By Tom Still

MADISON – Here’s a sobering fact about two of the largest health-care programs in Wisconsin, both of which have federal roots: Wisconsin gets the short end of the thermometer on Medicaid and Medicare when it comes to federal payback rates. And because that’s true, state residents pay more to make up the difference.

Gov. Jim Doyle and the Legislature must confront that reality in the 2007-2009 state budget debate, or risk seeing fewer state dollars available for most other programs – including education, economic development, aid to local governments and more.

Health-care executives and business leaders who met last week at a Madison hospital spoke with some urgency about costs and reimbursement rates for Medicare and Medicaid in Wisconsin. The consensus was that low federal payments (Wisconsin ranks about 45th among the 50 states in both categories) combined with high state costs (we’re indefensibly among the top five states in Medicaid expenses) is shifting costs to everyone who’s not covered by Medicare and Medicaid.

That is increasing pressure on the state budget, which has tried to cover more people through state-based health and drug programs such as BadgerCare and SeniorCare. But as medical providers continue to get paid less by the federal government for services for the poor (Medicaid) and the elderly and disabled (Medicare), the state’s efforts serve in large part as substitutions for federal dollars.

Hospitals and clinics also do what they can to close the gap, but their executives are worried about a tripling in “uncompensated care” – or medical care delivered for free or nearly so – in about six years. Who pays? We all do, eventually, through higher health premiums, higher taxes or both. And it’s hurting our economic competitiveness because it adds to the cost of Wisconsin goods and services.

In part, Wisconsin is its own enemy. For reasons that are hard to understand, Wisconsin maintains a Cadillac Medicaid program with Hyundai payback rates from the feds.
When it comes to Medicare, Wisconsin’s low payments are mostly a result of the state’s tradition of delivering high-quality care for less. In the early 1980s, Wisconsin’s lower-than-average costs were used to justify lower payment rates. Some 20 years later, those payment rates no longer fairly reflect the marketplace. In effect, Wisconsin is being penalized for the lower health care costs that it had more than two decades ago.

There are three parts to Wisconsin’s problem. First, Wisconsin doesn’t receive its fair share of federal spending compared to our federal tax dollars. Our hospitals, home health providers and other health care providers receive less Medicare reimbursement than other states.

Second, lower Medicare rates in Wisconsin make this state less attractive for Medicare HMOs. Without Medicare HMOs, our elderly and disabled must bear high out-of-pockets costs such as prescription drugs.

Third, the absence of Medicare HMOs means the state’s Medicaid program must cover tens of thousands of recipients who are eligible for both Medicaid and Medicare. That costs the Wisconsin taxpayers millions of dollars a year.

The state could sit back and wait for President Bush and the new Democratic-controlled Congress to reform health-care financing and access in the United States, but few are willing to bet on it. Americans don’t like standing in lines or waiting in doctor’s offices, so the idea of a Canadian-style health care system is almost a non-starter.

The Holy Grail of a “national” health care system is also out of reach because it ignores major regional differences in health-care needs and priorities. What’s needed most in Wisconsin may not be best solution in Florida or Arizona, for example.

Many health-care experts have come to believe that state-based reforms, not changes implemented first in Washington, D.C., hold the most promise. Given the nation’s 220-year tradition of federalism and “state’s rights,” the notion of experimenting first at the state level makes sense. In a bygone era, Wisconsin was the birthplace of workers’ compensation and unemployment compensation. More recently, it was the cradle of welfare reform. Why not health-care reform?

A handful health-care plans are already on the table in Madison. While each plan may have its flaws, pieces of each may merit study by Doyle and the Legislature. They can wait for the Washington Godot, or act reasonably now through pilot projects and other experiments. There’s no advantage in waiting: The state budget may not survive it.
Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.