Connect with Isthmus:         Newsletters 

Friday, January 30, 2015 |  Madison, WI: 17.0° F  Mostly Cloudy
The Paper
Share on Google+
Sick system
Jack Lohman is trying to save the state's businesses - from themselves
Jack Lohman
Jack Lohman

Jack Lohman is a lifelong Republican and retired medical-services CEO who has a new mission in life: preventing Wisconsin business from committing "economic suicide" by resisting health-care reform.

"Free-market health care is the biggest enemy of free-market businesses in Wisconsin," says Lohman, who at a 69 looks a bit like the mustachioed tough-guy detective played by Dennis Farina on TV's Law and Order.

Although Lohman has a genial, grandfatherly air, he remains driven by his belief that businesses in Wisconsin need fundamental health-care reform, lest they suffer severe erosion of their ability to compete. He says health-care costs in Wisconsin are "removing the competitiveness of our businesses."

For example, says Lohman, "we can't compete in the auto business with Canada, which has overtaken Michigan as the biggest center of auto making." U.S. auto firms operating in Canada save approximately $5 per hour per worker in health costs alone compared to DaimlerChrysler's engine plant in Kenosha and GM's light-truck and SUV plant in Janesville.

And, in fact, the situation in Wisconsin is more dire than elsewhere. The health-care premiums paid by Wisconsin workers are increasing 4.2 times as fast as wages, jumping 66.1% from 2000 to 2006, while median earnings rose by only 15.7%. A recent study found that Wisconsin has the nation's third highest premiums, averaging nearly $2,000 per worker above the U.S. average, $9,523 to $7,530.

Alarmingly, the corporate publication Expansion Management - aimed at executives who recommend which plants to shut down and where to open new facilities - has ranked Wisconsin as tied for third highest premiums in the nation.

"Wisconsin pays so much more than other states, and then on top of that, we're competing with national economies that have lower costs and better results," says Paul Linzmeyer, president of Bay Towel Inc. in Green Bay. (The U.S. actually ranks 37th in overall health outcomes, according to the World Health Organization.)

At present, three major reform plans are being offered to the Legislature: the Wisconsin Health Plan coauthored by former state budget director David Riemer; the Wisconsin Health Partnership Plan backed by the AFL-CIO; and the Wisconsin Health Security Plan favored by Lohman and state Sen. Mark Miller (D-Monona).

The Wisconsin Healthcare Reform Coalition, consisting of some 31 groups, is united behind the urgency of reform. While different groups prefer various plans, they are committed to backing the plan with the best chance of winning.

Yet Lohman and other reform-minded business leaders have a lot of persuading to do among those they seek to rescue. Leading business groups like Wisconsin Manufacturers & Commerce are among the fiercest foes of fundamental reform. And with business outspending labor by about 12 to 1 in state elections, big business is clearly the most powerful force under the Capitol dome.

"The lobbying dollar is what counts," says Linzmeyer. "Insurance companies don't have those huge glass buildings because they aren't making money."

Lohman puts it this way: "The health-care industry, hospitals, HMOs, doctors and pharmaceutical corporations spend about $1.4 million a year in Wisconsin buying non-action in Madison by the Legislature."

Bearing the burden

After working 10 years with Marquette Electronics, rising to president of international operations, Jack Lohman started a Milwaukee-area firm that performed cardiac testing for doctors and clinics. He served as CEO of the rapidly expanding company for 25 years before retiring in 2004. During those years, he became intimately familiar with the burden health-care costs place on Wisconsin businesses.

As CEO of his firm, Lohman was the quintessential workaholic, often working around the clock and sleeping in his office, where he showered and kept changes of clothing.

Now he shows the same tireless qualities advocating for a "single payer" plan for Wisconsin and the nation. He describes his plan as "Medicare for all" - albeit, he hopes, with a higher level of reimbursement for providers.

Lohman churns out a stream of commentaries for Wisconsin newspapers. He delivers speeches, appears on radio talk shows, and devotes a major portion of his Web site to health care. Recently he published a book on campaign finance reform (with an extensive section on how special interests have thwarted health-care reform).

A single-payer system would replace insurance bureaucracies and their massive costs with a single, high-efficiency agency. The idea, similar to what now exists in Canada, is advocated in a bill proposed by State Sen. Mark Miller and Rep. Chuck Benedict, a doctor from Beloit. A related concept, the Wisconsin Partnership Plan, contains many single-payer features.

Cutting out private health insurance firms - or at least severely reducing their mammoth bureaucracies and influence - is seen as vital to reducing health costs and allowing Americans to select their own doctors and make other health decisions without insurers interfering.

"Currently, we are spending almost a third of every health-care dollar on administration and paperwork generated by the private health insurance industry," says Dr. Stephanie Woolhandler, a professor at Harvard Medical School. "Countries like Canada spend about half that much on the billing and paperwork side of medicine."

In 2004, annual per-capita health-care costs averaged $3,165 in Canada, compared with $6,102 in the U.S. Unlike "managed care" systems in the U.S., Canadian citizens can freely choose any doctor or health facility. Public satisfaction with the Canadian system is about 85%.

Insecurity about health care is climbing, even among those who have relatively good insurance coverage. Alarmingly, the share of Wisconsinites covered by employer insurance plummeted from 73% in 1980 to 58.4% in 2002.

Wisconsinites are keenly aware that a sudden layoff may cut their family off from insurance coverage. While Wisconsin ranked fourth in the nation in the percentage of its residents who have health coverage, estimates of the number of uninsured still range from 540,000 to 600,000.

But even with all of these problems, there is considerable resistance to health-care reforms that include an expanded role for government.

"Our experience with government-run programs is that they are good at providing coverage, great at paying health-care providers far less than what it costs to provide the care, and terrible at managing health," says Eric Borgerding, vice president of the Wisconsin Hospital Association.

Similarly, the big business lobby Wisconsin Manufacturers & Commerce opposes any mandate requiring all businesses to pay into a health-care fund. WMC favors voluntary efforts by employers to cover their workers and state programs to reach the uninsured. R.J. Pirlot, the group's legislative director, says these include "wellness programs, better management of chronic disease states, more transparency on cost and quality." The group is also concerned about Medicaid underfunding.

But WMC vigorously opposes a single- payer-style plan - or what Pirlot calls the "socialization of health care in the state." (Lohman counters that single-payer would only "socialize" insurance, leaving doctors and hospitals as private entities. In fact, a Wisconsin plan might very well be administered by a single private company, just as Madison-based WPS handles all Wisconsin Medicare claims.)

WMC also rejects the notion that all businesses should either offer health coverage or else pay into a fund to cover the uninsured. This is a common feature of reform plans advanced by former state budget director Riemer and David Newby of the state AFL-CIO.

"We believe that requiring payments from all employers would have a negative effect on small businesses and entrepreneurial activity," says Pirlot, echoing the conventional wisdom for leaders in business.

Eager to sign up

Not all businesspeople are down on the idea of fundamental reform. Many national groups - including the Business Roundtable and the U.S. Chamber of Commerce - have come out in support of universal health care. So have a growing number of business leaders in Wisconsin.

Michael Rayome, regional human relations director at the 800-employee Graphic Packaging plant in Wausau, argues that creating a single large pool for covering everyone would actually help existing small businesses and make it easier for new ones to form, as with the Wisconsin Health Partnership Plan.

"I don't believe that the small business owner would be hurt," says Rayome. "I've given a couple presentations on the Partnership Plan, and small business owners have come up and said, 'You get that passed and I'll be the first to sign up.'"

Rather than discouraging small firms, argues Rayome, an affordable, universal health plan would actually encourage the development of new businesses, by permitting people to leave their current jobs and pursue "entrepreneurial impulses" to start new firms. "We need that growth of small businesses in Wisconsin."

Soaring premiums are an ongoing headache for Rayome, whose firm shells out $1,100 a month for family coverage. He says the Partnership Plan could drastically lower costs to about $340 per month, according to two health-care accounting groups. "If we were paying $340 a month per worker instead of $1,100, we'd be saving $300,000 a month."

Rayome says, "I've seen the presentations and talked with WMC people, but I don't understand their fears." Others often express harsher assessments. Says Linzmeyer, "WMC and local chambers of commerce are in bed with the same people causing the problem."

Health-care reformers challenge the notion that the role played by insurance corporations is indispensable. As Linzmeyer puts it, "Insurance companies seem to have control over the public debate. We're stuck with a middleman that other countries don't have - the health insurance companies."

Lohman takes the point further. "When you look at the costs of underwriting, broker commissions, CEO pay, profits and administrative services, it's clear they are dispensable," he says. "Just look at the amount of money used up by them in denying care."

The elephant in the room

Many businesspeople adhere staunchly to "free market" solutions, with a heavy emphasis on the "personal responsibility" of health consumers vis-à-vis problems like smoking and obesity. This philosophy is perhaps most forcefully articulated by John Torinus, CEO of Serigraph printing in West Bend. "The private market would solve things better than a government plan," he says.

Torinus has been vocal in promoting a health-care model in which the employer imposes extremely high deductibles on employees, offset with a Health Savings Account of several thousand dollars. He favors giving businesses maximum flexibility in handling health care.

"The elephant in the room - that pundits, polemicists and politicians never talk about - is the cost," says Torinus. "They talk about covering the uninsured, not the cost. Employers would like to hear about getting the costs down for Wisconsin."

Borgerding, of the Wisconsin Hospital Association, takes a similar view. "It is a lot easier for politicians to cap spending, set prices, eliminate the middleman [insurance companies] or do other things," he says, "than it is to tell people they need to take on more responsibility for their health and health care.

"I don't know many politicians who at election time want to knock on your door and say, 'Twenty-five percent of the Wisconsin population is not just overweight, but obese, and that is driving up a large portion of our health-care costs. You should really start exercising.'"

The hospital association also supports systemic change, including Gov. Doyle's effort to expand coverage through BadgerCare Plus (although the WHA has major problems with the structure of Doyle's proposed tax on hospitals).

Some reformers are astonished by the hospitals' lack of support for fundamental reform. After all, shouldn't hospitals be delighted if everyone's bills were guaranteed and they did not have to give away millions of dollars in charity care or have their emergency rooms clogged with uninsured patients?

Moreover, a universal plan like either the Partnership Act or the Health Security Act would relieve hospitals from having to deal with multiple insurers, a costly administrative burden. In addition, they would be assured payment for services and have to provide practically no charity or uncompensated care.

"It seems like the hospitals are much more concerned about the public gaining enough buying power to put a downward pressure on costs," says Robert Kraig of Citizen Action of Wisconsin, the state's largest public-interest organization.

Kraig authored a recent study on Wisconsin health costs that singled out the concentrated market power of the big hospital chains and their ability to raise prices without being punished by the market.

"Right now, there's no one big enough to put market leverage on them," he says. "They don't want that kind of market leverage to exist through one huge statewide pool of consumers. They want to continue to amass 'nonprofit' profits of a billion dollars a year, and continue with their expansions."

Independent voices

What is emerging from all this is a sharply divided business community. With Jack Lohman, Paul Linzmeyer, Michael Rayome, Wayne Corey of the 52,000-member Wisconsin Independent Business organization, and others like them, there is a growing group of leaders advocating fundamental reform that the insurance and pharmaceutical industries find threatening.

These independent voices are working to persuade Wisconsin businesses that they have a clear choice: fight for reform, or face near-certain economic decline as premiums consume more and more of their earnings.

Linzmeyer believes other business leaders will step forward once they recognize the heavy costs of inaction on health care. "We have some very intelligent businesspeople in this state, and maybe they will recognize what we're up against. Are we going to do what's right, or are we going to keep living with this dysfunctional system?"

Lohman agrees. "It boggles my mind that we continue to accept the inefficient insurance bureaucracy running our health care," he says. "Any businessman designing this system from scratch would opt for a single-payer system without the waste and high costs generated by a middleman bureaucracy standing in the way of good health care."

Share on Google+

Log in or register to comment

Select a Movie
Select a Theater

Promotions Contact us Privacy Policy Jobs Newsletters RSS
Collapse Photo Bar