Progressive Thinking

The U.S. has the least efficient health care system among 11 developed nations, and solutions to this problem are not being developed in Washington. Wisconsin used to blaze new trails as a model for the nation to copy. Time to return to our pioneering roots.

ALTOONA, WI - What passes for a debate on Capitol Hill over the future of health care in America shows how very far we have to travel to reach the destination of civilized medicine in this country.

Those currently in charge of Congress have a vision of the future that involves making health insurance far more expensive for those who need it most and leaving tens of millions more people uninsured. Their vision also would let states take away protections for people with pre-existing medical conditions, meaning that more than 50 million Americans could be put in the dismal position of only being able to buy insurance that doesn’t cover the care they actually need.

President Trump and congressional Republicans desperately want to repeal and replace the Affordable Care Act, more commonly known as Obamacare. That law erred on the side of getting more people insured and requiring insurance to cover the health conditions people have, but in doing so the goal of keeping insurance premiums affordable is made next to impossible to achieve over the long haul. What Trump pushed and House Republicans passed errs on the side of lowering premiums for most people in the long run, but does so by jacking up costs for the sickest among us and taking insurance coverage away from large numbers of people.

Neither approach does anything about the biggest single failing of the U.S. health care system. Health care administrative costs in America are twice as high as the global average. Compared to the rest of the world, more of our health care dollars pay for paperwork and less of the spending goes for patient care. That’s because we have a multi-payer system that forces health care providers to submit claims for payment to dozens and dozens of different insurance companies. That means dozens and dozens of different forms to fill out. And dozens and dozens of different systems to navigate and different procedures to follow to get medical treatment paid for.

This is why the U.S. has the least efficient health care system among 11 developed nations. Solutions to this problem are not being developed in Washington. The problem is not even being discussed on Capitol Hill. Neither party’s favored approach addresses it.

That being the case, answers need to come from outside of Washington. It’s been a while since Wisconsin blazed new trails and made itself a model for the nation to copy, but there’s no more urgent need than health care system innovation to inspire Wisconsin to return to its pioneering roots. We have a program in Wisconsin called BadgerCare that provides coverage to low-income people. It should be Wisconsin’s goal to make everyone in the state eligible to enroll in BadgerCare. No one would be required to enroll, but everyone should be eligible. BadgerCare should be there for all Badgers.

For starters, Wisconsin should put the single-payer BadgerCare plan on the state’s insurance exchange. Offer people looking for medical coverage a public option in this marketplace that now only offers private insurance plans. Let anyone and everyone buy into BadgerCare. Show the nation an alternative to the multi-payer monstrosity that produces administrative costs that are double what the rest of the world pays and leaves America with the stigma of having the least efficient and most costly health care system among developed countries.

Lead the way, Wisconsin.

— Mike McCabe

Constituents show up to talk about health care and other issues with the person elected to represent them. He didn't show up to listen.

GREEN BAY - About a hundred constituents showed up last night at the Brown County Central Library last night to share their concerns with their new Congressman Mike Gallagher. He didn't show up to listen.

Granted, the "Town Hall" listening session had been organized by local liberal and Democratic advocacy groups, but did that make them any less his constituents? Gallagher had been elected last fall to represent the 8th Congressional District and all the people who live in it.

I had the "good fortune" to be on a stage in 2009 with then Congressman Steve Kagen as he fielded questions from Tea Party advocates about the bill that would become ObamaCare. It was not very pleasant. But he hung in there, and answered every question as best he could. He was elected to represent them too.

Many Republican elected officials today seem to prefer hiding out from their constituents, "speaking" only to them on FaceBook, on telephone conference calls, or at pre-arranged campaign stops at friendly venues. They screen all questions, and answer only those they select. They certainly don't dare to meet all the people they represent face to face.

According to news reports, health care coverage and the American Health Care Act (AHCA), a Republican bill to replace the Affordable Care Act, was the topic most wanted to discuss. Gallagher had supported the bill during a House vote earlier this month. A line of area residents presented their personal concerns, told stories about children with pre-existing conditions, told their fears about losing their health care, and fears about rising costs. An empty chair sat on the stage where their "representative" was supposed to listen.

Some critics called it political theatre. But that's the easy political cop out. So was Gallagher's "out of town on business" excuse. If people cannot talk to their representatives, who do they represent?

It appears many in Washington today, and not just Republicans, represent only the industries and businesses who pay their bills. Gallagher is just joining the long line.

That's not what our "representative form of government" was supposed to be about.

Sen. Kathleen Vinehout writes about a public hearing before a committee, of which she is a member, on a bill to eliminate the personal property tax. What will be the financial impact of the proposed change, who pays more, and what goods and services do we do without?

ALMA, WI - “Taxes are what we pay for a civilized society,” Supreme Court Justice Oliver Wendell Holmes said ninety years ago.

Taxes pay for much of the goods and services we take for granted, such as roads, fire and police protection, consumer protections, schools, parks, and our social safety net. Taxes make up the largest part of the revenue in our state budget.

Taxes are a part of our daily lives, through the money we pay in sales tax or a deduction in our paycheck for income tax. Once a year, property owners send in a check to their local government for property taxes on their homes and farms.

Property tax is probably the most unpopular tax. A subset of this tax, the personal property tax, came under fire at the recent Senate committee hearing.

“When the tax bill came, I always viewed this tax as a penalty.” Quentin Schultz of River Falls told our committee. He joined dozens of business owners who traveled to Madison with hopes of getting rid of the personal property tax.

About three percent of the property tax paid is for things that are not land or buildings. Our committee heard from a diverse group of businesses who asked for things such as the equipment to bake bread or their ski lifts at a ski resort to not be taxed.

Over the years, business groups advocated for loopholes or “exemptions” to the personal property tax. In a January 2017 paper, the nonpartisan Legislative Fiscal Bureau (LFB) listed 18 pages of “exemptions” to the personal property tax. The list includes many common items from A to Y: from animals to youth hockey.

Business owners at the committee hearing gave many examples of how difficult it was for them to know what was and was not taxed, and how expensive the tax was for them to keep records. Many complained the tax on them was unfair, calling it a “bad” tax.

But is there ever a “good” tax?

To answer this question, I turned to the teachings of many economists I learned from over the years. Recognizing that all taxes have negative effects, a “good” tax is broad-based - it affects everybody. It has a low rate and does not have loopholes. When a tax is broad-based and has a low rate, everyone pays something but no one pays too much.

A “good” tax is easy for taxpayers to comply with and easy to collect. Finally, a “good” tax causes little change in normal economic activity. The personal property tax fails this standard on many levels.

Lawmakers following the wisdom of “good” tax policy would choose a reform that gets us closer to these standards. To be revenue neutral, any lowering of the state’s revenue should be made up somewhere else.

The “somewhere else” or how the lost revenue would be made up was never discussed in the committee hearing. The cost of this personal property tax change would be about $520 million. For comparison, that is about that same amount the Governor put in his budget as a “per student” increase for all public schools.

Lawmakers who support eliminating the personal property tax said they planned to add state money to offset the loss to local community. They also said, without that additional state money, homeowners would pay higher property taxes. Some communities would see a much higher increase in property taxes. For example, the City of Blair in Trempealeau County receives 22% of its property tax revenue from personal property taxes.

The proponents of the bill suggested the money lost to communities like Blair would be made up in more state aid. However, no one could answer my question of where this money would come from.

I applaud my colleagues who want to get rid of a “bad” tax. However, we must have an honest discussion about how we are going to pay for local services upon which people depend.

History shows us that local government bears a heavy burden to make up for cuts in state funding. Eliminating the personal property tax increases that burden. If promises to make up for the loss of revenue are not met, it will affect local programs and local taxes.

If we are going to eliminate “bad” taxes, we must consider the consequences and discuss either who pays more or what goods and services we want to do without.

Walker and the Republicans who control the legislature are pushing the biggest budgets in the history of Wisconsin, yet they have cut $800 million from the UW.

MADISON - A budget is all about priorities and Republicans and Governor Walker have made it very clear that the UW is not their priority.

Since elected, Governor Walker’s state budgets have spent nearly $282 billion dollars – over $127 billion in GPR alone. These are the biggest budgets in the history of Wisconsin, yet Governor Walker and Republicans have cut $800 million from the UW in the last few budgets.

The funds are there, but Republicans have chosen not to restore their $800 million cut.

Democrats will not agree to continue this cut to the UW because we value the UW and the economic engine it is. Wisconsin deserves better than another state budget with cuts to our UW classrooms.

Truly the great state of Wisconsin deserves a strong UW system and the educational opportunities a strong investment in our UW schools brings for our people.

The most recent LAB report again points out that WEDC does not collect the information necessary to report on the jobs promised when taxpayer dollars are used. Is our money effectively and efficiently invested?

MADISON – Our state spends a great deal of money on economic development. The Wisconsin Economic Development Corporation (WEDC) is responsible for overseeing much of the taxpayer money that goes to job creation.

A recently released audit by the nonpartisan Legislative Audit Bureau (LAB) found that “WEDC cannot be certain about the number of jobs actually created or retained as a result of any awards that ended.”

By law, WEDC is required to report jobs created or retained. The agency meets the requirement through reports posted on its website. However, auditors found these data inaccurate.

“We found that the on-line data in January of 2017 included 183 jobs created and 1,082 jobs retained by recipients that had sold their operations in Wisconsin, ceased their operations in Wisconsin, or had withdrawn from their contracts before the contractually specified completion dates.

For example, WEDC claimed credit for retaining 340 jobs for a company that ceased operations in Wisconsin; claimed credit for creating 68 jobs for another company that sold its operations in Wisconsin; and claimed 485 jobs retained for a third company that withdrew from its contract years before it was to deliver the created and retained jobs.

In addition, auditors found WEDC double counted jobs created and retained. For example, one company received awards in both June 2012 and September 2012 for the same 305 jobs created and 284 jobs retained. Another company signed two different contracts in July of 2011 but the company claimed they would retain the same 110 jobs for both awards.

Auditors also looked at 192 contract awards made since July 2011 through the end of September 2016. Presumably, at the end of a contract one would know if the promised results were achieved. Upon review of the 192 awards, LAB found only 12.5% (24) even had an expected result of job creation or retention.

Of those 24 with expected results, three of the contracts did not actually require the company to create or retain jobs; 13 contracts ended before their completion date (meaning the requirements were not fulfilled). Of the eight contracts completed, WEDC did not collect sufficient information to verify that promised jobs were created.

Without accurate information about WEDC program results, lawmakers and taxpayers cannot know if the investment in job creation and retention was money well spent.

WEDC authorized hundreds of millions in tax credits, grants and loans since its 2011 inception. The most recent audit is the third report that raises ongoing concerns about the lack of independent verification of jobs created or retained.

Some WEDC problems were corrected, such as establishing accounting policies and procedures for the agency (the lack of which was a finding in 2013). But other problems identified in prior audits continue. For example, in 2015 auditors found WEDC kept a reserve of state money larger than necessary. In the most recent audit, auditors found WEDC’s cash and investment reserves more than doubled over four years.

Prior problems with administering its loan program caused legislators to phase out any further loan activity by WEDC. In this most recent audit, the potentially uncollectable loan balance nearly tripled and auditors found a substantial rise in the loan delinquency rate.

Just days before the release of the audit, the Legislature’s budget writing committee voted, along partisan lines, to restart WEDC’s troubled loan program. The committee also voted along partisan lines to increase state taxpayer dollars going to WEDC.

Both of these actions should be stopped.

For nearly six years, Wisconsinites asked whether WEDC lived up to the promises made at its inception. The Legislative Audit Bureau continues to tell us that WEDC does not collect adequate information to provide lawmakers and citizens with accurate information on whether promises of job creation and retention were delivered

Most of WEDC’s money is state taxpayer dollars, a precious resource that is used to fund many other programs. A dollar spent on unverified job creation/retention programs means a dollar is not available for critical investments like transportation infrastructure, public schools or local government.

It is time for all of us to demand that the Governor and the WEDC Board step up and correct the ongoing problems documented in three separate audits of WEDC over the last six years. Job creation is important, but so is the most effective and efficient investment of state taxpayer dollars.

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The audit briefing sheet and full audit can be viewed online.