What We Know About the Wisconsin Health Plan

By Scott Niederjohn, Ph.D.

The release of an actuarial analysis of the Wisconsin Health Plan this past week has generated as many questions as answers.  The number of variables in the plan, in addition to the number of revisions the plan has gone through (five at last count), has made the process of parsing the numbers surrounding the plan daunting.  Throw into the mix changes in assumptions and details of the various plans and the problem becomes even more challenging. 

While the analysis and debate will continue in the coming months, it is unlikely the consensus will from around the Wisconsin Health Plan.  Last week the WPRI offered a critical analysis of this plan.   Earlier in the year we also did a review of an earlier version of the plan.

We are no fans of this big government style of health care reform.  However, rather than taking our word for it, here is a list of findings about the WHP from the Lewin Group, the actuary that performed an analysis for the plan's authors:  

• The WHP would nearly eliminate the uninsured population in Wisconsin.
• The cost of the original WHP proposal exceeded revenues by about $3.6 billion per year.
• In order to balance the WHP budget, the payroll tax on employees was increased from 2% to 3.95%.  The tax on employer payrolls was changed from a graduated scale beginning at 3% of wages to a fixed 11.55% tax on all wages.
• Wisconsin payrolls will not keep pace with health care spending.  Because of this, the payroll tax will have to be increased on employees and employers every year.  The Lewin Group estimates that these taxes will reach 4.62% and 13.51% by 2017.
• State and local governments would save $1.1 billion on their health insurance costs under this plan.  The net savings to state and local governments would be $267 million after tax cuts.
• Private employer’s that do not currently provide health insurance would see costs increase by $1.1 billion under this plan.  Currently insuring employers would see a savings of about $24 per worker, or $44 million in total.
• Increased employer costs would result in a loss of between 3,200 and 8,100 minimum wage jobs.
• Spending on health care would rise by $171 per family.
• Families with incomes below $50,000 would see net reductions in family health spending.
• Families making more than $50,000 per year would see an increase in health spending.  For example, families that make between $75,000 and $99,999 per year would see average increase of $1,260 per year in their health care costs.
• The WHP would have a minimal effect on controlling health care costs in Wisconsin.  It is expected that health care spending growth, under the WHP, would slow from 6.5% per year to 6.0% per year.  This would yield a 2.9% savings over the 2007 to 2017 period.

As this list makes clear, the Wisconsin Health Plan would create many winners and losers.  Clear winners are the uninsured and government.  Government would see a massive reduction in their health care costs.  Losers appear to be private employers who would see an increase in their health care spending as would the average Wisconsin family.  Further, it seems likely that many the plan is trying to help might be hurt by the large reduction in low-wage jobs this plan would eliminate.  Armed with this information, Wisconsin citizens and policy makers are left to make their own judgments about the value of this proposal.