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Conference Report: Taxing and Spending Limits in Wisconsin
200 gather to consider methods for controlling government spending and taxing
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Increasing health-care costs pose challenge
Two conference speakers addressed health-care costs in the context of
limited government revenue.
In the short term, Wisconsin could do a better job of tapping federal funds for health-care assistance, says Thomas Hefty, former chair and chief executive officer of Cobalt Corp., and its subsidiary, Blue Cross and Blue Shield United of Wisconsin. Hefty, who has decades of experience in health care, has served on state and federal commissions that study government efficiency and delivery of medical care.
Essentially, Hefty says, Wisconsin missed the boat for taking advantage of federal funds for covering state health-care costs. “It is the missing link in terms of looking at the Wisconsin budget,” says Hefty. “And Medicaid is the biggest low-hanging fruit.”
Hefty calls for Wisconsin to model itself after Massachusetts when then-Gov. Michael Dukakis balanced the state budget while growing Medicaid and bringing in more than $500,000 million in federal aid. There is no reason Wisconsin cannot join other states in following the Massachusetts miracle, Hefty argues.
“You can have good government at the state and local level, and still win a great deal of federal money, and there are ‘blue’ states and there are ‘red’ states that achieve both,” Hefty contends.
In the long term, reducing health-care costs could be difficult. The issue is mind-boggling, says James Knickman, vice president of research and evaluation at the Robert Wood Johnson Foundation, a group that annually grants approximately $4 million for research and other activities related to health care.
“It’s no secret that health-care expenditures have been growing rapidly,” he says. “One of the interesting things about health-care costs is [that] everything seems to be going up. It’s not like one item goes up, [and] the other item doesn’t go up.”
The number and type of services that one hospital offers can be starkly different from those at another hospital, and the prices are all over the board. He explains “it’s worse than the market for mattresses, where everybody says they’ll match the lowest price on mattresses, but nobody sells the same mattress.”
In addition to hard-to-understand pricing systems, the addition of products, a desire for longer-term care, an egalitarian approach to medical treatment for poor people, and simply a desire to spend more of our money on being healthy all contribute to the huge growth in spending on health care, explains Knickman.
To better understand what can be done about these escalating costs, Knickman has done an exhaustive analysis of what happens when state budgets are cinched and medical costs reduced. In a word, a reduction in these types of services is “difficult,” he says.
Costs can be cut by reducing new quality mandates, investing in preventative care, integrating acute and long-term care, restricting supply, and pushing the middle class to pick up more of the tab, Knickman says.
“Holding down prices and quantities in both health and long-term care is feasible,” he says. “It’s very difficult and it would take a lot of effort.”
However, consequences of limiting care and making the middle class pay more would mean a decrease in eligibility for care and community-based services, and a significant reduction in care for elderly people that improves quality of life at the end of their lives, Knickman says. Ultimately, “the impacts of all of this will fall mainly on the frail and the poor.”