Director, District 2

June 25, 2007

Chairman Erpenbach,

The United Steelworkers union, USW, is enthusiastic in its support for the Healthy Wisconsin budget amendment currently before your committee.  The USW is the largest private sector union in Wisconsin and the largest manufacturing union in North America.  Our 35,000 WI households include employees of paper mills and foundries, builders of Harley Davidson motorcycles, above ground mining equipment made by Joy Global and Bucyrus International, and workers in nursing homes, dental service providers and other portions of the health care system.

For the last ten to fifteen years, health care has been the principal cause of conflict and consternation in collective bargaining, in both public and private sector negotiations.  Years ago, we were shocked when premiums for family coverage reached $500/month.  In negotiations, companies and unions grappled with the problem and adopted new health care plan designs, raised deductibles, co-pays and, in many cases, asked employees to contribute to health care premiums for the first time.

Years later, we were shocked again when premiums reached $1000/month for family coverage.  Again, we adopted new health care plan designs, raised deductibles, co-pays and, in many cases, increased employee contributions to health care premiums.

Yet again, a few years later, we were shocked when health care premiums reached and exceeded $1500/month for family coverage.

We’ve tried HMOs, PPO’s, POS plans, exclusive network plans and virtually any other idea that came along.  But after all these years and all these attempts to control health care costs, the following conclusion is clear:  The problems with our health care system are profound and fundamental; those problems cannot be solved company by company, one round of negotiations after another.  We’ve run out of fingers to put into the dike.  We need a fundamental and comprehensive restructuring of the health care system in WI that will increase access to health care, improve quality and control costs.

Moreover, the crisis in health care affects other portions of the employment spectrum.  Many unions have negotiated options for early retirement at age 60 or 62, or after 30 years of employment.  However, as companies have dropped or abandoned retiree health care, those early retirement opportunities have vanished into dust.  Who can afford to retire at age 60 or 62 without health insurance?  One of our members in Milwaukee worked three or four years past age 65, in order to provide health care coverage for his invalid spouse, who was younger than himself.  He remarked to me that he was even losing money by working; his retirement pension from a former employer would have exceeded his wages, but he needed to continue to work until his spouse became eligible for Medicare.

How many dreams of early retirement have been shattered by the health care crisis?  How many employees have deferred retirement and worked longer than they wished, simply to maintain health insurance coverage?  How many employees have abandoned plans to retire and start their own business, whether it’s a bait shop up north or other businesses, because they couldn’t run the risk of going without insurance and couldn’t afford individual insurance at age 55 or older?

We have a great delivery system for health care in WI, at least for those who have insurance.  For those without insurance, basic health care is often put off until it can’t be put off any longer and it often occurs in the Emergency Rooms of our hospitals in WI.  I fear that the trend of ever higher deductibles and co-pays will have the same effect, with many families putting off routine and preventive care because the deductibles and co-pays put health care into the unattainable portion of the family budget.

While our delivery system is good, our system of financing health care is a patchwork of conflicting, confusing and baffling regulations, restrictions and red tape.  As others have mentioned today, there are hundreds of people involved in the insurance and health care system whose job is to transfer costs and responsibility from one group to another, or simply to deny health care reimbursement altogether.

One of the most peculiar features of our current patchwork system is a number of perverse incentives.  Rather than encouraging employers to contribute to the costs of health care for their employees, the current patchwork provides incentives to figure out how to make someone else responsible for your employee’s health care costs.  For some employers, it may mean pushing people into Badger Care.  Some employers have thrown up their hands and have gotten out of the “health care business” altogether.  Yet their employees and their families continue to have health care needs.

The responsible employers, who provide affordable insurance for their employees and their families, whether through collective bargaining or their commitment to the community, in essence, subsidize those employers who do not provide health care insurance to their employees.  In some cases, the responsible employer may be subsidizing their own competitors.

The Healthy Wisconsin plan seeks to correct those incentives for perverse and counter-productive behavior.  The Healthy Wisconsin plan will ensure that everyone contributes their fair share towards the cost of health care.  At the same time, the Healthy Wisconsin plan will ensure that large and small employers both can benefit from the economies of scale that the Healthy Wisconsin plan will deliver.

We applaud the leadership of the Senate Democrats in crafting this plan.  And contrary to some of the opponents, this is not a “fly-by-night” scheme cooked up at the last minute.  At the risk of dating myself, you may recall the logic of Ronald Reagan’s tax cuts, which were justified by the Laffer curve, drawn on a cocktail napkin.  This plan ain’t drawn up on a cocktail napkin. 

The Healthy Wisconsin plan incorporates elements of many reform plans that have been introduced in the WI Legislature over current and past sessions, as well as other ideas that have been discussed and analyzed in recent years.  Those ideas came from “big government” supporters and “small government” supporters.  Support for the Healthy Wisconsin plan also comes from Democrats and Republicans, alike.

Moreover, it takes features of the current WI State employee insurance program, which has demonstrated success in reducing health care cost increases, and applies those successes statewide.

There is much talk today about the “radical middle” in politics today.  There is a hunger for breaking through partisan gridlock and partisan divide.  Citizens want solutions to the problems facing themselves and their families, not bumper sticker slogans.  Whether it’s Senator John McCain and his Straight Talk Express, Senator Barak Obama and his call to put aside partisan differences or the appeal of New York Mayor Michael Bloomberg, citizens want solutions, not rhetoric from their government.

Special interests will oppose this proposal, particularly those who profit from the current health care mess.  Others will oppose it because they’d rather have a “bloody flag” to campaign against than a solution that requires compromise.

Wisconsin has a history of creative and pragmatic solutions to public policy questions.  In the turn of the 20^th century, WI led the way with solutions for problems of unemployment compensation and workers compensation.  We have an opportunity in the 21^st century to lead the way once more in solving the issue of access, quality and cost for health care for all WI residents and employees.

The Healthy Wisconsin proposal is a public-private solution to the problem of health care access and cost.  It uses the power of government to achieve economies of scale, unavailable to small companies and larger than the biggest company can achieve, and to require that everyone contribute their fair share to the cost of health care.  But it is not “government health care”.  Health care delivery will remain as it is today, with incentives and rewards for the most effective and most efficient health care networks. And ultimately, the goals of increased access, improved quality and cost control will be achieved by WI families.  Each WI family will have the opportunity to decide which health care delivery option is best for themselves and their families.

And by adopting the Healthy Wisconsin proposal, all WI residents will also have peace of mind; knowing that regardless of what twists and turns life brings them, they will always have access to health care.  It won’t matter if they are laid off or retired.  It won’t matter if they change jobs or start a business.  It won’t matter if they develop health conditions that today would prevent them from getting health care insurance.  Our state, our communities and our families will be more secure than we are today.

I urge all members of the Senate and the Assembly to support this proposal.  Let’s have Bucky Badger roll up his sleeves and show the nation that Wisconsin can break through the paralysis of the status quo and develop a solution that benefits businesses, large and small, employees, local governments and citizens alike.

I appreciate your time and attention.

Douglas Drake

Staff Representative

District Two, USW