Looking for Excuses on 'Hospital Tax' - WMC Blows It

The Capital Times took a look at the continuing Assembly opposition to the 'hospital tax' on Wednesday. The intrigue requires a scorecard, a calendar and a referee.  Here is the quick and dirty:

• February, 2007 word gets out that Governor Doyle is contemplating a 'hospital tax.'
• In the spring the 'hospital tax' is proposed. It will make Wisconsin eligible for an additional $420 million of federal dollars.
• Wisconsin Manufacturers and Commerce (WMC) immediately opposes the measure.
• Wisconsin Hospital Association (WHA) also opposes the measure but was prepared to support the measure if assurances were sufficient that funds would be used for health, not general purpose revenues.
• By fall a number of health care providers which probably includes Humana, Aurora, and Meriter support the measure.
• In October WHA supports the measure.
• By winter, WMC changes to neutral.
• March 6, 2008, the health care providers having taken the day, WMC now supports the proposal.
• April: Governor Doyle indicates that the 'hospital tax' should be part of the budget repair bill.
• May: Budget repair bill is adopted, Republicans in Assembly continue their opposition despite the support from WMC and WHA.

May 21, 2008:  The blame game as reported in The Capital Times:Assembly GOP says no to hospital tax. It is noted that:

• Doyle hadn't even announced the details of the plan in February of 2007 when Donna Sollenberger, former CEO of UW Hospital and Clinics who was on the board of the Hospital Association at the time, announced, "Ultimately, what you're saying is you're going to tax sick people."

  It was a rhetorical shot that took on a life of its own, published in the group's newsletter and then adopted by the state's largest business lobby, Wisconsin Manufacturers and Commerce. (emphasis added)

• In October the Hospital Association changed course. And Wisconsin Manufacturers and Commerce, which as a rule fiercely opposes any taxes, came out in favor of the hospital tax this past March.

  "It's a very unusual instance where we come out on that side of the tax issue," said WMC spokesman Jim Pugh.

• "By the time they had it figured out," he said, "they had the Assembly Republicans sitting out on the end of the branch and they were sawing it off."

  Eric Borgerding, senior vice president of the Hospital Association and a lobbyist for the group, bristles at the suggestion that the group made a mistake...But he concedes that his group's initial opposition may have had unintended consequences.

The key to all of this is that WMC and subsequently WHA saw two things - Governor Doyle and the word tax. They immediately said 'No.'

Here is what my sources tell me: In the Spring of 2007 WMC immediately responded without knowing the details and the substance of the proposal. Consequently, the backpedaling by WMC.

Throughout the chaos, it became difficult for anyone, especially for WMC to  move the extreme right wing Republicans in the Assembly, to get sufficient conservative support for the measure.

It will be a key 'wedge' issue in the fall elections and will significantly contribute to Democratic control of the Assembly. 

from The Capital Times:

Here's how the tax plan would work:

The state would levy a 0.7 percent assessment on hospital revenues, amounting to slightly more than $200 million a year. The state would use the money to increase Medicaid rates to hospitals, which hospital officials have long complained are insufficient to cover the cost of providing care. Because the federal government provides states with matching funds for Medicaid costs, federal funds would flow to the state, about $1.40 on the dollar for the hospitals, for a $150 million a year gain. The state would garner about $62 million a year in reimbursements for Medicaid expenditures.

 

Update: May 29, 2008: I tried to edit this post with strikes, but it was too cumbersome. Consequently, I have deleted sections and rewritten others after several sources filled me in on the role of the WHA.  The bottom line is this: Initially Wisconsin hospital were reticent ot support the hospital tax because the state was often using segregated funds for general purpose revenues.  They did not trust the state.  After meetings with the Doyle Administration, they were more comfortable with the proposal.  Then came the support.

Comments

[Laura C]

Very much fun to read about the idiotic knee-jerk reaction by WMC and WHA concerning the hospital tax. Thanks for the post - reminds me of the Key Stone Cops.