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Money for Nothing
Wisconsin taxpayers experience the same cycle every year: their taxes go up, yet they see no change in their government services. In fact, if anything, they see the quality of government work decline.
Last week, the Wisconsin Policy Research Institute issued a report that began to shed light on why our government is crumbling before our eyes. According to the report, local governments in Wisconsin have dug a $6 billion hole by promising health benefits to retirees who no longer even work for them. In many cases unfunded retiree health care liabilities add up to tens of millions of dollars per year that must be paid or the obligations continue to balloon every year.
For instance, Milwaukee Public Schools (MPS) currently carries a $2.2 billion liability – and because they only pay 25% of their bill each year, their liability is expected to skyrocket to $4.9 billion by 2016. At that point, the annual retiree health care payment will equal 54% of the MPS payroll – leading to higher taxes or reduced services.
The WPRI report makes several important recommendations to address the impending crisis, include altering existing benefit packages to account for cost, issuing debt to fully fund the liabilities, paying the liabilities off as quickly as possible and barring elected officials from managing benefit plans in which they personally participate.
Clearly, if private businesses were hiding future costs from their shareholders in a similar fashion they’d end up prison. Yet when governments do it it elicits a shrug. We should expect a higher standard of openness from our government – since in the end, it will be the taxpayers that have to bail these local governments out.
Last year, Wisconsin Senate Democrats rammed a $15.2 billion universal government-run health care plan into the state’s budget (dubbed “Healthy Wisconsin”). As a “compromise” for pulling it out, Governor Doyle created a new program, called “BadgerCare Plus,” which would expand government health coverage to thousands. Doyle pitched the plan as “revenue neutral” – one of the many times you’ll hear that a program “pays for itself.”
Now, we’re finding out that the program didn’t quite pay for itself. In fact, due to over utilization of the plan, the tab will increase by an estimated $25 million more than Doyle expected. And given government’s proclivity to underestimate health costs, the number will go up from there.
In fact, when the initial BadgerCare program was created, the unexpected costs told the same story. In Fiscal Year 2001, the first full year of BadgerCare’s operation, the Legislature spent $129 million in all-funds revenue. By Fiscal Year 2004, merely three years later, that number had nearly doubled to $205.6 million.
Underestimating health care costs isn’t exclusively a state problem. According to Michael Tanner of the Cato Institute, in 1967, the House Ways and Means Committee predicted that Medicare would cost $12 billion in 1990. In reality, the program cost over $110 billion that year. In 1987, Congress estimated that the Medicaid Special Hospitals Subsidy would reach $100 million by 1992. The actual cost exceeded $11 billion.
This is the most significant flaw in the argument for Healthy Wisconsin – the claim that a government takeover of health care will actually keep costs down. The evidence shows that when the more government takes control, the more costs explode. "Free" health care draws people like moths to a light. And taxpayers are left to foot the bill.
A Free Lunch at the Polls
According to the Wheeler Report, voters in up to 13 municipalities and six counties will have the opportunity on election day to “advance” the legislative debate on health insurance. The question facing up to 750,000 voters will be whether the 2009 Legislature should, by December 31, 2009, “guarantee” affordable health care coverage substantially similar to that provided to legislators.
In other words, Healthy Wisconsin advocates are using tax dollars normally reserved for running elections to conduct a poll on their health plan. This is obvious, as the language used in the meaningless referendum mirrors their own talking points. The “you deserve health care as good as your legislator” talking point, meant to induce jealousy, is an oldie but goodie among the single-payer crowd.
It should come as a shock to no one when these bogus referendums pass – just as surely as if they asked questions like “do you like pizza?” or “how ‘bout some ice cream?”
An American Carol
Hollywood movie makers rarely cater to the conservative crowd, but this weekend, conservatives throughout the country can enjoy a good laugh at the expense of liberal whackos like film-maker Michael Moore.
An American Carol starts in theaters this Friday October 3rd and promises to provide conservatives with some much needed comic relief. The movie which was produced by Michael Zucker has some notable Wisconsin connections. The late Ken Hendricks and his wife Diane, owners of ABC Building Supply, Inc. in Beloit helped finance the film, and a Wisconsin native plays the character mocking Michael Moore.