by Don C. Brunell
President, Association of Washington Business

In Wisconsin, a legislative brawl over health care has captured national attention. Washingtonians should pay attention too, because we may see a similar slugfest here next year. Yet, while it may be riveting to watch Democrats and Republicans rip each other apart like a couple of worked-up badgers, the political free-for-all is just the sideshow.
The main event is the underlying battle between Democrats who want government to control health insurance and Republicans who push market-driven reforms. How this dust-up is settled may be the prelude to what happens in other states around the country.
The conflict is so explosive that the Milwaukee Journal Sentinel, the Wisconsins leading newspaper, recently called upon both sides to check their weapons at the door, lock themselves in a room and negotiate. Easier said than done.
Democrats control the Wisconsins Senate by a margin of 18-15. With the backing of Gov. Jim Doyle, also a Democrat, they launched Healthy Wisconsin, a scheme where the state would broker health insurance for all citizens. Consider it another costly experiment, like the one in Massachusetts, where government mandates that everyone carry health insurance.
In Wisconsin, the $15.2 billion program would be funded through a 14.5 percent payroll tax, which would eventually rise to 17.5 percent over the next decade. Initially, employers would pay 10.5 percent of the payroll tax while workers would kick in 4 percent.
Lets put that annual $15.2 billion in context. Its $3 billion more than Wisconsin takes in each year from personal income taxes, sales taxes and corporate income taxes combined.
The Wisconsin Manufacturers and Commerce Association is fighting the Senates proposal. WMC says the new state-run program violates the federal Employee Retirement Income Security Act, which requires businesses operating in several states to offer uniform health care benefits. WMC contends that the program would put employers operating in multiple states out of ERISA compliance because Wisconsin would require a different set of benefits than other states.
Were familiar with that argument. ERISA compliance issues sank the 1993 universal health care plan adopted here by the Democratically-controlled legislature and then-Gov. Mike Lowry, a Democrat. To implement the program, Washington needed an ERISA waiver from Congress, which was denied.
Healthy Wisconsin is a top-down, one-size-fits-all government mandate that could sink Wisconsins economy. Republicans, who control the Wisconsin State Assembly 52-47 fear the plan would make the state a magnet for those seeking health care. While all Wisconsin residents would be eligible for the universal health insurance, some non-residents would be as well. In fact, the plan calls for the state Senate to allocate $640 million to cover the problem of people coming to Wisconsin just for health care.
Republicans are putting their faith in market-based reforms, betting that informed consumers can make health care more efficient, control costs and make insurance more affordable. Tax-free health savings accounts, coupled with high-deductible health insurance plans, form the centerpiece of their alternative.
Its the classic partisan standoff that has stymied health care reform for decades. Most Republicans want people to make decisions about their health care and how they spend their money while prominent Democrats promote government-run health care.
Wisconsin and Washington are similar. They have roughly the same population, are spread out geographically, have a strong agriculture and manufacturing base, and are high-cost states for business.
In Washington, a commission established by the legislature and appointed by Democratic Gov. Chris Gregoire continues to examine government-centric health insurance reform. The 2007 Legislature passed a version of the Massachusetts and Wisconsin plans, but our proposal amounts to rudimentary building plans awaiting details, completion and funding.
That commission will make recommendations to Washingtons Democratically-controlled legislature next year. Ideally, lawmakers will look at the many things currently working in our market-based health care system and build on them, while fixing only what needs fixing. Conversely, Washington legislators and Gov. Gregoire may decide to toss out a working system and once again establish a massive state-run program as their predecessors did in 1993.
That would be a bad idea. Wisconsins government-run health care plan threatens to crush that states already overburdened taxpayers. At the same time theyre contemplating billions in additional taxes to pay for Healthy Wisconsin, legislators are scrambling to come up with $1.75 billion in new taxes just to balance their very unhealthy state budget.