Date:               March 10, 2008

To:                  Members of the Senate Health, Human Services, Insurance and Job Creation Committee

From:              Mark Block, Americans for Prosperity-WI Director 

Re:                  Senate Bill 562 

Americans for Prosperity (AFP) is a free-market grassroots organization that advocates for public policies which champion the principles of fiscal and regulatory restraint.  Americans for Prosperity strongly opposes Senate Bill 562 (SB 562) - government run health care. 

SB 562, or the Healthy Wisconsin Plan, does not take a market-driven, consumer-based approach to health care reform – it mandates coverage for all Wisconsinites; it does not address the current systemic drivers of high health care costs, such as waste and redundancies; and it proposes an exorbitant $15.2 billion tax increase.

This is the wrong direction for Wisconsin.  Another tax increase will further discourage employers from locating here and/or creating high paying jobs.  Tax increases translate into job losses - families, businesses and capital leaving the state. Furthermore, creating a new payroll tax will not likely keep pace with rising health care costs.  Health care costs have been increasing much more rapidly than payrolls. This will create enormous pressure in the future to either raise taxes again, or try to solve the health care crisis again.  According to the Wisconsin Policy Research Institute, when tax revenue does not keep pace with the quantity of health care that people demand when it’s provided for them at no direct cost, shortages result, and governments develop rules and policies to allocate and ration health care services.  Although Healthy Wisconsin does not propose creating state sponsored clinics, doctors, etc., the plan will have the same effect from a tax perspective, risking rationing in the long run. AFP believes that government agree to market-driven approaches to health care delivery by adopting the federal provisions that allow citizens to deduct state income contributions from taxes used for Health Savings Accounts (HSAs); transparency in cost and quality of services; and supporting wellness initiatives in the workplace.

Health Savings Accounts

HSAs are a unique form of health insurance that combine high deductible health insurance plans with a healthcare savings vehicle, the HSA – a first step toward market reform in the health care arena.  Dollars in an HSA can be used to cover a patient’s out-of-pocket medical expenses, including costs not covered by an insurer, extended coverage, or other expenses. The hallmark of HSAs is that both contributions to the savings account and expenses paid out of the health savings account are 100% tax-deductible against one’s federal income tax liability.  Individuals own HSAs thus creating the opportunity to accumulate personal savings for healthcare over the course of one’s life.   HSAs are more flexible than traditional health insurance plans because the individual maintains control over how HSA dollars are spent.  This flexibility provides individuals with more control and customizable care to suit their healthcare needs, which has earned HSA plans the nickname of “consumer-driven healthcare.” Under traditional insurance plans, patients rarely observe the true costs of healthcare because they pay, at most, very small co-pays, thus encouraging overuse. HSA users are more closely connected with the costs of their care, making users more cautious about their healthcare consumption.

Transparency

Transparency is the key component to market- driven health care reform.  The purpose of transparency is to help patients make informed decisions and control costs, introduce a system for providers and insurers to reward efficiency and quality, enable providers to benchmark their performance (cost and quality), provide information necessary for a competitive/market based system in health care, and provide cost standards which help develop trust between patients and providers. Critical factors that should be made transparent include the total cost of caring for a condition, the costs of particular health care services, the risks of treatment and illnesses, and the quality record of care and performance provided by doctors and medical facilities.

Wellness

Another part of consumer driven health care is creating a culture of wellness by advocating for models of consumer driven health care plans that emphasize personal responsibility and prevention. Consumer-based plans can lower family health care costs, while encouraging individuals to pursue healthier lifestyles and become more savvy users of healthcare services. Consumer-based approaches to health care will change the role of employers in the health care system. Currently, the employer’s role in most health care situations is to cope with paying the rising costs of insurance.  In a more market-based health care system, employers will be encouraged to control costs by becoming proactive in promoting the health and well-being of its employees. We need to provide everyone in Wisconsin tools to become critical consumers of health care services.  Wisconsinites are intelligent investors and consumers, making complex decisions in their daily lives and completely able to do the same in the health care arena, given the opportunity.