Reg's Blog

Senior and Post-Acute Healthcare News and Topics

Wisconsin’s Newest Triple Tax

Yesterday, Governor Jim Doyle signed AB 75 (now Act 28) otherwise known as the Wisconsin Budget Bill, inclusive of 81 vetoes unlikely to be overridden in the Assembly.  Amid fanfare and small accolades for passing “on time” (today is the deadline) a new budget, is the harsh reality that this budget kicks off a new era in Wisconsin tax policy.  For the first time in Wisconsin’s history, residents will experience a triple taxation in the form of  their healthcare and of course, the inevitable result of higher healthcare costs.  Wisconsin to date was not widely known as a “low cost” healthcare state and thanks to this budget, will keep that “booby” prize designation for some time to come.

If per chance, you have read my other posts regarding the Medicaid shell game that is perpetrated during budget preparations, you will have an inkling as to how Wisconsin tax payers and healthcare consumers just got triple shafted by this budget.  In the final analysis and “budget”, the gouging occurred in plain sight and to my dismay, without too much opposition from consumers, providers, or politicians.  In plain language, here is what just occurred.

  • Under the guise of capturing additional Federal matching dollars, the budget jacks-up the nursing home bed tax from $75 to $150 immediately (tomorrow) and then again, by another $20 next year.   Unless you believe in Peter Pan, the Tooth Fairy and the Easter Bunny (Santa Claus is off limits of course), you know that this tax will be passed on to residents capable of paying privately for their room and board.  As the tax occurs on every licensed bed, providers with the greatest census comprised of private paying residents will feel a disproportionate share of this tax “pain” as they are forced to pass it along to their residents and the resulting Medicaid rate increase of 2% will fall woefully short of making up the “paid in” difference versus the “receipt” difference via the rate increase.  Conclusion: Nursing home residents see their costs go up and providers see their costs go up – strike one.
  • Nursing homes in this budget are not alone as hospitals now fall under the spell of the “shell game”.  With this budget, hospitals now will pay a “revenue” based tax, again under the guise of attracting Federal matching dollars to bolster Medicaid reimbursement.  Similar to the repeat dilemma that nursing homes experience, hospitals will quickly realize that the tax that they pay in plus the added Federal match doesn’t quite translate dollar for dollar into reimbursement improvement.  In actuality, the sleight of hand legislature and the Governor will “sift” a few million here and there from this new “pot”, moving it hither and yonder to balance other “bloated and unfunded” elements of the State budget.  And of course, like in the nursing home scenario, hospitals will pass this tax on to their paying customers thereby inflating the costs of hospital based healthcare for each and every resident in Wisconsin that carries insurance or pays for their care privately. Conclusion: Hospital care just got more expensive and that expense will be passed on via insurance rates and costs of care to anyone who can afford to pay – strike two.
  • The final leg of the tripartite tax stool is perhaps the toughest to understand for most people and the least direct.  This leg is the Federal stimulus and matching funds leg that is referenced as the source to be tapped via raising the nursing home bed tax and creating the new hospital tax.  Simply stated, to understand this leg is to understand that Washington and the Feds have no money that did not already come in the form of taxes paid.  In other words, the money being used to match the nursing home and hospital taxes is taxes already paid by individuals and business in Wisconsin.  The cruel irony is that we will be paying new taxes for nursing home beds and hospital care that will be used to return taxes already paid and in exchange, receive the reward of higher cost healthcare.  Even more bizarre is the fact that the taxes once paid to the Feds and theoretically returned via a match with the new healthcare taxes, will be skimmed by the Legislature and Governor for uses other than for which they were taken in the first place; clearly not for lowering the cost of healthcare.  Conclusion: The Feds never had any new source of money and never will save the taxes already paid by taxpayers – strike three.

I leave you with a simple economic lesson tied directly to this subject – Governments are not sources of money, people and businesses are sources of money and ultimately, people are truly the only source.  In a climate where healthcare is already too expensive and the economy is lack-luster at best, raising taxes via healthcare in any fashion to theoretically redistribute dollars from another source is simply bad economic policy.  There is absolutely no chance in this scheme for the healthcare consumer or for providers for that matter, to come out ahead and sadly, their loss will come at the expense of all tax paying citizens and businesses in the State.

June 30, 2009 - Posted by | Policy and Politics - Wisconsin | , , , , ,

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