Friday, October 19, 2007

Don’t Raid The Fund

This should not go unnoticed.

Increases the one-time $175 million transfer from the fund that helps pay legal awards in medical malpractice cases by at least $25 million. The transfer will be fought in a lawsuit to be filed by the Medical Society of Wisconsin - a suit that may take years to resolve.

Agreeing to this would be horribly irresponsible. 

The PCF is a segregated fund that is filled with a special taxes on health care providers.  The fund is used to pay huge malpractice verdicts - essentially catastrophic coverage for malpractice.  This keeps the cost of malpractice insurance, which has driven some specialties out of some states, under control.  The Medical Society plans to sue because those funds are not supposed to be a general tax for general purposes.  If the funds are used for the general fund, it would violate the uniformity clause of the Wisconsin constitution because it would essentially be a special tax on a special group of citizens - doctors. 

And… the doctors will almost certainly win the lawsuit. 

When the doctors win, it will require that the that the $200 million be put back into the fund or returned to the doctors.  Where will that money come from?  What will be cut?  Or what taxes will be raised?  It is irresponsible to raid that fund and almost guarantee a $200 million budget hole for a future legislature and the citizens of Wisconsin.

(6) Comments
Posted by Owen at 1705 hrs
Politics + Politics - Wisconsin

  1. Meh.  Though you’ve certainly done a nice job digesting the health care industry propaganda on this issue, I wouldn’t count on the doctors walking away with this one easily.  LFB did a nice review of the legal issues a few years ago.

    As I recall, LFB said that as long as the Legislature/Governor creates a sum-sufficient GPR appropriation that would kick in provided the fund is unable to fulfill its statutory obligations, the state could well be able to get around any argument that the WMS or other groups might make regarding the taking of private property.  Even if the court ruled this a taking of private property (a position that in and of itself is hardly a sure thing), such a sum-sufficient guarantee could be considered to be just compensation.

    Also, one could argue that the legal agreement between the state and those who fund the PCF isn’t necessarily impaired since all the state would be doing is changing the funding mechanism.  Instead of the funds coming solely from the PCF, they could also come from GPR in the event the PCF runs short.

    It’d be silly to think that the lawyers at DOA haven’t looked this over and concluded that they’d have a pretty good chance in court.

    But you’re right, there’s absolutely no guarantee, and should the state lose it would have to be prepared to deal with the ramifications of that.  And yes, there are certainly better ways to fund government than by raiding segregated funds.

    Posted by Recess Supervisor on October 19, 2007 at 1912 hrs


  2. “It is irresponsible to raid that fund and almost guarantee a $200 million budget hole for a future legislature and the citizens of Wisconsin.”

    Indeed, just like it’s irresponsible to increase the state’s GAAP deficit.

    But apparently that was ok, depending on who was doing the proposing.

    Posted by .(JavaScript must be enabled to view this email address) on October 19, 2007 at 1913 hrs


  3. It’d be silly to think that the lawyers at DOA haven’t looked this over and concluded that they’d have a pretty good chance in court.

    Just like the Oil Company Tax?

    Let’s face it.  The Party In Gummint (PIGS) are using every trick in the book to spend money without taking the responsibility—GAAP games, moving payments out after the FY ends, “borrowing” from trust/segregated funds, and now “promising” college—with the bills due 2 elections away or more.

    Ponzi would be proud.

    Posted by dad29 on October 19, 2007 at 1946 hrs


  4. My understanding is that Doyle is intent on raiding this fund and there is little to stop him from doing it right now. The Assembly GOP is standing aside in exchange for improving the language to prevent this in the future.

    Basically, Doyle does not view any “segregated” funds as out of his reach…and, like with the transportation fund, shows no qualms in demagoguing the issue when the need arises to “refill” them down the line.

    Posted by .(JavaScript must be enabled to view this email address) on October 19, 2007 at 2038 hrs


  5. Word is that this is why Sheldon Wasserman voted with Republicans in the Assembly—not because he’s a physician but because he’s thinking like a lawyer and an economist.

    He has in mind that the state got KILLED when Tommy did exactly this to the state employees’ pension fund to balance his budget.

    In the end, it cost the state three times what it borrowed because of payback plus interest plus—especially—legal fees to fight and lose for years in the courts.

    Unless there’s something about this fund that differentiates it from the state pension fund—this is really, really not a good idea.

    Posted by .(JavaScript must be enabled to view this email address) on October 19, 2007 at 2139 hrs


  6. “Basically, Doyle does not view any “segregated” funds as out of his reach..”

    Replace “Doyle” with “Any Governor” and you’d be more accurate.

    Posted by .(JavaScript must be enabled to view this email address) on October 20, 2007 at 1058 hrs


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