Let Wisconsin prove socialized health care works (updated) Posted by: McQ
on Wednesday, August 08, 2007
We've talked about the states as laboratories for "new" ideas and we previously mentioned how Wisconsin has decided, for better or worse (and I'd guess the latter) that it will insure everyone in the state.
John Stossel says "go for it, Wisconsin". His theory is that perhaps their experience will finally demonstrate for all that the "socialist approach" isn't the way to go. Of course, as you might imagine, "free" health care isn't free:
The plan would cost an estimated $15.2 billion, or $3 billion more than the state currently collects in all income, sales and corporate income taxes."
And, of course, down the road it will cost much more than that. Even the $15 billion is based on the usual Pollyannaish assumptions such as millions in savings "from putting more emphasis on primary care."
Obviously taxes are going to go up in the Badger state. That goes without saying. But the supposed basis for savings, as Stossel points out, rest on the notion that the emphasis on "primary care" will somehow balance things out. The fact is, seeking "primary care" is a voluntary thing and even those with insurance don't routinely take advantage of it. Why the state thinks that will change if it is the one offering the insurance does indeed seem "Pollyannaish" as Stossel mentions. But it wouldn't be the first time the government sold a bill of goods to its constituents to get its way.
And, who will pay for this? Well the usual suspects, although, as mentioned, that's not how the program was sold. It was sold to the real payers as a tax on business:
As usual, most of the new taxes will be imposed on employers. Progressives believe money taken from them doesn't cost anything. Rich corporations will simply waste less on lavish perks and excess profits. But taxes on business are often paid by workers, stockholders and consumers. Businesses that can't pass the taxes on to someone else will close or move out of state.
Illinois isn't that far and those companies who will be put in a situation where the taxes imposed are prohibitive (and trust me, they'll go way beyond $15 billion) you'll begin to see business flight to a friendlier atmosphere. Economics 101. That or they'll cut headcount, salaries or other employee perks.
Flight, of course, will reduce the desired tax base and two things will have to happen - one, raise taxes on those businesses that remain (and hit that tipping point where they begin to close or flee as the earlier ones did) or two, begin taxing Wisconsin's workers (since you don't have to be employed to be insured, only workers will pay), or a combination of both. Most likely, once it settles in, it will end up being a combination as the cost of the program rises and out-of-staters with chronic diseases move in for the free-ride.
The apparatus for the top-down approach to health care is in place as well:
[continued from the previous cited paragraph] But progressives are oblivious to this fact. They see Wisconsin becoming a fairyland of health happiness supervised by the 16-person "authority" that will oversee the plan. Socialism will work this time because the "right" people will be in charge.
This is reminiscent of Hugo Chavez's belief that he holds the secret to making something which has failed every time it has been tried previously to work this time. It's not the ideology that is defective, it is just those who are trying to execute it. So here we see the usual top-down authoritarian and central planning approach for which socialism is so well known, and they will decide how your health care should be executed. But this time, it will work.
So why does Wisconsin's government think it must intrude in the health care market ... why to "make it more affordable", of course. Government has a fabulous track record in that arena, you know.
For example, did you know it now costs a family in Wisconsin $4,462 a year for health insurance right now?
Any guess as to why?
...partly because Wisconsin imposes 29 mandates on health insurers: Every policy must cover chiropractors, dentists, genetic testing, etc. Think chiropractors are quacks? Too bad. You still must pay them to treat people in your state.
Of course, in a free market, your insurance choices would be like a buffet, where you choose what you need for your family without mandates. That's not the market that exists today, however. So we've seen government create the cost problem through their mandates and now its going to solve the problem it created.
How intrusive is this plan? Well say you don't like it and want to buy your own plan in another state. Uh, that is against the law:
Want to buy insurance from another state, like nearby Michigan, where an average policy costs less? Too bad. It's against the law to buy across state lines. Your state's Big Brother knows best.
So I'm with Stossel. Go for it Wisconsin. Get it out of your system. Run this thing. Let's see how it works out, because we're all interested to see if, in fact, TANSTAAFL is something to finally be tossed in the bone-yard of discarded conventional wisdom. We've seen others try unsuccessfully to repeal the laws of economics, I'm interested to see how well Wisconsin does in that regard.
However, if we are lucky enough to have it turn out as most expect, perhaps it will provide the basis for avoiding what I believe would be a disastrous attempt by the federal government to take the Wisconsin plan national.
UPDATE: Oh, and read this from Consumer Reports. Did you notice the one thing not mentioned when talking about "underinsured" or "uninsured"? That's right ... not a word about state mandates and their effect on the availability of affordable health insurance coverage. If you're interested in the impact of state mandates on the cost of health care coverage, check this (pdf) out. And this.
UPDATE II: MichaelW, at A Second Hand Conjecture, adds a caveat to my and Stossel's "go for it Wisconsin" which I think makes sense. Fearing proponents of universal health care in DC would never allow Wisconsin to fail he says:
So, instead of saying “go for it, Wisconsin!” I would instead encourage the purveyors of this plan to explicitly waive any federal assistance, now or in the future, to make that waiver binding on all future actors for the State, and to make it applicable to either requests for or offers of assistance. In other words, I would say to Wisconsin “put YOUR money where your mouth is, and put it in writing.”
Good point. Probably won't happen, but good point anyway.
UPDATE III: Coincidentally, David Leonhardt has a piece out in the New York Times about universal health care "Free Lunch on Health Care? Think Again" where he addresses the notion central to Wisconsin's premise that it will make health care cheaper with preventive medicine:
No one really knows whether preventive medicine will save money in the long run, let alone free up the billions of dollars a year needed to help pay for universal health insurance. In fact, studies have shown that preventive care — be it cancer screening, smoking cessation or plain old checkups — usually ends up costing money. It makes people healthier, but it’s not free.
“It’s a nice thing to think, and it seems like it should be true, but I don’t know of any evidence that preventive care actually saves money,” said Jonathan Gruber, an M.I.T. economist who helped design the universal-coverage plan in Massachusetts.
This is a tough idea to swallow because better health really does seem as if it should lead to lower medical bills. Indeed, if it were somehow possible to wave a wand and turn people into thin nonsmokers who remembered to take their statins, this country’s health care expenses would fall.
But any effort to promote health has its own costs. Doctors and nurses need to spend time with patients to persuade them to change their behavior. (Ever tried to get someone to stop smoking or drinking?) For a new program to work, it has to reach people who are not being helped by whatever exists now — and who thus will be among the most difficult and expensive patients to treat. The program would also have to treat a whole lot of people who never would have gotten sick.
"However, if we are lucky enough to have it turn out as most expect it will, perhaps it will provide the basis for avoiding what I believe would be a disastrous attempt by the federal government to take the Wisconsin plan national."
It will not work like that. As soon as it fails, they will say it is because we did not go national with it. So the calls to go national will increase from the socialists not decrease.
As usual, most of the new taxes will be imposed on employers.
The usual Democrat formula: create a new broad-based entitlement, and saddle one tiny unpopular strata of the population with the costs. If the huge new taxes on business are based on payroll, can anyone here guess what will happen to the employment rate in Wisconsin?
One time when riding the bus I met a guy who had this theory that if we took all the pennies out of circulation and made them into copper wire, we could bring free electricity to everyone in the U.S., and the electricity would be paid for by the pennies.
Another experiment for us to observe! Apparently the reams of documents/reports on the shortcomings of the stateside military medical plan, the Canadian’s and Europeans’ socialized health care systems are insufficient demonstrations of that approach. Somehow I don’t believe that even a failure of the Wisconsin experiment would change many minds. It would again be the wrong people running it, not the idea.
I don’t think this movement can be stopped as long as the vast majority of the American people, based on the people that I know, who seem to believe that the government owes them this benefit; in their minds it is a right. And unfortunately the politicians will pander to this belief, ignoring the unintended consequences and failing to weigh the cost vs. the benefits, since it will get them reelected and bring them more power.
What needs to be done to correct our health care problems would require much more personal responsibility for all Americans and would impact many influential sectors such as medical professionals to weed out the quacks, lawyers by minimizing and restricting law suits and contingency practices, insurance companies forced to seriously go after the insured, administrators, lawyers and doctors who defraud the system and politicians who want more control over our lives to protect us from harm. But apparently the evil business sector can be squeezed unmercifully with no impact on you and me. Ri-i-ight!
I’m with AMR on this one, being a resident of WI. Not that it means much, but it surely doesn’t make me happy to hear everyone say "Go for it, WI!" when I’m going to be one of the schlubs paying for this mess that won’t actually cause any lessons to be learned when it goes belly up.
"two-thirds of Wisconsin residents support the Democratic plan — even when presented with opponents’ arguments that it would be a ’job killer’ that could lead to higher taxes ... Said Sen. Jon Erpenbach, D-Middleton, one of the plan’s sponsors, ’Everything we have heard [against the plan], we put in the poll. And it still comes back at 67 percent approval.’"
Perhaps it’s not too late to move... if not to avoid the hideous tax hikes coming down the pipe, then to avoid the apparent 67% idiocy rate.
One minor point...everyone quotes this $15.2 BILLION price tag. Now I don’t think socialized medicine is a good policy or is ever going to work, BUT...figures don’t lie, but liars figure. So tell me, what time frame encompasses this $15.2 billion? Is this per year, per bienium, per decade? Without a time frame and a scale it is a meaningless figure. $15.2 billion PER YEAR is intolerable, 15.2 billion every two years is painful, 15.2 billion per decade is paradise...I’ve heard this figure, I thought I read the article, but never does anyone give me a time and without that time frame we can’t judge this policy. Without it we are no better than the likes of Pelosi and Murtha.
It will take time to collapse under its own weight.
And I wouldn’t be surprised if Congress finds a way to slide them some relief in their program via Medicare or some other such connection, artificially delaying its failure.
They just have keep it on life support for 3-4 years and pretend it works. By then, the Democrats will have a run at it on a federal level and use it as an example of how good it can be.
But in general I love State-level experiments. Democrats seem to hate them. They have a tougher time double talking the negative consequences when you can compare and contrast States. Because, as we know, no Democrat plans have any negative consequences. I’d wouldn’t mind their ’programs’ as much if they could acknowledge the negative consequences of their plans and admit they may even fail and need to be reversed.
...or $3 billion more than the state currently collects in all income, sales and corporate income taxes."
Those sorts of numbers are usually quoted on a per tax year basis.
hate to sound Erb-like, but this number is being bruited about by the plan’s OPPONENT’S, so I really don’t care to "assume" anything. I don’t mean that as an attack, but rather to say that the Truth has always been a powerful tool and I’d like to keep using it. And without a time frame we have no real truth...McQ your house is going to cost 200,000-plus dollars, can you afford it? Well, No if they want it all today, yes if they want it spread out over 360 house payments.
Again, nothing personal but if anyone has the timeframe would they kick it out? I assume it’s for one year but then again it may not be.
I find it almost INCONCEIVABLE (and I think I know what it means) that anyone could support a program that was going to cost more that the entire state budget! Hey dear let’s buy a house, the payment for which will exceed the total current household budget by 20%, the house payment will be 120% of the current household budget....But that’s me.
Oh BTW, the bill isn’t likely to prosper, because well the Assembly is Republican controlled. So this is more like a hobby horse we like to pull out and scare folks with than a plan that is going into effect any time soon. This is one of those counter-plans that Opposition parties create that will make the majority "look bad" by defeating, not really a serious proposal, IMO.
Joe is right - the plan has not passed the full legislature yet, only the Senate. From the WSJ article:
The last line of defense against this plan are the Republicans who run the Wisconsin House. So far they’ve been unified and they recently voted the Senate plan down. Democrats are now planning to take their ideas to the voters in legislative races next year, and that’s a debate Wisconsinites should look forward to. At least Wisconsin Democrats are admitting how much it will cost Americans to pay for government-run health care. Would that Washington Democrats were as forthright.
This article also says:
It represents an average of $510 a month in higher taxes for every Wisconsin worker.
Assuming that figure is correct, that’s probably more than the average worker pays now for health insurance per month per family in WI.
Now if only somebody could interest one or more of the states in doing something that might actually bring the cost of healthcare down.
In my state a LOCAL government saw a 20-30$ DECREASE in health care costs for its employees, by adopting HSA’s and Health Insurance. They were very proud of that accomplishment...you just have to look around and you’d be surprised what you find out there. Gub’mint isn’t always a’rais’n yore taxes, wastn’n yore money an’ kill’n l’il boys fish’n wit their Gran-Pa’s.
That should be a 20-30% decrease in rates....not $....the government was experiencing double digit GROWTH in healthcare costs, prior to this. They then made the decision to contribute the average savings to the employer portion of the HSA, a win-win if you ask me. Lower costs, and more money actually available for the workers.
Good government and prudentential policies are very possible in this realm, the fact was the government was "backed into a corner." It needed to provide healthcare, but it couldn’t raise taxes, so it innovated. Right now WI and the US governments are quite there yet. Both think that if we just raise SOME taxes a "little" we can get what we want. They aren’t being forced to innovate yet, but the time may come.
Insurers typically keep around 15 and 25 percent of the premiums they collect. As noted in the CR investigation, the nation’s six biggest private health insurers collectively earned nearly $11 billion in profits in 2006.
So there you have it. Following in the footsteps of Senator Cantwell it’s health gouging by big insurance.
Another snip of Leonhardt’s NYTimes piece, re preventive care:
The actual savings are also not as large as might at first seem. Even if you don’t develop diabetes, your lifetime medical costs won’t drop to zero. You might live longer and better and yet still ultimately run up almost as big a lifetime medical bill, because you’ll eventually have other problems. That would be an undeniably better outcome, but it wouldn’t produce a financial windfall for society.
This seems particularly worth keeping in mind when politicians start bloviating about how all the "free" health care will actually lead to long-term savings as the population gets healthier and healthier. Any of us who fail to steer entirely clear of doctors until we arrive, DOA, at the ER are going to require - at least in those final, golden years - a significant serving of all the medical interventions known to man. Sooner or later, it’ll start to get pricey. From a cost-per-head perspective, treating complications of diabetes in your 7th decade isn’t any worse than treating complications of living too damn long in your 10th. And just look at all the health care you’re likely to consume in your 8th and 9th decades.
Ultimately we’re just going to have to ship the old and infirm up to Canada.
I’m with AMR on this one, being a resident of WI. Not that it means much, but it surely doesn’t make me happy to hear everyone say "Go for it, WI!" when I’m going to be one of the schlubs paying for this mess that won’t actually cause any lessons to be learned when it goes belly up
You must suffer so the rest of us can be done with this stupidity.
One way to look at this is as "Federalism at its finest". You know, the 50 laboratories of the states and all that. Unfortunately, even after each and every one of these socialist experiments fail the left will still claim that they just weren’t funded well enough.