide an offsetting small business tax break, which the Republicans should love. That can be their contribution.

Actually, when you think about it, small businesses shouldn't pay taxes at all. They simply pass them on to the public and we reimburse them at the cash register, thus it becomes a regressive tax that affects lower income families more. That said, large corporations should pay taxes depending on factors that prompt good corporate citizenship, like the CEO-to-worker pay ratio, the ratio of local to outsourced jobs, etc.

In time I'd like to see healthcare morph into a totally taxpayer-funded service, because we are paying for it in the price of goods and services anyway. There is absolutely no reason why this should burden businesses who must compete with foreign companies that do not have health care built into their product prices. But I digress.

Suffice it to say that we should modify HW and not let the small business dilemma delay or prevent progress on fixing Wisconsin's healthcare mess. Its exorbitant cost is driving jobs out of the state, Wisconsin companies out of business, and preventing entrepreneurs from starting new businesses. Our state's economy can only be helped by this progressive movement.

The alternative is not pretty

Business and political leaders seem to be ignoring what will happen if we do nothing. It's a basic rule in life that he who owns the gold, rules. And today that's the businesses and their shareholders.

Business leaders and shareholders are now demanding change -- and they own the gold so I expect they'll get it. Those not forcing employees into high-deductible health savings accounts (HSAs) will be moving to managed care systems. Or they'll become members of a business consortium that contracts its health care to the lowest bidder.

HSAs are decent investment tools for the young and healthy and wealthy, but they are not a useful healthcare policy for the average family. According to credible studies by the Rand and Kaiser Foundations, the high deductibles can deter care until it is more costly to treat or becomes untreatable. Mothers will opt to put food on the table before buying their blood pressure medicine, and then have a costly heart attack or stroke. Or worse, die.

Those who can afford HSAs can find other ways to invest their money, but those who can’t need a solid health care program. Unfortunately, some employers are using HSAs as a means to transfer their healthcare risk to employees, and this promises to backfire in time. HSAs cannot reasonably be melded into a single-payer plan, but that does not prevent those capable of investing elsewhere.

Business healthcare consortiums are already forming in Milwaukee, but too often they are just a hair above being uninsured when uncovered catastrophic diseases strike. Not even the insurance industry will like this solution because ultimately they won't be needed there either. Its best option is to see Wisconsin grow and benefit from new markets.

FedEx moved on when Fax and eMail took over the overnight document delivery market, and they survived just fine. The insurance industry should take some lessons.

Doctors will not fare well either, as giant hospital chains buy up as many of the independent physician clinics as they can, specifically for their patient referrals. In either case physicians will soon become employed by a corporation and likely with lower salaries, competing more with foreign doctors, and facing higher demands for production-line efficiency. Get used to the five-minute office visit, because there’s more to come.

Nor will the hospital association like the new shareholder-managed-care system as they are beat down in prices with nowhere else to shift costs. It is not a pretty picture ahead. We need to fix it fast, and we need to fix it correctly.

The scare tactics have also begun, including the potential issue of unemployed people migrating to Wisconsin for care. This is a red herring. They already receive free health care through the Medicaid program in their own state, so waiting a year in Wisconsin would not benefit them.

Illegal immigration should indeed be dealt with, but not through the process of denying health care.  Especially when many of those immigrates become employed here and will be paying for their health care, and adding to the state's economy at the same time.
                                                                                      
Opponents of Healthy Wisconsin like to label this a $15.2 billion tax increase, and they conveniently -- no, purposely -- ignore the elimination of the $17 billion corporations are now paying in health insurance premiums. That distortion, naturally, comes from health insurance companies and business associations that sell insurance to their members. Wouldn't you know it?

And beware the dreadful words “government-controlled health care,” they are creeping upon us. In fact HW uses private health care networks, hospitals and clinics just as does Medicare and Medicare Advantage, and that "government" system is one of the most successful public-private ventures ever. Yes, its per-patient costs are higher because it almost exclusively covers seniors and end-of-lifers. But fold in the youngsters and the average is 20-30% less than we are spending today.

In the end it will be a political decision, and former Senator Joe Leean has it exactly right. The Democrats want it and the Republicans don't, favoring their campaign war chests and the insurance industry that fills them. More importantly the voters want it, so we should see it either passed this session or a different political party in control of the Assembly in 2008. That's called forced term limits. We need more of it.

Jack Lohman is a retired business owner from Colgate and is a founding member of www.BusinessCoalition.net. He authored "Politicians - Owned and Operated by Corporate America" and can be reached at jlohman@execpc.com.

 

 

http://www.biztimes.com/blogs/milwaukee-biz-blog/2007/07/23/insiders-try-to-sabotage-health-care-reforms