"Healthy Wisconsin" AKA Universal Health Care is a Destructive Health Care Proposal


By Aaron M. Rodriguez

1. Healthy Wisconsin Mandates Universal Health Care

Healthy Wisconsin On June 26th of 2007, the “Wisconsin state legislature approved a bill called Healthy Wisconsin” that would essentially mandate universal health care to all Wisconsin residents. The bill was a brainchild of democrats and passed in the State Senate with an 18 to 15 pure party-line vote. Due to republican resistance, however, it failed in the State Assembly. In the proposal, Healthy Wisconsin would provide full health care coverage to every individual considered a resident for at least 12 months - showing a “substantial presence” in the state. However, if one is “gainfully employed”, then these residency restrictions would no longer apply.

Healthy Wisconsin Provides a Lucrative Proposition for Everyone

Advocates of Healthy Wisconsin claim that by expanding health coverage, it would ultimately reduce insurance costs for consumers. This argument has a two pronged approach. The first prong claims that hospital service charges are inflated to compensate for the costs of uninsured individuals. Below is a syllogism that demonstrates how the argument is supposed to work; the conclusion is in bold.

1. The poor and uninsured cannot afford to pay all of their medical bills.

2. Their medical debt is transferred to medical facilities that are not fully reimbursed for the expenses.

3. In order to compensate, medical facilities pass on their expenses to insurance companies in the form of higher service charges.

4. Insurance companies absorb the charges and then transfer the costs back to the insured through increased insurance premiums.

5. Thus, high insurance premiums are the result of uninsured individuals.

6. Therefore, ensuring that all people have health care insurance will reduce overall insurance costs.


For all intents and purposes, premises 1-4 are adequate. Premise 5 is somewhat dubious, but is not a serious concern. The conclusion, however, is a non-sequitur.

health care professionals Proponents argue that insuring all individuals will reduce hospital service charges, and this will ultimately reduce health care costs for the consumer. However, this proposition is false. There are no reduced costs in a universal health care system, just rearranged costs. Instead of paying for the uninsured through inflated hospital charges and thus higher insurance premiums, we’ll pay for the uninsured through increased taxes. And more importantly, there is nothing that ensures that hospitals would pass along their savings to the insured. In an ideal world, if hospitals don't soak up un-reimbursed costs, then they'll pass along those savings to us. However, this is not an ideal world, and there is no good reason to assume that hospitals will be charitable with their savings. If they don’t pass along their savings when Health Wisconsin is passed, taxpayers will essentially pay for the uninsured twice, once through high hospital service charges and the other through increased taxation.

The second prong of the argument is that Healthy Wisconsin will save taxpayers nearly $13 billion over the next 10 years by outlawing private insurance companies. By doing this, buyers will not have to pay higher premiums that support high administrative overhead and excessive profiteering. However, it is not uncommon for government programs to overestimate their savings and underestimate their costs. As Mr. Tanner stated in his testimony,

In 1967, the House Ways and Means Committee predicted that Medicare would cost $12 billion in 1990. In reality, the program cost over $110 billion that year.53 In 1987, Congress estimated that the Medicaid Special Hospitals Subsidy would reach $100 million in 1992. The actual cost exceeded $11 billion.54 Should something similar happen with Healthy Wisconsin, rationing will be almost inevitable.

An Infrastructural Red Flag with Healthy Wisconsin

If codified, the bill “Healthy Wisconsin” will create a regulatory body called “Healthy Wisconsin Authority” (HWA), which is authorized by the state to “establish and administer” the program. Technically, HWA would not be a state agency, and the members of the board would not be state employees. This allows HWA the freedom to operate outside the budgetary and statutory restrictions typically imposed on state employees.

According to the bill, board members of HWA will be selected from a pool of labor unions and business organizations. And although it is required that at least five members are selected from state labor unions, none of them are required to be health care professionals. This is a major flaw. If the board is charged with the authority to determine “medically appropriate” care, then there exists a possibility that union representatives and business executives could overrule medical experts on important treatment plans.

Furthermore, the extent and span of HWA’s power is a bit troubling. The bill grants the board the power to determine what medical facilities can or cannot be covered, the power to set limits on how much health care providers can charge for their services, and the power to raise income taxes in order to cover anticipated costs. The most troubling outcrop of the legislation is the mandate to join Health Wisconsin’s program. This would place more limits on the power of choice in the health care industry while displacing those who were already satisfied with their coverage.

Loopholes in Healthy Wisconsin

As one would expect, every government program has loopholes. Figuratively speaking, Healthy Wisconsin would look something like Swiss cheese.

By providing coverage for the “immediate” family members of the “gainfully employed,” Healthy Wisconsin opens the door for serious taxpayer abuse. Theoretically, Joe Blow from Louisiana could move to Wisconsin and secure a job at McDonalds. Once gainfully employed, his entire immediate family still living in Louisiana would attain health coverage on Wisconsin’s dime. This would occur because the bill fails to address any residency requirements.

In a similar vein, pregnant Penny who moved to Wisconsin from Wyoming could secure health care coverage for her entire immediate family on the basis of her parturiency. Remember, Healthy Wisconsin does not require her to be “gainfully employed” if she is parturient. Each of these examples manifests some serious flaws with Healthy Wisconsin – flaws that are likely to make Wisconsin into an electro-magnet for the nation’s tired, poor and the sick.

Jack Lohman's Counterpoint

In an article for the Business Times, a proponent for Healthy Wisconsin named Jack Lohman stated

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.

A Rebuttal to Jack Lohman's Counterpoint

Besides the somewhat blatant over-simplification, there are a few problems with his reasoning. First, Loman’s statement that relocating would be foolish implies that Medicaid and Healthy Wisconsin are comparable health programs. They are not. Medicaid does not measure up to Healthy Wisconsin in terms of medical access, candidacy, or overall breadth of coverage.

Let’s deal with the issue of medical access first. Since Healthy Wisconsin would mandate participation from all Wisconsinites, it would be the only game in town. This would force medical facilities either to accept their recipients or receive no revenue. Medicaid, however, is a different story. According to a 2006 report by the Center for Studying Health System Change, nearly 50% of all doctors polled had stopped accepting or have limited the number of visitations from new Medicaid patients . Of those physicians, 84% of them stated it was due to inadequate reimbursement, 70% because of cumbersome paperwork, and 64% due to delayed reimbursement.

It would appear that Medicaid patients wouldn’t have the same level of access to physicians as Healthy Wisconsin would, thus providing an incentive for Medicaid recipients to envy Healthy Wisconsin.

Concerning candidacy, Healthy Wisconsin is much more inclusive than Medicaid. This means that those who cannot qualify for Medicaid would generally qualify for Healthy Wisconsin. Varying by the type of neediness, Medicaid will not cover most individuals that have a monthly income greater than $2,000, nor will it cover those (except seniors) who are without some sort of disability or “special needs.” This leaves a sizable demographic without Medicaid – a demographic that just happens to be eligible for Healthy Wisconsin.

Concerning breath of coverage, Medicaid has a history of rationing their care in order to control spiraling costs. This is especially evident with access to prescription drugs. The Center for Studying Health System Change found that 26% of Medicaid recipients could not afford prescription drugs due to costs, whereas only 8% could not afford prescription drugs with employer-based coverage. However, Healthy Wisconsin’s approach is on the cheap – charging only $5 for generic drugs and $15 for brand name drugs. Thus, Healthy Wisconsin would provide more medical access and greater prescription coverage than Medicaid.

And finally, Mr. Lohman is grossly misinformed if he thinks that Wisconsin will not become a magnet for poor immigrants. Currently, Medicaid will not cover “illegal” immigrants since it requires a social security number for enrollment. And if immigrants become naturalized citizens, they cannot receive Medicaid coverage until they acquire at least 5 years of residency. Healthy Wisconsin does not bar non-citizens from eligibility, nor does it require a set length of residency. Thus, Wisconsin would offer free health care to those who are in the country illegally.

To put the problem into a better context, new immigrants add about 2.3 million people to the United States each year, which is equivalent to the city of Chicago. It would be unreasonable and unjustifiable to assume that immigrants, who have historically demonstrated a tendency to migrate toward available work, will not also migrate toward free health care.

Final Thoughts on Healthy Wisconsin

Healthy Wisconsin has been billed as a business generator and a great cost saver, but the numbers don’t add up. The program will create about 13,000 state jobs, all of which translate into wages, benefits, and pensions. The program’s estimated cost is nearly 15.2 billion dollars, which would represent a 23% increase in state spending during a time when Wisconsin has a record state deficit and the nation is experiencing an economic recession. Furthermore, the loopholes that provide free health care coverage to illegal immigrants, the unemployed, and out of state family members are easily sufficient to offset any imagined savings when Healthy Wisconsin was initially created.

Undoubtedly, the most concerning problem of the program is the blank check written to the HWA to determine what is in the best health interests of Wisconsin residents . The board of HWA would be empowered by the state to add or remove benefits from the program for the purposes of cost reduction, risk management, and outcome oversight. As Michael Tanner aptly pointed out in his testimony, this would open the door for special interest groups to include their medical specialties within the program. Furthermore, if the board so desired, it has the authority to reduce or entirely eliminate deductibles or co-payments for certain groups, which would drive up costs even further. In sum, individuals with no health care expertise would be authorized to determine “medically appropriate” care for Wisconsin.

And finally, about 40% of Wisconsin’s small businesses do not offer health care insurance to their employees – they simply cannot afford to. By requiring all employers to pay a 10.5% payroll tax in order to cover the costs of health care, it would significantly hurt, close down, or drive out small businesses. Although the intent of the program is noble, Healthy Wisconsin would lure in the needy while driving out the productive. The America needs health care reform, not universal health care.

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