Wisconsin business group proposes hospital tax

A unique proposal to tax some hospitals in Milwaukee to help pay for care to the poor and uninsured at other facilities has drawn the ire of some hospital officials.

The idea of imposing a so-called "equalization tax" was floated in a March 17 report on local health care costs by the Greater Milwaukee Business Foundation on Health. The plan calls for the Wisconsin Legislature to implement the tax to help reduce disparities among hospitals.

Jim Wrocklage, executive director of the foundation, said the tax would be one way to help the facilities that shoulder most of the burden of caring for the indigent, uninsured and Medicaid patients, so they wouldn't have to charge higher prices than other hospitals.

But Wisconsin Hospital Assn. President Steve Brenton said the proposal is misguided because it targets hospitals instead of the root of the problem. "It's government programs that are failing to pay anything near the cost of care rendered to government patients," he said.

Brenton also says the proposal would be impractical because developing an equitable formula would be nearly impossible.

The American Hospital Assn. does not have a record of what states might have such equalization taxes, but Brenton believes that only a handful of states have tried it.

In Massachusetts, hospitals pay a tax to contribute to a "free care pool" designed to cover the cost of caring for the uninsured, said Paul Wingle, spokesman for the Massachusetts Hospital Assn. They can get reimbursed from the pool for the services they provide to eligible patients. State and federal dollars are also added to the fund.

The amount of each hospital's assessment is determined based on a state formula that considers patient volume and payer mix. Though the system has been in place for nearly 20 years, not everyone agrees it's a fair way to level the playing field, Wingle said.

"It's been a big source of contention in this state, and it's a system that sometimes puts hospitals at odds with each other," he said.

Wrocklage said his report, which also found that Milwaukee's health care costs are higher than other Midwestern metropolitan areas, would be reviewed by lawmakers, though it's unclear whether any proposed legislation would come out of it.