Wisconsin Senate OKs Record $15.2 Billion Tax Increase for Health Mandate

Published October 1, 2007

A universal health insurance mandate that relies on a $15.2 billion payroll tax for funding has passed the Wisconsin Senate.

The estimated price tag totals $3 billion more than the state currently collects in all sales, personal, and corporate income taxes. If the bill becomes law, the tax hike would be the largest in any state in the nation’s history in percentage terms.

The 18-15 vote on June 26 came less than 24 hours after the mandate bill was introduced.

The bill requires all Wisconsin residents to have health insurance. For those unable to afford a private plan, the state would offer subsidized plans funded by a payroll tax of 10.5 percent on all employers and 4 percent on all employees. The only exceptions to the mandate would be people already enrolled in government plans, such as those in military service or Medicare and Medicaid recipients.

Huge Change, Little Analysis

The legislation is a monumental change not properly analyzed, said Mike Prentiss, spokesperson for Senate Minority Leader Scott Fitzgerald (R-Juneau), who voted against the bill.

“It’s bad policy that has been poorly executed and sprung on the people of Wisconsin at the last minute,” Prentiss said, “and we think it will be disastrous for the economy and for jobs in Wisconsin, and also for health care coverage and the health care system.”

At press time, the bill was pending in a conference committee. Prentiss said he could not predict its odds of passing.

Unelected Board Oversight

A 16-member board independent from the legislature would manage the money, said Sen. Kathleen Vinehout (D-Alma), who helped write the bill. Groups such as unions, manufacturers, and small businesses would propose both employee and employer board members, and the governor would appoint them over staggered terms, she said. They would be held accountable through independently conducted audits that would be public record.

Vinehout said taxpayers must acknowledge the money they’d pay in taxes would be a substitute for what they pay now for health care. She said they’d actually save money and the cash collected would be managed by fellow residents on the board.

“The money isn’t going into the state budget,” Vinehout said. “We wanted the people whose money it was to be in charge of the plan.”

Giving money to an unelected, unaccountable board isn’t the same as letting citizens keep the money and choose whether to spend it on health care or something else, critics point out.

George Lightbourne, a senior fellow with the Wisconsin Policy Research Institute, said the board’s unbridled authority means it could independently raise taxes without requiring permission from the legislature or the governor.

Huge Power Grab

Vinehout said the board is an apolitical method of managing the money.

Greg Scandlen, president of Consumers for Health Care Choices, disagreed vehemently, calling the bill “the biggest political power grab in American history.”

The legislature would determine the validity of providers, services, and cost, Scandlen noted, and special providers such as chiropractors and midwives would lobby lawmakers to include them in the state plans–thereby raising costs through more coverage mandates.

“The power of the legislature would be like nothing anyone in America has ever seen,” Scandlen said. “It would put the legislature in charge of the entire health care system in the state.”

“Everything [in the health care system] would end up becoming a political decision,” Scandlen said.

Jillian Melchior ([email protected]) writes from Washington, DC.

For more information …

2007 Wisconsin Senate Bill 51: http://www.legis.state.wi.us/2007/data/SB-51.pdf

“Healthy Wisconsin–Your Choice, Your Plan: Cost and Coverage Impacts,” by the Lewin Group, released on June 19, 2007 by AARP Wisconsin, is available through PolicyBot™, The Heartland Institute’s free online research database. Go to http://www.policybot.org and search for document #21717.