Exhibit A: Wisconsin Democrat governor, Jim Doyle, is trying to do an audacious end run around the intent of a state-administered trust fund meant to control medical malpractice costs.

In 1975, the Wisconsin legislature set up a fund for physicians, hospitals, and other health professionals to contribute to called the Injured Patients and Families Compensation Fund. It was essentially a self-insurance "buffer" against rising med-mal costs and has been widely credited with stabilizing Wisconsin malpractice insurance premiums.

The assets of this fund are substantial, in excess of $735 million in 2007 (covering an estimated $685 million in potential liabilities). Such a large "pot of gold" has proven irresistible for Democrats in Wisconsin, and Gov. Doyle has proposed pillaging nearly $200 million to cover budget deficits the state is running up on their Medicaid program. While it's noble to fund a state's uninsured & under-insured, raping a successful program whose mandate and charter is very specific to the med-mal relief program is going to lead to a bitter court fight in Wisconsin between the Wisconsin medical association and Gov. Doyle.

In 2003 a state law declared the trust "for the sole benefit of health care providers participating in the fund and proper claimants. Monies on the fund may not be used for any other purposes of the state". Keep in mind that individual doctors have essentially been paying into this pool at somewhere between $8-10,000 annually for nearly 30 years. So in a nutshell, this Democratic proposal would turn an insurance program into a massive retroactive tax hike on providers while potentially causing the whole program to go insolvent (as assets would drop ~ $150 million below liabilities).

Gov. Doyle, you're the proud recipient of the inaugural Plastic Surgery 101 cheesehead award!

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A little depressing medical economics for today.

A story in Tuesday's USA-Today hints at the looming financial catastrophe largely driven by federal Medicare & state Medicaid programs. As usual, politicians and bureaucracy are jockeying over the "lipstick on this pig" (ie. how it's hidden on the accounting sheet) rather then the problems and painful solutions itself by arguing for less transparent and accurate accounting practices to keep the books looking prettier. In fairness (I guess) the true numbers would affect interest rates for the worse for the US debt burden.

Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined. Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85% of taxpayer liabilities.

The Financial Accounting Standards Advisory Board, which sets federal accounting standards, is considering requiring the government to adopt accounting rules similar to those for corporations. The change would move Social Security and Medicare onto the government's income statement and balance sheet, instead of keeping them separate. The White House and the Congressional Budget Office oppose the change, arguing that the programs are not true liabilities because government can cancel or cut them. Chad Stone, chief economist at the liberal Center on Budget and Policy Priorities, says it can be misleading to focus on the government's unfunded liabilities because Medicare's financial problems overwhelm the analysis. "There is a shortfall in Medicare and Medicaid that is potentially explosive, but that is related to overall trends in health care spending," he says.

Rob

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